Cassell v. Irving H. Miller Limited and Kenney, 2016 ONSC 5570

Court File and Parties

Court File Nos.: CV-11-1124 and CV-13-411 Date: 2016/09/13 Ontario Superior Court of Justice

Between: TIMOTHY CASSELL, Plaintiff – and – IRVING H. MILLER LIMITED, Defendant

And: TIMOTHY CASSELL, Plaintiff – and – GREGORY J. KENNEY, Defendant

Before: Laliberte, J.

Counsel: Allison A. Thornton, counsel for the Plaintiff Patrick Snelling, counsel for the Defendant

Heard: June 14th, 15th, 16th, 17th, 20th, 21st, and 22nd, 2016 Submissions filed: July 29, 2016

Reasons for Judgment

LALIBERTE, J.

Introduction

[1] The Court is dealing with two separate actions brought by the Plaintiff, Timothy Cassell (hereinafter referred to as T.C.). The parties agreed on a consolidation. Both actions stem from T.C.’s summary dismissal as an insurance broker.

[2] Action No. 11-1124 raises claims against his former corporate employer Irving H. Miller Limited (hereinafter referred to as IHM) which carries an insurance brokerage.

[3] IHM has counterclaimed against T.C. for breach of contract and breach of his fiduciary duty.

[4] Action No. 13-411 is brought against the Defendant Gregory J. Kenney (hereinafter referred to as G.K.). He is the principal broker and sole shareholder of IHM.

[5] T.C. worked for IHM from March 2001 to May 6, 2011 when his employment was terminated.

[6] These proceedings have raised a number of discreet legal and factual issues.

[7] Witnesses have provided conflicting evidence on significant events.

[8] The issues to be decided by the Court can be articulated as follows:

1. Did IHM have just cause to summarily terminate T.C.’s employment?
2. If not, what is the amount to be paid by IHM to T.C. in lieu of notice?
3. Is T.C. entitled to special damages against IHM by reason of the wrongful dismissal?
4. Is T.C. entitled to compensation for vested business as provided for in his employment contract?
5. Did T.C. breach the terms of his contract in regards to non-competition and/or his fiduciary duty to IHM?
6. If so, what are the appropriate damages payable by T.C. to IHM?
7. Does the evidence establish that G.K. is liable to T.C. on the basis of conspiracy, intimidation and/or slander?
8. If so, what is the appropriate measure of damages to be paid by G.K. to T.C.? Is he entitled to aggravated and punitive damages?
9. Is T.C. entitled to punitive and/or aggravated damages against IHM by reason of the manner he was dismissed?

The Evidence

[9] On consent, the parties filed joint document briefs which were made exhibits in this trial. These five volumes include most of the relevant documentary evidence. A supplemental document brief was filed by T.C.

[10] The Court was also provided with the litigants’ respective damages brief.

[11] By way of a statement of agreed facts signed by both counsel and filed with the Court on July 20, 2016, the following facts are admitted:

1. From the commencement of the Plaintiff’s employment with Newman Oliver and McCarten Insurance Brokers Ltd. To April 20, 2014, the Plaintiff sold general insurance policies generating a commission value to his employer of $79,799.27 (“The commissions”).
2. As a result of the generating of the commission the Plaintiff earned $46,446.68 from the commencement of his employment with Newman Oliver and McCarten Insurance Brokers Ltd. To April 30, 2014.

[12] It was noted by the Court that T.C.’s claim for $225,000.00 in damages as payment in lieu of notice exceeded the sum of $80,000.00 claimed in his Statement of Claim. Both counsel agreed in writing that the Statement of Claim be amended accordingly.

[13] The following witnesses were called by T.C.

• T.C.;
• Christina Wright;
• Peter Morris;
• Donna Peer.

[14] The witnesses called by IHM and G.K. are:

• Leanne Sullivan;
• Pamela Southern;
• Jeff Frydman;
• Patricia MacDonald;
• Derek Faulconer;
• G.K.;
• Tracy Young.

[15] The Court will now review the evidence.

Timothy Cassell

[16] T.C. is 59 years of age. He was 54 when his employment with the Defendant IHM was terminated on May 6, 2011.

[17] His employment contract was signed on March 9, 2001. It is found at tab 16 of the document brief.

[18] He worked as an agent for Cooperators from 1998 to 2000.

[19] He explains the difference between an agent and a broker. As an agent, he worked strictly for the one insurance company.

[20] As a broker, he is not bound to one company. He deals with many companies to find the best deal for the insured.

[21] He is referred to section 8 of the March 9, 2001 contract. It provided for vesting. He describes this as his retirement fund.

[22] The essence is that he would get a percentage of the business generated by him which is referred to as a “book of business”. Section 8 provides entitlement to this vesting on the happening of one of 2 events, whichever occurred first:

• A book of business of $500,000 or
• 5 years of service.

[23] His evidence is that he surpassed the $500,000 mark within 3 years.

[24] Section 13 of the contract provided for a possible partnership. He was able to gather the money. He spoke to G.K. who indicated that certain individuals did not want him as a partner. He was upset. He spoke to his wife. He wanted to leave but she would have persuaded him otherwise since he had never made such money in the past.

[25] T.C. then describes how the business operated. The main office was in Prescott. There was a satellite office in Cardinal which is where he worked.

[26] He describes that there was a Customer Service Representative (CSR) also working in Cardinal. He identified 3 individuals who had worked as a CSR, namely:

• Tracy who is G.K.’s ex-spouse;
• G.K.’s daughter in 2009-2010;
• Then, Patricia MacDonald who worked with him until his dismissal in May 2011.

[27] He describes his work as a producer:

• He signs up new applications;
• He would go and inspect homes and speak to clients;
• He took the information and provided same to the CSR.

[28] The CSR would do the follow-up in the sense of making sure things were done.

[29] He would not be involved in the “advance system…”. The purpose of this system is to follow up on dates. He would only put notes on this system. He wasn’t responsible for updates or follow-ups.

[30] So that the work was divided as follows as between him and the CSR:

• He did all the writing of new businesses;
• He would take information from clients who wanted to speak to him;
• He would give notes and all papers to the CSR.

[31] There were no paper files kept in Cardinal. They were filed in Prescott at the main office. Files would be transported back and forth by the CSR.

[32] He never had control of the files. He would take notes and place same on the CSR’s desk. He would sometimes bring notes to Prescott.

[33] He is shown copy of a letter dated May 28, 2010 which was sent to him by G.K. It is found at tab 50 of the document brief.

[34] It would appear to make the point that the CSR is not T.C.’s secretary.

[35] T.C. didn’t understand the purpose of this letter. He describes his work relationship with Patricia as “awesome”. They worked really well together. They both did their job. They helped one another.

[36] He explains that he is licensed as a broker with the Registered Insurance Brokers of Ontario (RIBO). He went through exams for this.

[37] He is asked how he was shown the business operation at IHM. Tracy is the one who showed him everything. He had a great relationship with Tracy who went to work at the Prescott Office as Office Manager.

[38] The defendant G.K. was a partner in the business. He purchased Cynthia Durant’s interest in 2009 which is when Tracy went to work in Prescott.

[39] He would report to G.K.

[40] He is shown tabs 2A to 2G which reflect his income from 2006 to 2011.

[41] He explains that following his termination in 2011, he did not have any income since he didn’t have any clients with his subsequent employer Newman, Oliver and McCarten, which is also an insurance broker firm.

[42] His income is noted as follows: 2005: $68,763.63 2006: $68,774.87 2007: $79,413.16 2008: $72,466.16 2009: $72,383.29 2010: $66,635.24

[43] He explains a drop of income in 2010 by reason of the loss of 2 insurance companies. This significantly impacted on his book of business. He lost many clients because of this.

[44] He is shown a note from G.K. dated April 5, 2010 where reference is made to the “Poo list” which refer to what is described as “substandard client”. I understand that a good number of these were his clients. He states that he was told by G.K. to tell these clients that “this was the best quote we have”… He didn’t think it was fair.

[45] The end result is that he lost many clients.

[46] He states never having seen the Human Resources Policy Manual found at tab 23. There is writing at the bottom of a page which he states is not his.

[47] There was no set process for annual performance reviews. They would meet once in a while. It was typically in January. He can’t recall if there was such a meeting in January 2011.

[48] He has no recollection of being told that he was on probation. His evidence is that he always had good results and good reviews.

[49] He is then questioned in regards to four specific clients, namely:

• Anthony Cryderman;
• Lorna Toupin;
• Randy and Sandy Strader;
• Leanne and Blake Sullivan.

[50] In the Cryderman matter, he explains that this was an application for tenant coverage and that there had been underwriting approval. The insurance company was Portage Mutual. He states that this had nothing to do with driving insurance.

[51] The next clients were Randy and Sandy Strader.

[52] On October 28, 2010, G.K. sent him a letter reproduced at tab 57. The letter states the following:

• That on October 15, 2010 he had sent down 2 applications with Patricia at the end of the day to give to Tracy for her signature;
• These applications bound Portage as of September 23, 2010;
• He was told that he had no binding authority with Portage;
• Applications are to be submitted to companies promptly;
• His conduct is not acceptable;
• If he continues this conduct he will be terminated.

[53] T.C. provides the history in the Strader file.

[54] It appears that Portage would have subsequently found out that the insured had lost his driver’s license. He explains that he had never seen this before. He had never seen the question of a licence being a consideration in a “tenant package”.

[55] On March 29, 2010, he was sent a letter by G.K. which is found at tab 45.

[56] Briefly it states that Portage had suspended his ability to generate new applications with them for one year. He was instructed by G.K. to act accordingly.

[57] He states that he was mad at Portage. He had other clients with this company. This situation did not impact on them.

[58] The next client is Lorna Toupin. He testifies that she was already a client with Portage. She wanted to stay with Portage. The Application would have been signed by Tracy and not him.

[59] He is then questioned in regards to an October 2010 document found at tab 54 which modifies his agreement of employment with IHM.

[60] Mr. Cassell explains that he signed this document as he felt he did not have any choice. He notes that he placed the letters “U.D.” under his signature as confirmation that he was doing so under duress. He was by himself with no support. Again, his wife would have prompted him to accept.

[61] Tab 60 shows a November 12, 2010 e-mail sent by G.K. to T.C.

[62] While reference is made to Mike and Tanya who were also producers, he doesn’t know if they had the same vesting agreement and if so, they hadn’t been there long enough to benefit from a vesting provision. He was the only one affected by this modification.

[63] He confirms not having received anything to sign this document.

[64] On November 19, 2010, he wrote G.K. to provide his explanation in the Strader file (tab 61). He never received a response.

[65] In regards to the Sullivans’ matter, these individuals have been clients of his since 2002. They were good clients. They were insured by Portage. He has known the family and they never complained against him.

[66] In May 2010, Leanne Sullivan called him and advised that they were selling their home and would reside with family before moving to a new home.

[67] He recommended a “tenant package” in between.

[68] Tab 52 of the Documents brief are the notes dated June 2, 2010 he prepared in regards to Leanne Sullivan’s request. He testifies that typically he would place such notes on the CSR’s desk. “Once in a blue moon” he would fax things directly to the companies.

[69] He testifies that while he does not have a recollection of doing so, he is 99% sure that he would have placed the relevant notes on the CSR’s desk. Patricia was new then.

[70] On September 17, 2010, he received a call from Leanne Sullivan while she was at her lawyer’s office saying she needed a binder for their new home in Brinston. He testifies having prepared the binder and sent it to the lawyer. This document is found at tab 53. He then prepared the notes directed at Portage found at tab 52.

[71] For him, this wasn’t a new business and his understanding was that it could be switched from one place to another. So that the one year suspension with Portage wouldn’t have applied to this transaction.

[72] T.C. then explains that the new home bought by the Sullivans was a home already insured through them. The defendant G.K. was the broker. The McKinnons had owned this property.

[73] This house had burned down and had been completely rebuilt. All of the relevant information for this home was available. He used this information to process the file.

[74] He testifies that as of September 2010, he had either placed the relevant notes and documentation on Patricia’s desk as she was the CSR or that he had faxed it directly to the insurance company.

[75] Tab 62 of the document brief shows the Residential Replacement Cost Evaluation Worksheet prepared by him for this house. He had done an inspection on November 15, 2010 to make sure everything was accurate.

[76] He looked at the house. A new garage had been built. There was a tractor and he was told they wanted to purchase goats.

[77] He suggested a farm package.

[78] T.C. testifies that he was told by Leanne Sullivan that they had not received any documents for the new home. He told her he would verify with the CSR Patricia.

[79] He would have spoken to Patricia and was told that Portage were way behind. He didn’t check as this wasn’t his job to do abeyances. His job was to sign up new business.

[80] On January 20, 2011, he would have driven by the Sullivans’ new home. He would have calculated the distance between this house and the fire hall in Iroquois and noted that it was 14 kilometers. This meant that it was in excess of 13 kilometers which impacted on the coverage and the premium.

[81] He states having called Ms. Sullivan once or twice and leaving a message. He can’t recall having explained in the message why he needed to speak to her.

[82] He then spoke to Pam Southern, an employee of Portage. He was advised that Leanne Sullivan had called as she hadn’t received any documents. In fact, they were still listed as being insured for their prior residence.

[83] He told Pam Southern that he was stunned. She wouldn’t provide coverage by reason of the above noted distance to a fire hall. He was panicking and she explained to him how to remedy the situation.

[84] On January 26, 2011, he was looking at obtaining a quote from another insurance company, namely North Waterloo. It was cheaper.

[85] He tried to call Leanne Sullivan but the line was busy. He attended her home on January 26, 2011.

[86] He spoke to the Sullivans and provided them with the North Waterloo application.

[87] They discussed the issue of the 14 kilometers. He was uneasy. Leanne stated that she needed time to think. They had gotten a quote from a competitor. He testifies having told her she was covered but she was skeptical.

[88] He states having told them not to be concerned as they would be covered under “Error and Omissions” insurance. But he understood she was covered. Pam made him believe they were covered.

[89] Around supper time on the same date, he testifies having received a call from G.K. who was upset. The CSR had received a call from RIBO regarding the Sullivans who had filed a complaint. He was told to meet him at the Prescott Office the following morning at 7:00 a.m.

[90] He was also told to prepare a response. He had the Sullivans file with him at that time.

[91] T.C. identifies the document found at tab 2 as the response prepared by him at G.K.’s request. He states that this was an accurate account.

[92] He testifies having looked for a fax confirmation in the file but couldn’t find one. In his written account which he states is 100% truthful, he states “…over the next few week she obtain details and I did up endorsement and sent in the Portage mutual. I cannot say by fax or courier as there was no fax confirmation attached to office copy. I can only assume by courier. The endorsement is then placed with CSR for abeyance.”

[93] He explains that he had no way of knowing if he had faxed it or sent it courier. The normal procedure is that Patricia would do this.

[94] When he wrote “I did up endorsement and sent it in to Portage…” he meant he gave it to the CSR.

[95] He then explains that the normal practice was for the CSR to courier the documents to the Prescott office who in turn sent it to companies. The documents could go through several hands.

[96] He has no recollection of faxing the September 17, 2010 documents, being the binder sent to the Sullivans’ lawyer for the new home in Brinston. There is no fax confirmation. He again would have placed the documents on CSR’s desk who looks after abeyancing.

[97] T.C. confirms having met G.K. on January 27, 2010 at 7:00 a.m. at the Prescott Office. Tracy Young was also present. She was in and out of the meeting. He had the Sullivans’ file with him so he brought it to the meeting.

[98] His evidence is that he showed G.K. the statement he had prepared (tab 2).

[99] T.C. provides the following details concerning this meeting:

• G.K. read the statement and every so often he would state: “that’s not going to fly…” that’s not how we do things around here…”; G.K. was referring to him faxing the documents directly to the company;
• T.C. reports having told G.K. “Come on do you mean to tell me that you have never faxed documents directly?”… G.K. would have responded “…when I do I make sure the receipt or confirmation is attached to it…”;
• He felt intimidated because he was saying how it happened and G.K. was saying “it’s not going to fly…”;
• It was mind boggling; he couldn’t understand;
• G.K. told him that he had been before RIBO before; he was talking about his past experience with RIBO; that he would get a slap on the hand or something like that; he had drinks with the boys at RIBO; T.C. states that he took that as intimidation and a threat; he saw this as G.K. telling him that he had influence with RIBO; he started to feel lots of pressure;
• G.K. told him that he would have to change his statement;
• He denies having shown G.K. a whited out RCT;
• During the meeting, G.K. was having conversations with Pam (underwriter with Portage) on what to do;
• T.C. states that he then went to the Cardinal office to modify his statement as instructed to do by G.K.

[100] T.C. is then examined at length on how G.K. would have compelled him to remove portions of his statement to RIBO. The end result is that G.K. would have told him to remove the following details:

• “The endorsement was placed on CSR desk for abeyance.”;
• His statement about not being sure whether it was faxed or sent by courier;
• Told to add “via fax” in regards to the sending of the September 2010 binder to Portage;
• There were several other modifications done at G.K.’s request; he states that there were so many changes that he can’t remember.

[101] He confirms having received the letter dated January 31, 2011 from IHM wherein it is stated that the Sullivans’ incident is taken very seriously and that its position will be stated once RIBO has completed its investigation. There was no discussion around this letter.

[102] He states that he was fired way before RIBO’s decision.

[103] The letter from RIBO dated February 7, 2011 (tab 92) is the first letter he received stating that he was being investigated.

[104] This letter was sent by Nadine Austin, a senior investigator with RIBO. She refers to the letter sent by him to RIBO. This is the letter G.K. made him change all these times.

[105] In this letter from Nadine Austin, T.C. was being asked to describe to her his abeyance and follow up procedures in the office.

[106] He testifies having notified G.K. of this letter in accordance with his instructions. He had been told by G.K. that he wanted to know everything that was going on with RIBO. G.K. said that he wanted to see everything that was being sent to RIBO first.

[107] T.C. testifies that he was very intimidated by G.K. That he was sacred. He sent an e-mail to Nadine Austin from RIBO on February 22, 2011 (tab 109). He wanted to circumvent G.K. as he didn’t want to get fired. He wanted to express the truth to her…that he was under duress… G.K. is the director…a powerful player… He was scared and trying to get someone to listen to him.

[108] He testifies that ultimately, the response he received from Nadine Austin is such that he felt as if she completely ignored how he felt. After this he thought there was no help so he never told her how he was pressured by G.K. in changing his statement to RIBO.

[109] T.C. reports that the letter sent to Ms. Austin in regards to the abeyancing system is incorrect and was again the product of G.K. telling him what to say. He had never received any instructions on this system other than one time from Patricia. Her instructions were not that good. He didn’t know how to do it. He never used the system.

[110] He describes the meeting of May 6, 2011 when he was notified of his suspension. He was given a letter. He reports asking G.K. if this was about the Sullivan’s file. The response was “yes amongst other things and that he was not at liberty to disclose. He was told to clean up his stuff and that his status would be confirmed on May 12 which was the date of the RIBO hearing. He states that the hearing was ultimately postponed. He was actually terminated before the RIBO hearing.

[111] T.C. is adamant that he, did nothing wrong in the Sullivan’s file. He just followed office procedure. The abeyance system at IHM was a joke. That he didn’t know how to do abeyance so how could he have gone against office procedure. If he sent it, which he doesn’t remember, it happened all the time. It was the CSR’s fault. There was no follow up. Sometimes there would be no abeyancing. Clients would call to complain about receiving wrong coverage for wrong cars. He states that he had lost a client who was mad because of this. He states that the abeyance system at IHM “was not effective at all”.

[112] Finally, in examination in-chief, T.C. is questioned in regards to damages.

[113] The alleged damages are found in his Damages Brief.

[114] In terms of loss of income, he confirms that his income from 2011 to 2015 is shown at tab 2. It is as follows: 2011: $24,125.35; 2012: $16,824.50; 2013: $24,824.50; 2014: $27,523.90; 2015: $39,038.10.

[115] He explains that all of his income is dependent on his book of business. He is at 100% commission.

[116] On October 14, 2014 he received a loan from his employer for which he signed a promissory note. This was declared as income. This has not been repaid.

[117] He provides evidence in relation to the loss of the section 8 vesting provision in the initial March 9, 2001 employment contract.

[118] He identifies the cashing of RRSPs as further losses. He was required to do so to pay for legal fees in this matter. These amounts are shown at tab 4 of the document brief.

[119] He was also required to increase his mortgage to live and pay legal fees.

[120] T.C. testifies that the termination of his employment at IHM has impacted on him and his family. This has been hard financially and emotionally. He states that he has been living in poverty.

[121] In cross-examination, the T.C. is questioned on his suggestion that he was living in poverty.

[122] He confirms that he did have other income including $5,000 per year from life insurance sales. He owns three rental properties which generate income. He can’t give exact numbers. These would be in his income tax returns which have not been disclosed in these proceedings.

[123] He doesn’t know if he has refinanced property other than his mortgage. He hasn’t sold any.

[124] As an insurance broker, he knows that he is bound by the terms of Regulation 991 issued under the Registered Insurance Brokers Act. He is referred to specific sections which deal with the duties of a broker, including integrity, diligence, efficiency, quality, competence, honesty, and candor.

[125] He recognizes being bound by these provisions.

[126] He is also aware of the terms of his employment contract with the IHM dated March 9, 2001.

[127] Counsel refers him to a number of provisions of the said contract which are acknowledged by T.C.

[128] He is aware of the obligations set out in Part 1 of the contract in regards to clients and the non-competition clause.

[129] He agrees that the 90 kilometers territorial restriction from Prescott was varied at his request at the time the contract was signed.

[130] In regards to article 8 of the contract and the vesting, he knew this meant he couldn’t compete within 90 kilometers of the Town of Prescott. His evidence is that the defendant G.K. joked about it and stated that it would never stand in Court. He states having agreed since he wanted the job and the vesting.

[131] He understood that the amount was based on his book of business and would be paid over a period of five years of leaving IHM.

[132] T.C. admits that under his present employment as a broker, he works from his home which is located within 90 kilometers of Prescott.

[133] He knew that there was a computerized abeyancing system at IHM. He doesn’t recall if he had a password for same but he did use this system. He added notes and could read the abeyances entered in any file.

[134] He agrees that binding is the process by which a broker obligates an insurance provider to a client. An insured is temporarily covered through a binder. It is in force for a period of time. The insurer may refuse or ask more questions.

[135] As a broker, he has binding authority. The terms depend on the insurer. He had binding authority while working at IHM.

[136] He believes that a binder with Portage was effective for 30 days.

[137] When the subject matter of the coverage is a home, he is required to submit an “RCT” (replacement cost) to the underwriter. He doesn’t remember if the “RCT” needed to be filed within 5 days.

[138] When asked if he knew that his binding authority with Portage had been suspended from April 2010 to April 2011, he responds that he knew he couldn’t send in new application to Portage. This is what G.K. told him.

[139] T.C. states that he has no knowledge of his binding authority having been suspended by Portage prior to April 2010.

[140] Nor does he have any knowledge of Portage having concerns with his work when submitting applications. It was never clear to him that Portage had concerns with his book of business with them.

[141] He is questioned in regards to the Cryderman incident. The suggestion is that the issue was his failure to file an application in a timely way.

[142] He has no recollection of a conversation with G.K. concerning late filing of this application. His only recollection is in regards to an impaired driving. Portage did not suspend his binding authority.

[143] He does not remember a conversation where he was required to tell the client that he was left without insurance. All he knows is that he signed the client with another company.

[144] He is asked if he agrees that his obligation to a client is to ensure that the application and binder are submitted to the insurer in a timely manner.

[145] He explains that his obligation is to provide the documents to the CSR who then processes the application. He does his work by giving same to the CSR.

[146] Counsel suggests that his broader obligation is to ensure that the documents are filed with the provider.

[147] The essence of his evidence is that he acted in accordance with the instructions given by G.K.

[148] T.C. is cross-examined in regards to his dealings with Leanne Sullivan.

[149] He spoke to her during the spring or summer of 2010 in respect of their intentions with their home. They were selling their home and moving to their parents pending the move to their new home.

[150] He accordingly wrote up documentation for a tenant package.

[151] He knows that this documentation never reached Portage.

[152] He confirms that in September 2010, he provided their lawyer a binder for their new home.

[153] He is aware that this application, and RCT were not received by Portage.

[154] He recalls speaking to Leanne Sullivan in regards to this application. He spoke to her once. They needed the binder in a “hurry”. He doesn’t remember if she raised the status of the tenant package during this conversation. The binder for same would have expired by then as it was sent in the Spring. His evidence is that “…he either gave the paperwork to Patricia or he sent it in…” He did not follow up on the tenant application as it “never entered his mind…”

[155] T.C. rejects the suggestion that the documents were to be sent within 5 days of the binder being sent to the lawyer. His view is that the binder is for 30 days.

[156] G.K. had raised the question of submitting documents in a timely way with him.

[157] His evidence is that he doesn’t specifically recall issues with him being late in filing documents with Portage.

[158] He had not spoken to G.K. or Tracy about the Sullivans file. His view is that this was not a new application with Portage as it is simply changing location. He was doing what G.K. had told him to do. He was following the boss’s order.

[159] T.C. doesn’t recall sending in an RCT for the Sullivans’ home. He did prepare one based on the information contained in the McKinnon file.

[160] In November 2010, he spoke to Leanne Sullivans who expressed concerns as she had not received written confirmation of coverage by Portage for their new home.

[161] T.C. explains that while he knew this exceeded the 30 days coverage under the binder sent to their lawyer, he believed the documents were being processed by Portage.

[162] His evidence is that in his mind, there was a policy in force even if a binder expires after 30 days and requires a written extension.

[163] He states that following his conversation with Leanne Sullivans on November 10, 2012, when she expressed concern, he spoke to CSR Patricia MacDonald who told him that Portage were way behind. He believed there was coverage based on this information. It was now with Portage. His view is that once the documents are sent to the insurer, it is out of his hands. He has done his job as a broker once the documents are submitted. He accordingly did not make any further enquiries.

[164] He denies the suggestion that he hadn’t spoken to Patricia about the Sullivans’ file.

[165] He agrees that Portage had never actually received the documents.

[166] The only inquiry he made was when he spoke to Patricia. He is certain he spoke to her about this.

[167] He didn’t ask her to check with Portage nor did he take steps to check himself.

[168] His evidence is that he had received instructions from G.K. to treat her as an “equal”. So that he wasn’t going to tell her how to do her job.

[169] He states that he had no dealings with the Sullivans from November 2010 to January 26, 2011.

[170] He did however decide to verify the distance between the Sullivans’ new home and the fire hall. He just decided to check the distance. He explained “the distance hit me” as it could lead to an issue of coverage. It could also impact on the premium.

[171] He explains that he tried to contact the Sullivans. He tried to call them for a day or two and then Ms. Sullivan called RIBO.

[172] He received a call on January 26, 2011 from Pamela Southern, an underwriter with Portage. He doesn’t remember her telling him that there was no coverage for the Sullivans’ new home.

[173] She would have told him about options. He states that she did not tell him and he doesn’t remember her telling him that there was no coverage.

[174] Ms. Southern called him to advise that the Sullivans were concerned. She confirmed that they had not received the endorsements.

[175] She would also have told him that there was a policy in force for the old house which would be cancelled and to send in a new application for the new house.

[176] He denies that she also told him that he did not have binding authority with Portage.

[177] Following his conversation with Ms. Southern, he attended the Sullivans’ home.

[178] T.C. is questioned in regards to his evidence given during the September 10, 2015 examination for discoveries:

“A. All I remember is trying to get coverage for the clients…not pointing fingers to Portage or Patricia or whatever…that was not my chief aim…I wanted to make sure these people had coverage…”

“Q. Did you tell the Sullivans on that day they were not covered?”

“A. I can’t remember the exact words that I said to them…I went to see them that day and I gave them quotes.”

[179] At trial, he states that, at that point, he knew there was a possibility that the Sullivans were not covered by insurance. He maintains that he believed they were covered under the old policy.

[180] He also felt that the fact Ms. Southern had spoken to him and provided instructions, served to confirm his binding authority with Portage.

[181] He is not sure when he prepared the North Waterloo Insurer application for the Sullivans. The quote was shown to them. It was a better quote which they refused.

[182] His evidence is that he did as he was told by Pamela Southern. He suggested to them backdating a cancellation for a refund as suggested by Ms. Southern. When asked if he felt this was fair to the Sullivans he responds that he was taking an order from an underwriter.

[183] The Sullivans refused to sign the cancellation. They also refused the quote from the other insurance provider. He states that he left it up to them.

[184] He is asked why he would offer a cancellation if there was a possibility that they could be covered. He explains that he offered the options raised by Pamela Southern. The Sullivans did not agree. He left the house without telling them there was a chance they may not have insurance. He states that he believed they had insurance under the old policy.

[185] He is again cross-examined on his evidence at discoveries. Counsel notes the following questions and answers:

“Q. Did you tell the Sullivans at that time that in fact they were not covered, they had no insurance?”

“A. I can’t remember the exact conversation.”

“Q. Well you left there and they had not elected to apply for insurance. Is that right? They were going to think about it over night?”

“A. Correct.”

“Q. And at that time you were aware they did not have insurance…you were aware?”

“A. Correct.”

[186] His explanation is that he had binding authority. He had verbally bound Portage just as G.K. did when he called 10 minutes after he had left.

[187] He is asked whether he felt he had an obligation to tell the Sullivans that there was an issue. He responds that he told them about his concerns with the 14 kilometers.

[188] Counsel suggests that Leanne Sullivans asked him whether there was coverage and he would have stated yes which is why she felt there was no urgency. He responds:

• He doesn’t remember what was said;
• He doesn’t know if there was coverage, it is for the Court to decide;
• He tried to be honest;
• He believed in his heart that there was coverage.

[189] He agrees that this was not initially reported to G.K. He did later that night. He doesn’t recall G.K. trying to reach him all day. It is possible that he called G.K. later that night. He can’t recall his exact conversation with G.K. He would have given him a summary. He can’t say for sure what he told G.K.

[190] He had a face-to-face meeting with G.K. the following morning.

[191] In regards to the filing of materials with insurers, he remembers being told, a few times, that this should be done quickly. He acknowledges having received a letter which directed that materials were to be submitted within 5 business days.

[192] He states that it wasn’t his understanding that this was a policy. The 30 days period was the time frame to get the documents to the insurers.

[193] T.C. is cross-examined on his dealings with client Strader. He rejects the suggestion that he binded this client with Portage. He did not quote Portage to him. He presented the application to Patricia. He hadn’t spoken to Tracy. Tracy is the one who bound Portage once she signed the application.

[194] There was an arrangement to deal with the fact that he was suspended from binding Portage whereby it would be bound by another broker.

[195] Counsel suggests that this was contrary to the existing practice whereby the arrangements were made with Tracy prior to the client signing the application.

[196] He has no knowledge of Tracy receiving the application signed by Mr. Strader 3-4 days before the expiry of the binder. He would have placed the documents on Patricia’s desk and has no knowledge of what transpired after this.

[197] T.C. is questioned on his January 27, 2011 meeting with G.K.

[198] The meeting began at 7:00 a.m. Tracy was present for part of the meeting which lasted for several hours. He was in and out. The purpose was to find a solution.

[199] His evidence is that he had prepared a report for RIBO prior to attending the meeting. He was told to prepare same the night before by G.K. He wanted him to prepare a “mock-up” to send to RIBO and provided the name Barbara Daguish from whom Judy Murray had received a call.

[200] He had brought the Sullivans’ file which included fax cover sheets. He doesn’t recall showing G.K. a RCT. He doesn’t recall G.K. pointing out that the RCT was dated the day before.

[201] He denies having told G.K. that he had faxed the documents to Portage. His evidence is that he told G.K. he didn’t know whether or not he had faxed the documents to Portage. He assumed they were couriered because there were no fax cover sheets.

[202] While he felt intimidated by G.K., he agrees that the spirit of the meeting was to try and resolve the problem. They were trying to determine what happened and how to resolve things.

[203] G.K. was speaking to Pamela Southern. Their purpose was to ensure the Sullivans were covered.

[204] T.C. testifies that G.K. had told him the night before that the Sullivans had a binder. He describes G.K. as “upset” and “demanding”. The process was being worked out. G.K. was trying to back date the coverage similar to what Ms. Southern had discussed with him.

[205] G.K. had him fax documents to Pamela Southern.

[206] There was no panic.

[207] He states that the discussion concerning RIBO was all mixed up during the meeting.

[208] He felt intimidated by the words used by G.K. which were:

• “well that’s not going to fly” and “that’s not how we do things” when he reviewed the first account to RIBO;
• “to be honest and forthright” with RIBO;
• The most he would get is a slap on the hand and directed to take a few courses;
• He had gone through the process before and that he would help him through the process;
• He had “beers with the boys from RIBO”; he interpreted this as referring to G.K. having power; he took this as a threat.

[209] He doesn’t remember being told the following:

• RIBO was not on a witch hunt;
• It is better to cooperate with RIBO.

[210] He describes himself as being upset.

[211] T.C. notes that he was in G.K.’s office and that he is the president.

[212] G.K. would have told him to remove parts of his statement.

[213] In response to counsel’s suggestion that G.K. had asked him to remove portions of his statement which he could not agree with if asked by RIBO, T.C. states that the deletions were at his demand. He didn’t know his motive at that time.

[214] There are 2 statements submitted to RIBO by T.C. which are not accurate.

[215] He is questioned on which parts of these statements are not true.

[216] His response is as follows:

• The statement suggests that he had sent the materials to Portage; this is misleading since he had no idea if he or Patricia had done so;
• That he will no longer submit documents to the companies but will process same through CSR.

[217] He confirms that G.K. had directed him following the January 26, 2011 event not to send documents directly. T.C. agrees that this was not false.

[218] T.C. admits that he had a list with names of some clients (half a dozen) when he left IHM. However, he denies having consulted this list.

[219] He did not solicit business from IHM clients. However, he had requests from clients who wished to leave IHM.

[220] His evidence is that these clients approached him and provided written confirmation of their wish to leave IHM and deal with him.

[221] He is shown a number of these notes signed by clients. He explains that the content of these notes were dictated by the clients. It was their decision.

[222] He agrees that the list of clients belonged to IHM. It was given to him by G.K. He did not consider this test.

[223] A portion of the special damages sought by him relate to legal fees incurred in the RIBO proceedings. He also makes reference to these proceedings.

Christina Wright

[224] Christina Wright is the Plaintiff’s step-daughter.

[225] She testifies that on May 7, 2011, she called the office of IHM to speak to T.C.

[226] She was told that he was not available for legal reasons or legal matters.

[227] The person she spoke to was Patricia MacDonald who she didn’t know. Ms. MacDonald did not elaborate on what she meant by legal matters.

[228] Ms. Wright thought that something serious had happened and called her mother.

[229] In cross-examination, she states that she had taken notes but she doesn’t have these notes anymore. She had written it down and was struck by the words. It was a 5 second phone call.

Peter Morris

[230] This individual has significant experience in the insurance business as evidence by his resume.

[231] He spoke of the different positions and responsibilities in this field.

[232] He describes the distinction between a producer and a customer service representative.

[233] A producer’s job is sales and to generate new business. This entails:

• Meeting and discussing with clients;
• Determine the appropriate coverage;
• Find the best insurer;
• Negotiate.

[234] A CSR assumes responsibility for the file and will do the day-to-day work. The work of a CSR tends to be more clerical.

[235] Abeyancing is described as being everybody’s responsibility. The purpose is to ensure there are procedures and policies in place.

[236] An advance system is a “reminder system”. It sets up reminders. The regulations require such a system in a brokerage firm. It is mandated by RIBO.

[237] The responsibility is shared between the principal broker who ensures that it is followed and the person who is handling a file. It typically falls with the CSR.

[238] A producer may or may not know how the advance system operates. He opines that he wouldn’t say that a producer can simply wash his or her hand from the system if a client calls the producer directly.

[239] In regards to the maintenance of files, he notes that same must be maintained and preserved. The correspondence must be safeguarded. He describes this as a shared responsibility between the principal broker who sets up the procedure and the producer.

[240] He states that the sanction imposed on T.C. by RIBO is one at the lighter end.

[241] Finally, he explains that vesting provisions tend to go along the same lines. It deals with a producer leaving a brokerage.

[242] He notes that there are no standard vesting provisions.

Donna Peer

[243] Donna Peer was called as a rebuttal witness by T.C.

[244] She states that she does not know T.C. and has never met him.

[245] In her dealings with IHM, she only dealt with G.K.

[246] The issue with G.K. and IHM revolved around the fact that they had discovered that only 12 out of 16 units were covered by insurance.

[247] Once the error was discovered, she was upset and contacted RIBO.

[248] She also notes that G.K. had failed to provide them with waivers which they were required to sign.

[249] She states that there was no way they would sign these waivers. This was in January 2011.

[250] She attended G.K.’s office one morning at 7:30 a.m. She had spoken to Kelly at Portage who advised her that she wasn’t licensed to speak to her.

[251] She reports that G.K. told her he did not have time for her.

[252] She never received an apology.

[253] According to her evidence, no one had explained to them the reason for the waiver.

[254] She doesn’t know why her insurance went from Economical to Portage.

[255] In cross-examination, she maintains that she was never provided with an explanation as to why 4 units had not been covered.

[256] She rejects the suggestion that there was a pre-set meeting for 10:00 a.m. with G.K. on February 12, 2011.

[257] She also disputes the suggestion that G.K.’s hands were full when she met him in the parking lot. She states that he was walking from his car. She called his name and told him she wasn’t going to sign these waivers. She states that he told her the insurance would be cancelled if she didn’t sign waivers.

[258] She doesn’t’ know if G.K. had spoken to her husband. Nor if there was a delay between discovery of the problem and making sure there was coverage.

Leanne Sullivan

[259] Ms. Sullivan has known the Plaintiff for most of her life. She has dealt with him as a broker since early 2000.

[260] They had sold their home located in Iroquois in June 2010 and purchased a home located in Brinston. The closing was in September 2010.

[261] The plan was to reside with her parents from June to September 2010. She contacted T.C. with a view of arranging for a tenant package and convert coverage to their new home.

[262] She believes she contacted T.C. between March and June 2010. She spoke to him on the phone.

[263] Her understanding following her conversation was that there would be a tenant package in place which would be changed to a home coverage once they moved to Brinston.

[264] She testifies that when the transaction was closed in September 2010, they had trouble getting a binder for the new home. They made a couple of calls. The binder was ultimately sent to her lawyer by fax.

[265] They moved in the house. In November, T.C. came to the property and took photographs and measurements. They discussed the possibility of getting farm insurance for the property.

[266] In January 2011, she realized that they had not received any documents confirming coverage. She thought it was odd. She pulled out the old policy for the house in Iroquois and called Portage. She spoke to a girl named Pam. She started to explain and noted that Pam seemed awkward.

[267] Pam confirmed that their coverage was for the home in Iroquois.

[268] Pam stated that she would call T.C. and tell him to get in contact with her.

[269] Ms. Sullivan explains that she was a little worried at that point. Worried that nothing had been done and there was no insurance on their property.

[270] She then called her other brokerage and was advised that they couldn’t discuss the matter. She was referred to RIBO.

[271] She called RIBO and spoke to Barbara. While on the phone with her, T.C. arrived at her house.

[272] She estimates that 30 minutes had elapsed from the time she called Portage and T.C. arriving at her home while she was speaking to Barbara from RIBO.

[273] She hung up with Barbara and T.C. came in. He had documents with him. There was a policy from North Waterloo, a quote and other paperwork to sign. She told him she wasn’t comfortable signing anything until her husband was there.

[274] T.C. left and she believes he returned that same evening. Her husband was there and they had decided that they were not going to sign the paperwork.

[275] The witness is asked to describe was she told T.C. during these two visits.

[276] During the first visit, she asked him something along the line of “was the insurance done…had he made the changes…” He responded that he had but Portage was so far behind in their processing they just hadn’t got the paperwork out yet”.

[277] She expressed to him that she was concerned that she may have no insurance coverage.

[278] She doesn’t recall anything else said by T.C.

[279] Her husband arrived home after work and she told him what happened. They looked at the paperwork. While T.C. was present, her husband became very upset and left the meeting and went outside.

[280] They discussed the insurance and T.C. stated that the documents had been changed and that Portage were way behind. All they had to do was to sign the paperwork. Also, there was the quote from North Waterloo.

[281] There was a cancellation document.

[282] The quote from North Waterloo was for insurance on the new property.

[283] The cancellation was to cancel the insurance on the property in Iroquois.

[284] She doesn’t remember why a cancellation was required. She assumes it was to allow for the new process. She doesn’t know why, T.C. never really explained the reason for the cancellation.

[285] She told T.C. that they were not going to sign anything. She believes she told him she had been in touch with RIBO and that she would let him know what they would do after contacting them again.

[286] She had no further dealings with T.C.

[287] Following that meeting, she received a call from G.K. from IHM. He told her what had not been done with the policy and that a binder was in place.

[288] She is cross-examined in regards to T.C.’s visit at her new home in November 2010.

[289] She doesn’t recall telling T.C. that she hadn’t received any documents confirming coverage during his November visit but it is possible.

[290] It is also possible that it was in November that he told her that Portage was way behind but she doesn’t recall. It is also possible that he told her he would go back to the office and check.

[291] She doesn’t recall receiving a voicemail from T.C. prior to her calling Portage in January 2011. She doesn’t think that such a message was left by him.

[292] It is possible that T.C. raised the issue of the 14 kilometers when he attended her home on January 26, 2011.

[293] It is also possible that T.C. told her that the North Waterloo policy would provide coverage at a lower rate.

[294] In re-examination, she states that she believes T.C. told her on January 26, 2011 that there was coverage. That Portage were way behind. The paperwork hadn’t been done yet.

Pamela Southern

[295] Pamela Southern works for Portage as an underwriter.

[296] She knows K.G. and knows of T.C.

[297] On January 26, 2011, she was in the office and received a phone call from Leanne Sullivan who was inquiring about her policy.

[298] The witness explains that as an underwriter she is not licensed to deal directly with the public. She refers such calls to the broker.

[299] The policy number and address provided by Ms. Sullivan did not match. The policy was the home in Iroquois and not the home in Brinston.

[300] Ms. Sullivan was advised of this and told to call T.C. She would also call him.

[301] Ms. Southern testified that she called T.C. and told him about her conversation with Ms. Sullivan. She asked him what was going on. She wanted details. He was advised that the insurance was for the home in Iroquois but that he had no binding authority for the new home in Brinston.

[302] She states that she asked him for details on the Brinston property including the value. She told him that the value was over his binding authority and that he needed to call in for approval.

[303] Her evidence is that she wouldn’t usually direct a broker on how to deal with a client. She can’t recall anything which would suggest that she had done so with T.C.

[304] Ultimately, she reports having spoken to G.K. and coverage was placed on the new home. She dealt mainly with G.K. in doing so.

[305] The Sullivans later cancelled with Portage.

[306] In cross-examination, she is referred to her notes used to refresh her memory in regards to her discussion with T.C. She agrees that the 13.5 km notation refers to the distance between the new home in Brinston and the fire hall. She is then asked if this distance was more than what was stated in the application. The witness responds that there was no application sent. There was one sent following her conversation with T.C.

[307] Counsel raises the point with the witness that her notes do not refer to the question of “binding authority” and “value” exceeding T.C.’s binding authority. The notes refer to other details such as June 25, 2010 being the closing date for the home in Iroquois and September 17, 2010, the home in Brinston. The witness responds that her notes are made so as to refresh her memory.

[308] Reference is also made to her notes of January 27, 2011 which relate to her conversation with G.K. These indicate that G.K. would have told her:

“Endorsements supposedly sent but can’t prove so”

[309] Ms. Southern agrees that the notes do not refer to T.C. having exceeded his binding authority by reason of the value of the home.

[310] She recalls speaking to T.C. after January 26, 2011 in order to get new policy issued for the Brinston home. She wanted to make sure she had all of the required documents for her file. She has no notes of this conversation. Her practice is not to make notes when she is the one who initiates the calls.

[311] She is unaware of what notes were sent by Portage management to RIBO. She provided all of her notes to the branch manager, Pino Dutillio.

[312] She is then questioned in relation to what is referred to as “screen shots from company system” which are notes recorded of communications with brokers.

[313] Again, she doesn’t know if these were provided to RIBO.

[314] Page 260 of these notes, items 9 and 10 are identified as the witness’ notes in regards to her conversation with Ms. Sullivan. These notes were recorded later than the handwritten notes. The point is made that these do not refer to T.C. having exceeded his binding authority.

[315] Ms. Southern had no dealings with the matter involving Kevin Wright.

[316] She is questioned in regards to a fax dated February 9, 2011 wherein G.K. would have requested documents from Portage. Specifically, G.K. asked the following:

“could you send the supposed endorsements as well…”

She recalls this exchange with G.K.

[317] The witness believes that there was a request from RIBO for a statement from Portage. She also believes that she participated in the preparation of this statement. She has no knowledge of whether G.K. participated in the preparation of this statement.

[318] She is then questioned on an e-mail dated February 25, 2011 sent by regional manager of Portage, Pino Dutillio to G.K. Ms. Southern was included (c.c.) in this e-mail. Jeff Frydman, the marketing manager for Portage, was also included (c.c.).

[319] The e-mail states the following:

“Please find attached a reply we would like to send to Nadine from RIBO…please advise if this is sufficient to resolve this matter….Pino and Pam”.

[320] Ms. Southern believes they had received a request from G.K. to prepare a statement to send to RIBO.

[321] She confirms that she recognizes the e-mail and that it was sent on behalf of Pino Dutillio and herself.

[322] There was a draft letter attached to the e-mail addressed to Nadine from RIBO. Ms. Southern confirms having participated in the drafting of this letter.

[323] She doesn’t know why Mr. Dutillio sent a copy of the proposed letter to G.K.

Jeff Frydman

[324] Jeff Frydman has been a marketing manager with Portage for over 20 years. As such, his work is to set goals with brokers and discuss concerns.

[325] Portage had a contract with IHM. He knows G.K. as the owner. He is unsure if he has met T.C. but he knows him as a producer with IHM.

[326] He was made aware of concerns with T.C.’s business by underwriters at Portage. The concerns were with the selection of business that he would send in.

[327] He raised these concerns with G.K. and the staff at Portage.

[328] He explains that these concerns were noted yearly in documents. Underwriters would also make notes. In turn, he would prepare an action plan.

[329] Mr. Fryderman states that he would have raised these concerns with G.K. He can’t provide a date when he spoke to G.K.

[330] He does recall a conversation with G.K. in regards to issues with T.C. These concerns were the ongoing issues of new business. They discussed suspending him from writing new business for Portage.

[331] As to whose idea it was to suspend T.C., he states that G.K. had put forth the idea.

[332] His understanding is that the purpose of the suspension was to suspend his authority to bind Portage for all new business. This suspension served to address the concerns he had raised with G.K.

[333] He indicates having learned of the Sullivan file. This raised concerns and he put in a full suspension with the underwriters.

[334] He explains that when they suspend a broker from binding new business, they still allow them if there is an endorsement they have to send in on an existing account. However, when the Sullivans’ file occurred, he advised the underwriters there would be no dealings anymore with T.C. for “new business, endorsements, anything…”.

[335] This full suspension was never lifted or amended.

[336] The witness states that he told G.K. that this suspension would never be lifted for T.C.

[337] In cross-examination, he confirms that he meets with the broker owners.

[338] He would meet G.K. a couple of times per year and would speak to him on the phone. He never had a personal relationship with G.K.

[339] He doesn’t recall having met T.C. in person. He might have been once or twice at the IHM office in Cardinal. His meetings with G.K. were at the Prescott office.

[340] He is asked to explain what is meant by concerns with T.C.’s “business and selection of business…”. He agrees that this relates to the quality of the clients he would send in.

[341] In his discussions with G.K., he would refer to the accounts not being “good accounts” which he defines as conforming with Portage rules which are filed with the government. It does not refer to client with lower credit risks.

[342] He explains that he doesn’t deal with rules. He deals in “accounts” and “growth”.

[343] He is questioned in regards to the Anthony Cryderman matter. He states not remembering the account which led to the suspension.

[344] Nor does he recall an underwriter turning down an application for tenant coverage by reason of a lost driving license.

[345] He is referred to an e-mail exchange with G.K. wherein they discuss the fact that T.C.’s binding authority is revoked as of April 1, 2010 for one year as a disciplinary action regarding a recent submission.

[346] The witness agrees that this may relate to the Cryderman matter based on the paper trail. He assumes it does refer to this matter.

[347] He agrees that he sent this e-mail to his staff setting out his expectations in relation to new accounts. He refers to G.K.’s actions as to how Portage and the brokerage will be protected.

[348] He explains what he looks at during his annual reviews. This includes all of the business, the number of policies, the applications which are denied and cancellations.

[349] He is aware that Portage had sent documents to RIBO in relation to their investigation into T.C.’s actions. He was not involved in this matter in any aspect.

[350] He is referred to his 2010 year end planning report for IHM. This document wasn’t shared with G.K.

[351] He would use this report in his discussions with G.K.

[352] The report states under the heading “marketing recommend action plans for 2011”:

“…continue to monitor new business from Tim if Greg lifts the ban on him writing new business…”

[353] Mr. Frydman agrees with the suggestion that G.K. is the one who put the ban on writing new business. He had discussed this with G.K. This ban was on new business. Portage did not have an issue with an existing policy needing a change. But if G.K. had an issue internally, that was up to him.

[354] He is questioned on his knowledge of the Peer matter. He has no recollection. He agrees that a cancellation by a client of a $14,000 premium is a “good size account”.

[355] He was made aware of T.C.’s termination on May 9, 2011 by IHM. This was communicated to his staff.

[356] Finally, he confirms that the brokerage agreement between Portage and IHM was terminated in 2015.

[357] The reason of the termination was not by reason of any individual associated with IHM but by reason of the loss ratio. He had suspended new business with IHM either in 2013 or 2014 because of the loss ratio.

[358] G.K. terminated the agreement with Portage in 2015.

Patricia MacDonald

[359] Patricia MacDonald was a licensed insurance broker in Ontario. She was employed by IHM in 2009.

[360] She was trained in regards to office procedure by Tracy Young who was the office manager. She was taught the filing process and became a CSR at the Cardinal office in June 2010. As such, she worked with T.C. There was nobody else at the office.

[361] She testifies that she didn’t know the Sullivans. She knew their names as they had called the office. It is later that she became aware of an issue with these clients. It was after the fact, once RIBO got involved.

[362] She provided a statement to RIBO. There was no reason for her to know about this matter prior to the investigation.

[363] She has no recollection of T.C. asking her questions in regards to the Sullivans file in November 2010.

[364] She explains that if she is asked to look into a situation where a client has not having heard anything from an insurer, she would look at notes and call the company. She would ask questions from the company. She would then put notes on the file.

[365] The witness describes the “Power Broker” advance system. It is her belief that T.C. put notes in the system. She states that it is not a complicated system. You can see what is going on with a file if you enter the system.

[366] Her evidence is that all companies get behind some 4 to 6 weeks. She has never seen a provider being 5 months behind.

[367] She confirms that she did speak to someone from RIBO. She also spoke to G.K. and asked what she should put in her statement to RIBO. She wanted to make sure, G.K. did not tell her what to say other than telling her to tell the truth.

[368] She states that there was never any agreement to do something to harm T.C.

[369] Ms. MacDonald denies having told someone who had called that T.C. wasn’t available because of legal reasons. She states never having said this. She would say that he wasn’t working there anymore.

[370] In cross-examination, she doesn’t specifically recall the May 28, 2010 e-mail sent by G.K. to both her and T.C. (tab 50).

[371] She describes that the work procedure for new business was such that T.C. prepared the documents and give same to her. She would send it in to the provider with a cover page. She would bring or fax documents to the Prescott Office.

[372] She confirms that she was usually responsible for abeyancing.

[373] She assumes that T.C. knew how to operate the abeyance system since he had been working there for 10 years.

[374] She states that G.K. never told her of another RIBO investigation.

[375] She reiterates the point that she has no recollection of the Sullivans prior to the RIBO investigation. To her knowledge, she had nothing to do with these endorsements. She had no involvement with the Sullivans.

[376] She also re-affirms that G.K. did not tell her what to say to RIBO. Her evidence is that he told her to tell the truth. That is all he maintained.

[377] She describes the procedure at the Cardinal office as she did in examination in-chief. T.C. wrote up the new business and he would give her the documents.

[378] Lastly, she testifies that her instructions were to advise people calling for T.C. that he was not available. She was never told to mention “for legal reasons.”

[379] She is questioned in regards to her May 18, 2011 e-mail response to T.C. when he asked her what reason was being given for his absence. Her response was “…I am just to say that you are away for a few weeks. For legal reasons I am not able to say more. They don’t get into it with me…” She explains that she only used the words “for legal reasons with T.C. since he was involved. She didn’t use the words “for legal reasons” with others.

Derek Faulconer

[380] Derek Faulconer was presented as an expert witness on questions of binders, ethics and vesting in the insurance business.

[381] He explains the concept of binding as follows:

• It means the effecting of insurance pending the receipt of the policy;
• A broker is provided authority to bind by the provider and the principal broker;
• The manner of binding depends on the agreement; it is typically exercised in writing;
• The broker must ensure that the authority to bind is not exceeded which depends on the agreement;
• Different brokers may have different authority to bind within a brokerage.

[382] On the issue of a broker’s ethical obligation, reference is made to the code of conduct which sets out what is expected from all brokers. This includes candor and honesty.

[383] A principal broker is tasked with the responsibility of making sure that each broker understands his or her obligations and authority.

[384] There is a duty to protect the public.

[385] A principal broker must act when aware of a breach of duty. The breach must be rectified and reported to errors and omissions insurance.

[386] Finally, the witness describes the appraisal of the value of vesting provisions through the “rule of multiples”.

[387] In cross-examination, he testifies that the binding authority of a broker is determined from the agreement and the product manual.

[388] He explains that a principal broker is responsible to set up procedures and policies within the office. There is a division of labour between a broker and a CSR.

[389] The rules of conduct in regards to how a broker is expected to treat another broker (i.e. integrity, avoiding criticism) applies to principal brokers. The intent is that accusations should not be made before there is some certainty.

[390] In the course of an investigation, RIBO will look into the operation of the brokerage, its policies and procedures.

[391] In re-examination, the witness confirms that a principal broker has an obligation to be forthright with RIBO and advise of concerns.

Gregory Kenney

[392] G.K. is the principal broker at IHM. He is the sole shareholder. He has been a licensed broker since 1994.

[393] T.C. was hired in March 2001. The employment contract is found at tab 16 of the document brief. The only change to this agreement was in late 2010 and dealt with the vesting provision. There was no consideration for the removal of this clause. The intent was that there would be no vesting if he was terminated.

[394] While there were issues prior to what led to his dismissal, these do not form the basis of the termination.

[395] T.C. was bound throughout by the terms of the contract.

[396] Specifically in regards to the non-competition clause set out in section 6(3) of the contract, the change was handwritten by T.C. He negotiated a restriction of 90 km of Prescott for a period of 3 years.

[397] He never told T.C. that this clause would not be enforceable. Such a clause was important to him. Cardinal is a small community. T.C. became the face of IHM. He wanted to protect his goodwill. He did not want him to become a competitor for a period of 3 years.

[398] He is of the view that the section 8 vesting provision was subject to the non-competition provision.

[399] The termination clause is found at section 9 and was never changed.

[400] T.C. was employed as a producer in March 2001. He agrees with witness Peter Morris’ description of a producer’s role.

[401] T.C. worked out of the Cardinal office. The CSRs were Tracy initially, Jessica and Patricia.

[402] T.C. was trained by him, Tracy and the providers. There is no basis for T.C. to believe that he did not receive training. He worked there for 8-9 years before termination.

[403] His view is that the abeyance system is not complicated. It would take 15 minutes to learn how to operate.

[404] G.K. doesn’t believe T.C.’s suggestion that he didn’t know how to use this system.

[405] Reference is made to T.C.’s binding authority with Portage having been suspended for one year and the March 29, 2010 letter. His view is that there is no room for confusion as to the meaning of this suspension.

[406] He also confirms knowledge of Portage’s letter dated April 12, 2011 stating that they would never restore T.C.’s binding authority.

[407] G.K. recalls a meeting with T.C. following the March 29, 2010 letter. He recognized that there were times when Portage would be preferable for a client. The practice was for T.C. to prepare the application and present same to him or Tracy for their review. This arrangement was necessary since T.C. had no binding authority with Portage.

[408] G.K.’s evidence is that T.C. could not have understood that this was only for new business. This was never raised by T.C. with him.

[409] The office procedure in Cardinal was that T.C. worked with a CSR. There was no manual. There were clear policies which were discussed during meetings. T.C. could seek clarifications.

[410] He notes that Stacy would attend the Cardinal office once or twice per month.

[411] G.K. explains that T.C. was not dismissed because of problems with office procedures. Binding is not an office procedure.

[412] Binding is one of the reasons why he was released. Binding requires authority to do so. It is a relationship between the provider and the client.

[413] He agrees with the evidence provided by witness Jeff Frydman.

[414] Jeff Frydman had concerns with T.C. G.K. refers to the Cryderman file and that he had discussed this witness Frydman. His goal was to please Frydman and attempt to work on procedure. He told him T.C. would be suspended for 1 year. He doesn’t believe saying there would be exceptions.

[415] T.C.’s employment was terminated on May 6, 2011. Ultimately, this was based on the Sullivans’ matter and IHM’s relationship with Portage.

[416] G.K. states that as the RIBO investigation unfolded, the extent of T.C.’s unethical conduct came obvious. He realized the extent of his conduct. T.C. had lied to the Sullivans.

[417] In regards to his relationship with Portage, he explains that this provider can fill a void of 20% of the clients’ needs. As an owner and principal broker, he must consider these needs.

[418] When he was told by Frydman that T.C. was suspended forever, this meant a loss of 20% of the market. The import was such that his competitors could fill that need.

[419] G.K.’s version of the Sullivan matter is that he first learned of the concerns on January 26, 2011 in the afternoon when he received a call from Julie who works for IHM. She stated that RIBO had called in regards to a client. She could not find the file. T.C. was named as the broker. He tried to reach T.C. but was unable to do so.

[420] He spoke to RIBO. The concern was with coverage. He didn’t say anything since he had no information.

[421] At around 8:00 p.m., he received a call from T.C. He notified him that RIBO had called about the Sullivans. T.C. confirmed that he had the Sullivans’ file. G.K. told him to attend the office at 7:00 a.m. the following morning. There was no other discussion at that point.

[422] The meeting took place on January 27, 20911 in his office in Prescott. Tracy was there as a witness. He wanted a witness.

[423] G.K. denies having asked T.C. to prepare a written account for RIBO prior to this meeting. T.C. was told at the meeting that RIBO had asked for a written account. He had not brought an account with him that morning. T.C. had brought the Sullivans’ file.

[424] G.K. asked him what had happened. T.C. explained that they were existing clients who needed coverage while living at their parents’ home. They had bought a house. He issued the endorsement.

[425] T.C. gave him a fax and said this is what was sent to Portage. He was showing him documents from the file.

[426] G.K. states that the last time he had seen this file was a month or 2 after. The file had been sent to RIBO. Nadine from RIBO told him that the file was returned to them. RIBO subsequently stated that they had never received the Sullivans’ file.

[427] A September 16, 2014 e-mail from RIBO states that they have never received the Sullivans’ file. IHM does not have a copy of the file. He believes Tracy had sent in the file to RIBO.

[428] G.K. testifies that he was shown a fax cover sheet to Portage during the January 27, 2011 meeting. There was no transmission confirmation. T.C. did not have an explanation for this. T.C. would have told him that he had faxed the documents to Portage.

[429] T.C. was asked for an RCT. G.K.’s evidence is that T.C. provided one which was dated the night before.

[430] G.K. explains that the purpose of the discussion was to determine whether there was coverage. He wanted T.C.’s understanding of what happened. G.K. was concerned with the absence of confirmation that the endorsements had been faxed to Portage.

[431] G.K. wasn’t told about a conversation with Pam from Portage. Nor did T.C. raise North Waterloo as an alternative. He didn’t talk of the 13 km issue. He did not mention his visit with the Sullivans.

[432] The meeting ended before 9:00 a.m. He was going to contact RIBO and Portage and ensure there was coverage. He had a conversation and bound the risk with Portage. This served to correct the question of present and ongoing coverage but did not address the issue of a gap where there was no coverage from June 2010 to January 2011. He explains that the insurance was back dated to cover this gap.

[433] G.K. explains that T.C.’s offer to the Sullivans for coverage with North Waterloo would not have addressed the gap noted above.

[434] G.K. states that he now has a better understanding of what happened.

[435] He opines that he didn’t know much on January 27, 2011. He believes T.C. had an obligation to provide him with more information. He states that T.C. did not mention the following:

• His meeting with the Sullivans;
• Leanne Sullivan having raised concerns in November 2010;
• The explanation that Portage was way behind.

[436] Once the meeting was over at 9:00 a.m., T.C. assisted him in faxing documents to Portage. He had a conversation with Barbara from RIBO who wanted to know if the Sullivans were covered. He told her that they were covered.

[437] Barbara asked for T.C.’s version of events. This was conveyed to T.C. by G.K.

[438] G.K. confirms that he had not decided to dismiss T.C. by January 31, 2011. This decision was made after January 31, 2011.

[439] He explains that while he had a picture of what had happened, this picture grew as he received documents.

[440] He notes that Portage had suspended T.C. for life. He couldn’t go to bat for him. It was clear that he couldn’t trust him anymore.

[441] He hand delivered the termination letter to T.C. on May 6, 2011.

[442] His thinking was that T.C. had all of this information on January 26, 2011. There was no coverage. He hadn’t called him. He drove to the Sullivans and lied to them.

[443] He states that the evidence heard in this trial supports his belief that T.C. wants to cover his tracks. There was a gap. He wonders why T.C. raised North Waterloo and the cancellation. His belief is that he wouldn’t have learned of this if the Sullivans had not called RIBO.

[444] In regards to what he told T.C. during the January 27, 2011 meeting, G.K. agrees that he referred to having drinks with persons on RIBO. He notes that T.C. was very tense. He brought it up to comfort him. That there was no need for concern if he told the truth.

[445] He did tell him that he had dealings with RIBO. This was to calm him down.

[446] There was no conversation with which he could feel intimidated. T.C. never told him he felt intimidated.

[447] G.K. believes that he did tell T.C. to make changes to his report to RIBO. He didn’t want him to dig a bigger hole for himself. His story had changed on the question of him faxing the documents. His original statement was not a true account of the procedure in place.

[448] He told him that “it wouldn’t fly” because it wasn’t a true account. It was not reflective of the office guidelines and policies.

[449] There is nothing untrue in the report filed with RIBO.

[450] His purpose was not calculated to make IHM look better in the eyes of RIBO.

[451] As for the slander allegation, he states that he never spoke to anyone other than RIBO and IHM employees.

[452] He provided information to RIBO at their request. He had to provide this information.

[453] He never directed staff to “slander” T.C. Nor did he hear staff referring to “legal matters” as suggested by witness Patricia Wright. He never directed staff to respond with such words.

[454] He denies having conspired with anyone.

[455] He states that he did not pay T.C. in accordance with the vesting provision since he was terminated for cause. He notes that T.C. started to work for a competitor contrary to the Agreement. He has also taken clients away from IHM.

[456] In cross-examination, G.K. confirms that the decision to dismiss or not T.C. evolved between January 31, 2011 and May 6, 2011.

[457] He is then questioned at length in regards to David and Donna Peer. He agrees that 4 properties had been left out when coverage was changed from Economical to Portage in May 2010. The error was discovered in September 2010. So that there was a gap in coverage for a period of 4 months on these 4 properties.

[458] There was also an issue in waivers not having been signed by the Peers as requested by Portage. The suggestion is that unsigned waivers had been sent in by Portage. G.K. testifies that he recalls having attempted to obtain the signatures many times. He has no recollection of Donna Peer refusing to sign these waivers. He disagrees with the suggestion that he told her if she didn’t sign she would have no insurance.

[459] The Peers chose to cancel their coverage with Portage in February 2011 and returned to Economical through another broker. This meant the loss of a $14,000.00 policy for Portage. He doesn’t agree that this policy mattered for Portage.

[460] G.K.’s evidence is that he would deal with David and not Donna. He would see him on a weekly basis.

[461] On February 20, 2011, he knew that the Peers had registered a complaint against him with RIBO.

[462] He agrees that the Peer complaint and Sullivans complaint ended up being investigated at the same time by RIBO. He was asked to meet with Nadine Austin to discuss both files in regards to his plan of supervision and office procedures.

[463] G.K. agrees with the suggestion that there would have been a gap for physical damage to the 4 properties from May to September. It was during a conversation with David Peer that he realized that there were 16 properties and not 14.

[464] He ultimately plead guilty before RIBO and a joint submission was made for a $5,000.00 fine. The suggestion is made by counsel that it was important for him that RIBO not be left with the sense that this was part of a systemic problem with IHM.

[465] He is questioned in relation to the procedure at IHM. He states that the CSR is responsible for abeyancing. The producer provides the file to the CSR. A producer is not responsible for abeyancing. He didn’t want T.C. to do abeyancing.

[466] G.K.’s evidence is that he told T.C. to remove parts of his first written account as it wasn’t clear and not an accurate description of how they operated.

[467] He explains that the procedure was more than just placing the documents on the CSR’s desk. There would be a discussion with the CSR such as “here’s what I have done”, … “here’s where I am at” … “here’s where it needs to be picked up…”. He told T.C. that he needed to be clearer in his description.

[468] The other aspect was the removal of the statement that he wasn’t sure if it was faxed or sent by courier and that he assumed by courier since there was no fax confirmation.

[469] G.K.’s evidence is that T.C. advised him that he had faxed the documents. He would have to tell RIBO if he was asked so that this wouldn’t fly. T.C. had changed his version. T.C. showed him 2 fax transmission sheets with no confirmation.

[470] G.K. has no recollection of the issue concerning the 14 km to the fire hall. He did not discuss this with T.C. at the meeting.

[471] He is also adamant that he wasn’t provided with anything in writing by T.C. at the first meeting.

[472] The next part of the cross-examination pertains to the information he provided RIBO.

[473] He states that RIBO asked him whether he thought that T.C. was covering his tracks and he said yes.

[474] He was asked by RIBO if there had been other incidents and he provided them with the information they asked for. When asked by RIBO, he told them that he believed that T.C. had been incompetent beyond the Sullivans’ matter.

[475] G.K. reiterates the point that T.C. was the face of IHM in the Cardinal area. He represented IHM in that area. He was bringing in the bulk of the clients.

[476] T.C. was expected to follow guidelines. He did not have the ability to sign brokerage agreements with providers. He did at one point have the authority to communicate with providers to ask for exceptions. He was never made a partner. He was always an employee. He was not considered a boss. He did not have direct reports.

[477] G.K. doesn’t’ agree with the suggestion that T.C. did not have equal bargaining power when the employment contract was signed. He was one of the parties involved. He told him to review the contract with his lawyer and return once he had time to review same. T.C. negotiated the territory.

[478] He is then questioned in regards to the non-competition clause. His expectation was that T.C. would not work for a competitor within 90 km of Prescott. The expectation was not for him to decline IHM clients who approached him asking for insurance.

[479] G.K. is referred to tab 23 which is the Performance Management Policy in force at IHM as of January 2009. He agrees that there wasn’t a written plan in place for T.C.

[480] Counsel notes that the Policy Manual provides the following on the issue of termination:

“ Termination – for incidents of the most serious nature (fraud, theft, violence, harassment, etc.), repeated issues for which a suspension has been previously imposed, or where a performance management process has failed to result in necessary improvement, termination of employment may be appropriate and justified.”

[481] While he agrees that there was never a written plan in place, his view is that there were ongoing issues with T.C.’s performance. He was given “frame of repeated issues”. The policy was used as a guide.

[482] The next questions related to IHM not having kept a copy of the Sullivans’ file before sending same to RIBO.

[483] He maintains that the suspension of T.C.’s binding authority with Portage applied to new business.

[484] G.K. is again questioned on the Peer matter. His view is that there is a distinction between the Sullivans and this file. He states that he did make efforts to have the Peers sign the endorsements. He never blamed David Peer for missing the 4 properties. He maintains that he did provide David with the required information as to the coverage with Portage prior to transferring from Economical. His position is that he dealt with David and not Donna.

[485] He denies having told Donna Peer while in the parking lot in January 2011 at 8:00 a.m. that he was refusing to speak to her. His position is that he told her they had an appointment set for 10:00 a.m. that day.

Tracy Young

[486] Tracy Young is the Office Manager at IHM since 2009. She has worked there since 1998. She knows T.C.

[487] She calculated the amount claimed by IHM in its Damages Brief filed as Exhibit 13. She had revised the list set out in Exhibit 14.

[488] Ms. Young explains the abeyance system used at IHM. She describes same as being “very user friendly”.

[489] She recalls the meeting between G.K. and T.C. on January 27, 2011. She had known T.C. for years as she had worked with him as a CSR.

[490] The meeting was in regards to a complaint filed with RIBO. G.K. had asked T.C. to attend.

[491] She recalls that they discussed the RIBO complaint and how T.C. had to respond. G.K. told T.C. to be upfront and honest. She doesn’t remember word-per-word but that was the gist of what G.K. told T.C. She was present at this meeting.

[492] She describes T.C. as being very upset. She hadn’t seen him as upset before.

[493] She notes that G.K. was trying to be helpful. He told T.C. to be honest and upfront. That the RIBO people “are brokers like us”. She did not see or hear anything which was intimidating.

[494] T.C. did not appear intimidated or afraid of G.K. He was upset but not intimidated.

[495] She understands that the issue between T.C. and Portage led to his binding authority being suspended for 1 year. This was told to her.

[496] She explains that in cases when it was in a client’s best interests to deal with Portage, she would advise the other brokers who would bind Portage.

[497] She recalls one such case being Lorna Toupin. This was a tenant application. She assisted T.C.’s client.

[498] She is questioned in relation to the Randy Strader matter.

[499] The witness provides her account of the Randy Strader incident. The suggestion is that T.C. had delayed in filing applications for coverage with Portage. Her version can be summaried as follows:

• She had spoken to T.C. about the Strader file on September 9, 2010;
• He told her he would write up a policy with North Waterloo;
• She didn’t hear anything before October 15, 2010;
• It was late in the afternoon when she received 2 applications (home and vehicle) from the Cardinal office as she was in the Prescott office; there was a note from T.C. attached to the applications stating that the insured has received quotes for Portage through another broker and wanted to keep this client and to please file the Applications; she noted that these had been signed by the insured on September 23, 2010; there was a cheque from the insured for the full premium;
• She was upset stating that she almost had a heart attack;
• She states that there was a gap in coverage between September 17, 2010 and September 23, 2010;
• She contacted G.K. who told her to contact the client to advise him of the gap;
• The initial provider Intact agreed to cover the gap.

[500] She was present at the Cardinal office on May 6, 2011 when T.C. was advised of his termination. She describes that both T.C. and G.K. were very calm.

[501] T.C. would have made reference to G.K.’s friends at RIBO. He packed up his stuff and left.

[502] While in the parking lot, T.C. would have asked her if IHM had put a lot of money in her pocket. She responded “no”.

[503] She explains how she came up with a loss of $12,794.85 in exhibit 13. She states that each tab refers to clients who left IHM to go to T.C.’s new employer.

[504] The $12,794.85 reflects the value of the commissions lost by reason of transfers to T.C.’s new employer.

[505] The witness is cross-examined in regards to a number of the clients listed in exhibit #3. Specifically:

• Numbers 24, 25, 26 and 27 exceed the 3 year period;
• Number 17: client is beyond the prescribed limit of 90 km from Prescott;
• Number 37: was not a client of T.C.

[506] She confirms not having spoken to the clients as to why they left IHM.

[507] Some of these clients are friends and relatives of T.C. The suggestion is that they would be expected to follow T.C.

[508] While she has since discussed the January 27, 2011 meeting with G.K., she has an independent recollection of what was discussed.

[509] She doesn’t recall G.K. referring to “drinks with boys”. She believes they were all 3 in the room. She doesn’t recall how long T.C. was at the office. Nor if T.C. stayed with G.K.

Position of the Parties

Plaintiff

[510] The Plaintiff’s position is that the Defendant IHM has failed to prove that there was just cause to summarily dismiss him.

[511] Counsel notes that while a number of allegations of incompetence were raised by IHM in its pleadings, in the end, the only justifications relied upon at trial for termination without notice or pay in lieu are:

• T.C. had lied to the Sullivans;
• It was a necessary business decision to preserve its relationship with Portage.

[512] It is pointed out that IHM had a written Disciplinary Action Policy in its Human Resources Manual which sets out the parameters of when an employee could be terminated. The submission is that the actions alleged against T.C. do not fall within these parameters.

[513] The suggestion is that there is no evidence to support the allegation that T.C. had lied to the Sullivans. What he told them was true or, at a minimum, he had a bona fide belief that it was true. His belief was that there was coverage and this is supported by the evidence. Specifically:

• He understood for his discussion with Portage that coverage would be backdated; he understood the issue to be 13 km distance and the increase in premium;
• Ultimately, the Sullivans’ file was resolved as he had proposed during his visit;
• The Sullivans’ situation was exactly akin to the Kevin Wright matter since there had been communication with IHM in a timely and accurate way;
• Any gap in coverage would be covered by the mandatory, errors and omissions insurance.

[514] The reliance on “honesty with the Sullivans” as a ground for dismissal is qualified as a curious allegation because:

• G.K. received very little information from the Sullivans;
• There were no further discussion between T.C. and the Sullivans (other than a letter of apology) after January 26, 2011;
• There is no evidence of any information about “lying to the Sullivans” coming to G.K.’s attention between January and May 2011;
• Leanne Sullivan testified at trial and did not indicate that T.C. had lied to her;
• Leanne Sullivan supports T.C.’s evidence in regards to what he told her.

[515] It is argued that the evidence of Jeff Frydman and Derek Faulconer serve to defeat IHM’s position that T.C. had no binding authority in the Sullivans’ file. Specifically, the suspension was an internal measure and it only applied to new business submissions. The Sullivans had been insured by Portage for over 9 years.

[516] In the alternative, even if the Court was to find lack of honesty and integrity, same does not provide just cause for termination.

[517] Reference is made to the Peers’ matter and G.K.’s handling of a similar mistake. This should serve as a measure on the issue of just cause. The argument is that G.K.’s actions in Peer are equal or worse than T.C.’s in Sullivans. This goes to the question of “proportionality” for termination.

[518] In regards to the need to preserve the relationship with Portage, the submission is that this fails as a legal justification for termination.

[519] The following points are raised by counsel on this issue:

• G.K. would have provided the information to Portage which led to their decision; it is argued that this should raise concerns;
• G.K. is the one who had suggested T.C.’s suspension to Portage following the Cryderman matter;
• T.C. did nothing wrong in submitting the Cryderman application;
• In 2013 or 2014, Portage indefinitely suspended the binding authority of all brokers at IHM;
• It is reasonable to infer that the problem Portage had with IHM went beyond T.C.

[520] In terms of damages, T.C. seeks to be restored to the position he would have been had he not been wrongfully dismissed by IHM.

[521] Specifically, he claims the following damages:

• Notice: his circumstances were exceptional and the Court should consider a notice period at or in excess of the usual upper limit of 24 months because:
  • he is entirely paid by commission and significant time is required to build a book of business;
  • he experienced a 60% drop in earnings over the 4 year following his dismissal.
• Vesting: the Court notes that IHM is not disputing that the value of the vesting is as stated by the Plaintiff, namely $83,597.55; the issue revolves around entitlement to this vesting provision by reason of the non-competition clause; counsel submits that the vesting payment is severable from the unenforceable non-competition clause and that full payment with interest is owing to T.C.
• Special damages: the claim is for $56,510.86 based on additional debts and losses on RRSP investments withdrawn to support his family and to finance legal fees in connection with the RIBO proceedings; it is argued that these are linked to the wrongful dismissal and the actions of G.K. in compelling T.C. to file a self- incriminating statement with RIBO.

[522] Counsel submits that the evidence supports T.C.’s claim that G.K. is liable both for conspiracy and intimidation.

[523] The essence of the submission is that G.K. collaborated with other individuals who vetted their statements to RIBO through him. Furthermore, it is argued that T.C. was pressured by G.K. to shoulder an inordinate share of the blame for the Sullivans’ file. Those efforts are said to have been successful, as T.C. capitulated to pressure to change his statements and was charged while G.K. and IHM were not.

[524] The submissions is that the 4 elements required for intimidation identified by the Court of Appeal in Tran v. University of Western Ontario, 2015 ONCA 295, [2015] O.J. No. 2185 have been made out. These are:

• Threat to commit an unlawful act:
  • The alleged act is said to be the “thinly-veiled threat by G.K. during his January 27, 2011 meeting with T.C.
• Intention to harm:
  • G.K.’s purpose was to present T.C. as having acted outside the ordinary office procedure;
  • G.K. was also facing a RIBO investigation at the time;
  • G.K. knew or ought to have known that this would result in more severe disciplinary sanctions against T.C.;
  • It is said that G.K.’s intent was to shield himself and IHM by deflecting responsibility unto T.C.
• Submission to the threat by the Plaintiff:
  • No submissions were made by counsel on this element;
  • The Court assumes the position to be that T.C. submitted to the requests made by G.K. in regards to his statement to RIBO.
• Actual damage:
  • The severity of the RIBO charges against T.C. and the need to bring a motion to prevent the use of the self-incriminating statements;
  • Financial ramifications of $27,838.50 to $33,149.50. (legal costs, travelling to Toronto, days off from work).

[525] In her written submissions, counsel states “…given that the conspiracy merges with the tort of intimidation, the Plaintiff’s written submissions will focus on the latter.”

[526] It is said that oral statements made by G.K. amount to slander. Counsel identifies the following which are said to be false:

• His misstating office procedure to RIBO in order to implicate T.C.;
• Accusing T.C. of “covering his tracks”;
• Alleging that T.C. had performed incompetently on other files.

[527] While qualified privileged would prima facie protect G.K. in the context of a RIBO investigation, the fact that the statements went further than necessary and the presence of malice make it such that he cannot rely on this defense.

[528] The submission is that the damages for slander, which do not require actual loss as it impacts on T.C.’s professional reputation, should reflect a number of aggravating features, namely:

• T.C.’s position and standing in the community;
• The nature and seriousness of the statements;
• The mode and extent of the publication;
• The absence or refusal of a retraction or apology;
• The possible effects on T.C.’s life;
• The motivation and conduct of G.K.

[529] The Plaintiff also claims entitlement to punitive and aggravated damages.

[530] It is said that such damages are warranted in light of G.K.’s calculated and reprehensible misconduct with foreseeable long-term effects on T.C.

[531] Counsel’s position in regards to the non-competition clause is that it is not enforceable based on the analysis set out by the Ontario Court of Appeal in H.L. Staebler Co. v. Allan, 2008 ONCA 576, [2008] O.J. No. 3048.

[532] The argument is that this is not one of the rarest of cases where an employer can demonstrate that the employee is so substantially the face of the company that a non-competition clause is necessary for the protection of the employer’s legitimate interest. It is an unreasonable restraint of trade.

[533] Nor should the non-competition clause serve to frustrate T.C.’s entitlement to the vesting provision.

[534] Even if the clause was drafted narrowly enough to be prima facie enforceable, the principles are such that it is unforceable by reason of the fact that he was wrongfully dismissed. Reference is made to the “General Billposting” principle in support of this proposition.

[535] The essence of the vesting clause is such that IHM is not entitled to a deduction or a set-off for the value of the accounts that have left IHM and followed T.C. to his new employer.

Defendants

[536] The Defendants submit that all of the Plaintiff’s claims should be dismissed. In the alternative, if there is liability, the damages claim are excessive.

[537] IHM seeks damages for the value of the commissions lost as a result of T.C. soliciting business in contravention of the non-competition clause and the breach of his fiduciary duties owed to IHM.

[538] The submission is that this case turns largely on credibility.

[539] Counsel notes that the Plaintiff has failed to call a number of witnesses which could have provided relevant evidence. Failure to do so should serve to raise a negative inference against the Plaintiff.

[540] The point is made that witnesses were not cross-examined on the arguments and aspersions made by the Plaintiff’s counsel in her written submissions so that the Court should decline to draw the inferences sought.

[541] Based on T.C.’s conduct with the Sullivans and Portage’s decision to permanently revoke his binding authority, IHM had sufficient cause to summarily dismiss him. It is noted that he had been a problematic employee subjected to prior remedial efforts in the past.

[542] Reference is made by counsel to the fact that T.C. was bound by the Insurance Brokers Code of Conduct which required him to act with integrity, honesty, candor and good faith in his dealings with the Sullivans and IHM.

[543] It is argued that T.C. did not act in keeping with his duty of honesty and candor with the Sullivans. Counsel relies on the following:

• He knew or ought to have known that their home was not insured during his November 2010 visit;
• Knowing that they had not received any documents from Portage, he did nothing;
• Both experts confirm that it was T.C.’s obligation to ensure they were covered;
• On January 26, 2011 he was told by Pam Southern that there was no coverage and that he did not have binding authority;
• He took no immediate steps to insure the home other than attempting to sell a North Waterloo policy;
• He lied to the Sullivans by telling them they were covered and there was a delay at Portage;
• He attempted to have them sign a cancellation on their previous house;
• Advising the Sullivans that errors and omissions would provide coverage;
• He left the house without telling them that they had no insurance;
• He failed to provide G.K. with relevant information during the January 27, 2011 meeting.

[544] This dishonesty and lack of concern is serious and goes to the fundamental basis of his employment as an insurance broker.

[545] His ongoing failure to acknowledge the implications of his conduct should be considered by the Court on the question of just cause.

[546] His dishonesty is said to go to the core of his employment relationship.

[547] The Peer complaint against G.K. does not engage the question of proportionality as there is no nexus with the Sullivans’ complaint. G.K.’s shortcomings in his dealings with the Peers did not involve dishonesty or a lack of candor. Witness Donna Peer could not point to any dishonesty on the part of G.K. In fact, G.K. showed candor in dealing with his oversight.

[548] Portage’s decision to permanently suspend T.C.’s binding authority is as a result of his own conduct. This resulted in the Cardinal office not being able to compete. Thus, it is argued that by his own conduct, T.C. made it such that he couldn’t fulfill his contractual obligations to IHM.

[549] In the alternative, if the Court finds that T.C. was wrongfully dismissed, the damages sought by T.C. are excessive.

[550] The general rule is that an employee is entitled to one month’s notice per year of service. The income earned through employment during that period should be deducted. T.C. found new employment within 6 months.

[551] Counsel suggests that T.C. has failed to mitigate his losses in that:

• There is no evidence that he sought employment elsewhere in Ontario;
• There is no evidence that he was confronted with a poor employment environment.

[552] He states that T.C. made a calculated decision to remain in the vicinity of Cardinal and work to re-establish a book of business on terms more favourable than he enjoyed at IHM. Therefore, there is no basis to go beyond the above-noted standard of one month per year of service.

[553] The submissions raise the point that while he had provided his T4s, he did not put his tax returns into evidence. It is therefore impossible to assess his actual losses. The evidence shows that he has other sources of income.

[554] In the end, it is submitted that the proper notice period is 10 months. This equates to a payment in lieu of notice of $59,505.13 based on a yearly income of $71,401.16.

[555] The argument is that this amount should be reduced by the life insurance sales, rental property revenue and monies earned with his new employer. The end result should be a payment in lieu of notice in the range of $45,000 to $60,000.

[556] T.C.’s claim for special damages in the amount of $56,000 should be dismissed by the Court. These are based on loss of interest as a result of withdrawals of RRSPs, a loan from his new employer and refinancing charges on a mortgage.

[557] The argument is based on the following:

• There is no evidence of loss of growth of the RRSPs;
• The loans should be viewed as a draw against earnings; the loan was advanced in 2014; T.C. received the benefit of the loan; there is no tenable theory upon which either the principal or the interest should be recoverable; the loss, which should be restricted to interest, is too remote;
• The mortgage interest from 2012 to 2016 is too remote;
• Absent a global understanding of T.C.’s financial circumstances, it is not possible to conclude that the refinancing was necessary by reason of his termination.

[558] As for the $23,000 claim in operating costs for starting up a new business, counsel argues that these costs are not particularized or otherwise evidenced.

[559] In regards to the vesting provision, counsel does not dispute the value of $83,597.55 identified by the Plaintiff. He states: “In the circumstances, if the Plaintiff is entitled to any vesting payments, they would be based on the value of $83,597.55.”

[560] Counsel submits that there is no basis for an award of punitive damages. There is no evidence of an independent actionable wrong tied to the dismissal. The evidence relied upon by T.C. to justify an award for such punitive damages against IHM has nothing to do with the dismissal. It relates to G.K. and not IHM.

[561] It is conceded that the amendment to the vesting provision of November 2010 was obtained without consideration and thus, does not operate.

[562] However, a plain reading of the provision makes it clear and obvious that the vesting entitlement was contingent on T.C. abiding by the non-competition clause.

[563] It is argued that the non-competition clause cannot be severed from the vesting provision. It is operative notwithstanding the principles set out by the Ontario Court of Appeal in Staebler Company Ltd. V. Allan op. cit.

[564] Counsel relies on the case of Shafron v. KRG Insurance Broker (Western) Inc. [2009] 1 SCR for the proposition that the doctrine of notional severance does not apply in respect of restrictive covenants in employment law.

[565] Reliance is also placed on Justice Blair’s analysis in Kechnie v. Sun Life Assurance [2005] O.J. No. 4318 which is said to stand for the proposition that vesting entitlements may be made subject to non-competition.

[566] The end result is that the vesting entitlement in this matter is forfeited by reason of T.C.’s admitted breach of the non-competition covenant.

[567] IHM’s counterclaim is based on T.C.’s breach of contract or, in the alternative, a breach of fiduciary duty owed by him to IHM with respect to IHM’s relationship with its own client.

[568] This claim is based on T.C. having effected the transfer of more than 30 clients from IHM to his new employer. This resulted in lost annual premiums of at least $11,364.01.

[569] This conduct was in breach of articles 5, 6 and 7 of his employment contract.

[570] It is argued that the non-competition clause was warranted in these circumstances. G.K. explained why it was necessary. Cardinal is a small rural community. T.C. had been the face of IHM in that community for 10 years. IHM was vulnerable to lose its goodwill in the event T.C. decided to set up business in that community.

[571] This is an appropriate case to find that the clause is enforceable:

• It relates directly to the area where T.C. actively sold insurance for IHM;
• T.C. was the only producer employed in the Cardinal office;
• T.C. had enjoyed IHM’s marketing efforts over a decade to develop goodwill;
• IHM was vulnerable to T.C.’s competition;
• T.C. was compensated with vesting, provided he abided by the non-competition agreement.

[572] The end result is that the clause is said to be reasonable and enforceable.

[573] In addition, it is submitted that T.C. owed a fiduciary duty to IHM with respect to the clients and breached that duty by selling IHM clients insurance while with his new employer.

[574] It is submitted that an amount of damages in the range of $11,364.01 to $79,779.27 is appropriate. The amount depends upon the theory of liability.

[575] A breach of contract should lead to damages of $79,799.27 which is the amount agreed upon by the parties of commission generated by T.C. with his new employer up until the third anniversary of his termination. The Court could grant $46,446.68 which is the amount received by T.C. during that same period.

[576] If the Court finds a breach of the fiduciary duty, then the amount would be $11,364.01, being as a result of T.C. transferring clients.

[577] In relation to the claim against G.K. based on intimidation, it is submitted that there is no evidence of a threat. The words spoken do not amount to an unlawful act.

[578] The theory that G.K. was attempting to deflect attention away from himself and IHM given the Peers complaint is said to be flawed. The fact being that the Peers had not complained to RIBO until February 20, 2011, nearly a month after G.K. is said to have intimidated T.C.

[579] The Sullivans are the authors of the complaint to RIBO. G.K. simply cooperated as he was obligated to do.

[580] G.K. relies on section 4 of the Limitations Act and submits that the intimidation claim is statute barred. The argument is:

• The only evidence of intimidation is the exchanges with G.K.;
• The last statement was sent to RIBO on February 25, 2011; the intimidation, if any, was complete on that date;
• The action was commenced on April 30, 3013 which is more than 2 years.

[581] As for the claim, based on slander, the submission is that there is no evidence capable of amounting to slander.

[582] There is no evidence of the words spoken to Nadine Austin from RIBO. She was not called as a witness.

[583] G.K. acknowledged having made statements to RIBO as he was obligated to do. These statements are protected by qualified privilege. There is no evidence of malice.

[584] Furthermore, there is no evidence that the statements were false.

[585] The statements of Ms. MacDonald to Mrs. Wright cannot reasonably be seen as slanderous. Furthermore, G.K. cannot be held responsible for the words of a third party.

[586] Finally, it is submitted that counsel for T.C. has not properly plead conspiracy, had not lead evidence of conspiracy and did not put to G.K. that he engaged in conspiracy.

[587] In the alternative, if G.K. is found liable for intimidation, it is argued that there is no evidence of any damages suffered by T.C.

[588] The costs incurred by T.C. are as a result of his failure to cooperate with RIBO and his attempt at having the RIBO proceedings stayed.

[589] If he is found liable for slander, there is no evidence of T.C. having suffered any reputational loss or otherwise as a result of such statements. RIBO proceedings are kept confidential and T.C. eventually plead guilty to an agreed statement of facts.

[590] Nor is there any basis for punitive damages. T.C. is said to rely on speculations and conjecture to impugn the conduct of G.K. and seeks an award in excess of $300,000.

Plaintiff’s Reply Submissions

[591] In her response to the Defendants’ written submissions, counsel for the Plaintiff argues the following:

• The defendants’ summary of the evidence before the court on the honesty and integrity of the plaintiff is substantially inaccurate;
• There is no issue that he left the Sullivans with no insurance;
• The defendants materially misstate the evidence from Mrs. Peer concerning G.K.’s honesty and integrity;
• None of the accusations about a lack of mitigation were put to T.C. so that this submission should be disregarded;
• T.C. did not fail to take steps to mitigate his damages;
• The defendants’ suggestion that T.C. had other income sources is not relevant to the question of damages arising from his dismissal;
• The defendant is wrong that there was no evidence of loss of growth in his RRSPs;
• There is no support for the suggestion that the loans from his new employer should be characterized as a draw against earnings;
• All of the special damages claimed were as a result of IHM’s conduct in dismissing T.C,. without notice;
• G.K. was acting as agent for IHM so that his actions can be imputed to IHM on the issue of punitive damages and the need for an independent actionable wrong;
• The case of Staebler, not Elsley is the situation most akin to T.C.’s position; there is a distinction between a restrictive covenant found in an employment contract and one for the sale of a business;
• The onus is on IHM to rebut the presumption that a non-competition clause is unenforceable;
• That IHM was not uniquely vulnerable to T.C.’s continued employment with another brokerage in that only 3% of the clients in the restricted territory left and followed T.C.;
• The evidence does not disclose that T.C. was a fiduciary of IHM.;
• T.C. did not forfeit his entitlement to the vesting; the intent was to reward him for long-term service with IHM; it is not contingent on the non-competition clause;
• Nadine Austin is not a compellable witness pursuant to s. 26(2) of the Registered Insurance Act; there can be no adverse inference drawn from the failure to call her as a witness;
• G.K. admitted that he had made the statements to RIBO in regards to T.C. “covering his tracks” and having shown incompetency in other prior matters;
• The 2 year limitation period for the intimidation would have started on June 16, 2011 and found out that he was facing more than a “slap on the hand” as stated by G.K.; it is at this point that the element of “actual harm” was triggered; thus, the action was started within the 2 year period;
• T.C. did not have an earlier opportunity to mitigate his damages by meeting Ms. Austin from RIBO in confidence; he was directed by her to work with G.K. to prepare his statement to RIBO.

The Law

[592] In deciding this matter, the Court is guided by the following principles:

Termination of Employment

[593] At common law, an employer may summarily dismiss an employee if there is just cause. The existence of the required grounds to do so, allows for termination without notice or payment in lieu of notice.

[594] The analytical framework was articulated by the Supreme Court of Canada in McKinley v. BC tel, 2001 SCC 38, [2001] 2 S.C.R. 161.

[595] The exercise is fact driven. The employee’s impugned conduct must be assessed and measured in what the Supreme Court termed “a contextual approach”.

[596] The two-pronged test was stated as follows:

“49. In accordance with this test, a trial judge must instruct the jury to determine: (1) whether the evidence established the employee’s deceitful conduct on a balance of probabilities’; and (2) if so, whether the nature and degree of the dishonesty warranted dismissal.”

[597] The burden of proving the existence of just cause rests on the employer. The threshold is on a balance of probabilities.

[598] The pivotal question is whether the employee’s misconduct “gave rise to a breakdown in the employment relationship”. The test was expressed in different ways by the Supreme Court. Just cause exists where the conduct:

• “violates an essential condition of the employment contract”;
• “breaches the faith inherent to the work relationship”;
• “is fundamentally or directly inconsistent with the employee’s obligations to his or her employer”.

[599] The sanction imposed by the employer must be proportionate to the misconduct. An effective balance must be struck between the severity of the misconduct and the sanction imposed.

[600] The Supreme makes it clear that “just cause for the most serious sanction, namely dismissal, requires the most serious misconduct”.

[601] The Ontario Court of Appeal provided the following useful summary of the proper analysis in Dowling v. Ontario (Ministry of Health and Long-Term Care):

“50. Application of the standard consists of:

1. Determining the nature and extent of the misconduct;

2. Considering the surrounding circumstances; and

3. Deciding whether dismissal is warranted (i.e. whether dismissal is a proportional response).

4. The first step is largely self-explanatory but it bears noting that an employer is entitled to rely on after discovered wrongdoing, so long as the later discovered acts occurred pre-termination…

5. The second step…is intended to be a consideration of the employee within the employment relationship. Thus, the particular circumstances of both the employee and the employer must be considered. In relation to the employee, one would consider factors such as age, employment history, seniority, role and responsibilities. In relation to the employer, one would consider such things as the type of business or activity in which the employer is engaged, any relevant employer policies or practices, the employee’s position within the organization, and the degree of trust reposed in the employee.

6. The third step is an assessment of whether the misconduct is reconcilable with sustaining the employment relationship. This requires a consideration of the proved dishonest acts, within the employment context, to determine whether the misconduct is sufficiently serious that it would give rise to a breakdown in the employment relationship.”

[602] In cases where the evidence does not establish just cause, the Court must assess the damages to be paid to the employee.

[603] As explained by the Supreme Court of Canada in Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701, “the measure of damages for wrongful dismissal is the salary that the employee would have earned had the employee worked during the period of notice to which he or she was entitled.”

[604] The appropriate period of reasonable notice revolves around the particular circumstances of the individual employee.

[605] The Supreme Court of Canada in Machtinger v. Hoj Industries Ltd., [1992] 1 S.C.R. 986 adopted the following factors set out by McRuer C.J.H.C. Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140:

“There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.”

Conspiracy

[606] Civil conspiracy requires proof of the following elements:

1. An agreement between individuals;
2. The purpose or objects of the conspiracy;
3. The overt acts done by the conspirators in pursuance and in furtherance of the conspiracy;
4. Damage occasioned to the plaintiff.

• Tran v. University of Western Ontario, op. cit.

[607] The “merger doctrine” provides that “…when a tort has been committed by two or more persons an allegation of a prior conspiracy to commit the tort adds nothing…The prior agreement merges in the tort…”

• Ward v. Lewis [1955] 1 All E.R. 55

[608] As explained by the Court in Jevco Insurance Co. v. Pacific Assessment Centre Inc., 2015 ONSC 7751, [2015] O.J. No. 6826 at paragraph 2:

“…If the conspiracy that injured the Plaintiff is carried out through an unlawful act, and that unlawful act caused the damages, then the conspiracy claim adds nothing. The damages are the same. At the time of judgment, the conspiracy claim is merged in the tort claim and the plaintiff receives only one award of damages.”

Intimidation

[609] The tort of intimidation requires proof, on a balance of probabilities, of the following four elements:

1. A threat by the defendant to commit an unlawful act;
2. An intention by the defendant that injury will result to the plaintiff;
3. Submission to the threat by the plaintiff;
4. Actual damage suffered by the plaintiff.

• Tran v. University of Western Ontario, 2015 ONCA 295, [2015] O.J. No. 2185

Defamation (Slander)

[610] Justice J. Sproat in his text Wrongful Dismissal Handbook, Seventh Edition, Carswell, describes the law of defamation as it relates to the employment context. The following relevant principles are noted at pages 7-6-2 to 7-8:

• A defamatory statement is an untrue statement which harms the reputation of another and lowers his or her esteem in the community or exposes him or her to hatred, contempt or ridicule;
• In order for a defamatory statement to be actionable, it must be published. A statement is published when it is communicated to a third person other than the defamed individual;
• There are two modes of publication: libel and slander… Slander…is published through the spoken word…In order to maintain an action for slander, it is generally necessary to prove that the slander has caused material or pecuniary loss;
• There are…some exceptions to the necessity of proving special damages in slander suits. One of these exceptions is slander of a person in connection with that person’s business, trade, profession, office or other employment activity;
• Justification as a defence…means that the statement was not defamatory because it was true. This defence requires proof that the words sued upon, construed according to their ordinary and national meanings, were true in substance and in fact. The onus is upon the defendant to prove on a balance of probabilities the substantial truth of the statement used;
• Qualified privilege attaches to statements made on a privileged occasion. For a qualified privilege to exist, the statement must be made without malice pursuant to a moral, social or legal duty to communicate the information contained in the statement. Concomitant with the duty to speak there must also be an interest or duty in the hearer to receive the communication.

[611] Malice is understood to mean:

“…spite or ill will. However, it also includes…“any indirect motive or ulterior purpose” that conflicts with the sense of duty or the mutual interest which the occasion created….Malice may also be established by showing that the defendant spoke dishonestly, or in knowing reckless disregard for the truth.”

• Hill v Church of Scientology of Toronto, [1995] 2 S.C.R. 1130

Non-competition clause

[612] The principles governing the enforcement of a non-competition clause in an employment contract were set out by the Ontario Court of Appeal in H.L. Staebler Co. v. Allan, 2008 ONCA 576, [2008] O.J. No. 3048.

[613] These principles can be summarized as follows:

• To be enforceable, the covenant must be reasonable between the parties and with reference to the public interest;
• The balance is between the public interest in maintaining open competition and discouraging restraints on trade on the one hand, and on the other hand, the right of an employer to the protection of its trade secrets, confidential information and trade connections;
• The validity, or otherwise, of a restrictive covenant can be determined only upon an overall assessment of the clause, the agreement within which it is found and all of the surrounding circumstances;
• In that context, the three factors to be considered are:

1. Did the employer have a proprietary interest entitled to protection?
2. Are the temporal or spatial limits too broad?
3. Is the covenant overly broad in the activity it proscribes because it prohibits competition generally and not just solicitation of the employer’s customers?

Breach of Fiduciary Duty

[614] Justice Price in John A. Ford and Associates Inc. (c.o.b. Training Services) v. Keegan, 2014 ONSC 4989, [2014] O.J. No. 3995 provides the following summary of the indicia on whether a fiduciary duty is owed to a former employer:

“190…(a) The employee’s job duties with the former employer; (b) The extent or frequency of the contact between the employee and the former employer’s customers and/or suppliers; (c) Whether the employee was the employer’s primary contact with the customers and (or) suppliers; (d) The extent to which the employee was responsible for sales or revenue; (e) The extent to which the employee has access to and makes use of, or otherwise has knowledge of, the former employer’s customers, their accounts, the former employer’s pricing practices, and the pricing of products and services; (f) The extent to which the former employee’s information as regards customers, suppliers, pricing, etc., was confidential.

191. Additionally, courts have considered the following: (a) Whether the employee has scope for the exercise of some discretion or power, can unilaterally exercise that power or discretion so as to effect the beneficiary’s legal or practical interest; (b) Whether the employer is vulnerable to or at the mercy of the employee holding a discretion or power; the employee’s knowledge of customer contact, information, needs and preferences, and, therefore, an ability to influence customers; (c) Whether the employee has “encyclopedic knowledge” of his/her employer’s customers, unrestricted access to all customer lists and information concerning customers, and knowledge of policy issues and personal contact with, and responsibility for, a large portion of customers; (d) The employee’s knowledge of the business and market opportunity of the employer or playing a role in the employer’s strategic market development; (e) Whether or not the employee’s functions are essential to the employer’s business, therefore rendering the employer vulnerable to the employee’s departure.

Damages (other than payment in lieu of notice)

1. Special Damages

[615] As explained by the Court of Appeal in Kienzle v. Stringer (1982), 35 O.R. (2d) 85, “the extent of recovery for damages from breach of contract is described in the classic words of Baron Alderson in Hadley v. Baxendale (1854), 9 Exch. 341:

“Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.”

2. Punitive and Aggravated Damages

[616] Punitive and aggravated damages are two distinct basis upon which damages may be claimed in wrongful dismissal cases. Their purpose is different.

[617] Aggravated damages, also referred to as mental distress damages, focus on compensating the plaintiff for mental distress relating to the manner he or she was dismissed from the employment.

[618] The focus of punitive damages is the defendant’s wrongful act that are so malicious and outrageous that they are deserving of punishment on their own.

[619] Justice Bastarache provided the following analysis in regards to aggravated damages in Honda Canada Inc. v. Keays, 2008 SCC 39, [2008] 2 S.C.R. 362:

“59…Damages attributable to conduct in the manner of dismissal are always to be awarded under the Hadley principle. Moreoever, in cases where damages are awarded, no extension of the notice period is to be used to determine the proper amount to be paid. The amount is to be fixed according to the same principles and in the same way as in all other cases dealing with moral damages. Thus, if the employee can prove that the manner of dismissal caused mental distress that was in the contemplation of the parties, those damages will be awarded not through an arbitrary extension of the notice period, but through an award that reflects the actual damages.”

[620] In discussing punitive damages, Justice Bastarache states:

“68…punitive damages should receive the most careful consideration and the discretion to award them should be most cautiously exercised…Courts should only resort to punitive damages in exceptional cases….The independent actionable wrong requirement is but one of many factors that merit careful consideration by the courts in allocating punitive damages. Another important thing to be considered is that conduct meriting punitive damages awards must be “harsh, vindictive, reprehensible and malicious” as well as “extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment.”

Discussion

1. Did IHM have just cause to summarily terminate T.C.’s employment?

[621] While IHM raised a number of reasons in its pleadings to justify T.C.’s summary dismissal, in the end, it relies on his dealings with the Sullivans and the decision of Portage to permanently revoke his binding authority.

[622] The questions for the Court are whether IHM has established such misconduct on a balance of probabilities and if so, whether it warranted dismissal?

[623] The permanent revocation of T.C.’s binding authority by Portage cannot, in and of itself, serve as just cause for dismissal. The true measure lies in the conduct which led to this revocation and how this in turn, impacts on T.C.’s obligations to IHM. Is it fundamentally or directly inconsistent with T.C.’s obligations to IHM? Does it violate an essential condition of T.C.’s employment contract?

[624] The evidentiary record reveals little in terms of what conduct led Portage’s marketing manager Jeff Frydman, to permanently suspend T.C.. His evidence was brief on this question. He stated that he had found out about the Sullivans’ file and advised the underwriters that T.C. was suspended permanently.

[625] If the focus of the exercise is the employee’s misconduct and whether same amounts to just cause, then the impugned conduct needs to be clearly spelled out. It must be identified and articulated.

[626] There are many dimensions to T.C.’s conduct in the Sullivans’ file which were raised in this trial. Is Portage’s decision based on T.C. having exceeded his binding authority? Does it relate to the failure to properly monitor the application for coverage? Is it how he dealt with the Sullivans on January 26, 2011 or failing to disclose relevant information to G.K. on January 27, 2011? The question remains what is it that Jeff Frydman found out about the Sullivans’ file which lead him to his decision.

[627] Since the focus must be on T.C.’s conduct and since Portage’s decision cannot, in a vacuum, serve as just cause, the next question must logically be whether Portage’s decision was justified on the basis of T.C.’s conduct.

[628] The first difficulty in this analysis, as already stated, is the uncertainty as to what led Portage’s decision. Assuming the misconduct was clearly articulated, the second hurdle is whether Portage was justified in permanently revoking T.C.’s binding authority.

[629] The Court understands through expert witness Derek Faulconer’s testimony that a broker’s binding authority rests on the agreement between the insurer and the brokerage. He also stated that different brokers may have different binding authority within a brokerage. However, the following questions remain:

• On what basis could Portage permanently suspend T.C.’s binding authority?
• Did Portage have an absolute discretion to do so?

[630] In the absence of such evidence, the Court cannot assess T.C.’s conduct and its nexus to Portage’s decision which in turn is identified as one of two reasons why he was dismissed without notice.

[631] There is no question that the ability to bind a provider is fundamental to the operation of a brokerage. A broker’s inability to bind a provider certainly impedes on the ability to meet a fundamental term of his or her employment contract with the brokerage.

[632] The Court’s view is that the evidence does not, on a balance of probabilities, allow for a finding of what led to Portage’s decision and whether same was justified in the circumstances.

[633] Much was said in this trial on the question of T.C.’s binding authority with Portage. In the end, the Court will simply state that there is confusion as to the nature of this authority. The following is noted:

• The March 29, 2010 letter sent to G.K. to T.C. states that “…Portage Mutual has suspended your binding authority for one year commencing April 1, 2010 to April 1, 2011”;
• Jeff Frydman testified that he had discussed this with G.K. who had decided to suspend T.C.’s binding authority with Portage;
• G.K.’s evidence is that the suspension applied to all business, new and old;
• T.C.’s version is that it applied strictly to new business;
• Jeff Frydman’s evidence is that he understood that it applied to new business;
• Pamela Southern’s evidence adds confusion when she describes her conversation with T.C. on January 26, 2011 after she has spoken to Leanne Sullivan; she introduces the concept of “value” to T.C.’s binding authority; her evidence was that she asked him about the value of the Brinston property and once advised, she reports telling him that the value of the home was over his binding authority and that he needed to call in for approval.

[634] Therefore, the Court finds that Portage’s decision to permanently revoke T.C.’s binding authority does not amount to just cause allowing for his summary dismissal.

[635] The suggestion is that the Sullivans matter also reveals conduct going to T.C.’s honesty, integrity and candor. His failure to disclose relevant information to the Sullivans during the January 26, 2011 at their new home makes it such that it amounts to misconduct going to the very core of his duties and obligations as an insurance broker. His conduct thereby provided just cause allowing for summary dismissal by IHM.

[636] T.C.’s dealings with the Sullivans on January 26, 2011 certainly raises significant concerns in regards to his conduct as an insurance broker.

[637] According to T.C.’s own evidence, this was the second time in four days that he was aware that there was a very real possibility, if not probability, that the Sullivans did not have coverage for their new home in Brinston.

[638] The first concern was when he states having discovered that their home was more than 13 km from the fire hall.

[639] The second was when he was advised by Portage that the applications had never been received.

[640] There is much uncertainty with T.C.’s evidence on what he told the Sullivans during the January 26, 2011 meeting at their home. At one point when questioned what he had told Leanne Sullivan when she asked if they were covered, he responded:

“I can’t remember the exact words I said to the Sullivans.”

[641] Leanne testified that she believes T.C. told her they were covered when she asked T.C.

[642] T.C. maintains that he believed that there was coverage. He states “I believed in my heart there was coverage…it is for the Court to decide whether there was coverage…”

[643] It is not necessary for the Court to decide whether there was coverage. The circumstances were such that it is doubtful the Sullivans’ new home was insured considering that:

• Portage had never received the Applications;
• The binding periods had long expired;
• The home in Iroquois had been sold;
• According to T.C., the 14 km distance was a significant concern.

[644] Perhaps the Sullivans could have made a claim pursuant to the broker’s errors and omissions insurance.

[645] The real question raised for the Court’s consideration in the context of this wrongful dismissal suit is whether the information disclosed to the Sullivans by T.C. or the lack thereof amounts to misconduct and justification for dismissal without notice.

[646] The Court’s view is that T.C. failed to provide the Sullivans with proper information. He was reckless with the truth on significant information the Sullivans needed: whether or not they had coverage. All of this in the context of knowing there was a risk.

[647] T.C.’s own evidence is as follows:

1. “I knew there was a possibility that they may not have insurance.”
2. “I left their home without telling them there was a possibility there was no insurance.”

[648] The Court is of the view that T.C.’s action amounts to misconduct going to integrity and candor. He is found to have been reckless with the truth.

[649] The questions becomes whether this provided IHM with just cause.

[650] Having considered all of the circumstances and the relevant principles, the Court finds that IHM was not justified in summarily dismissing T.C. on the basis of his dealings with the Sullivans on January 26, 2011. This conclusion is based on the following considerations:

• On balance, the Court finds that T.C. was reckless with the truth as oppose to having been wilfully dishonest;
• While serious, the nature and degree of his conduct was such that it did not warrant dismissal;
• Dismissal is seen as not being proportional to his misconduct;
• There is no evidence of prior conduct going to the issue of his honesty and candor with clients; the prior complaints related to his timeliness in filing applications;
• There is no evidence of prior discipline in regards to similar conduct; again, the prior reprimands dealt with the filing of applications;
• This misconduct must be looked that in the context of an employee who had worked at IHM for 10 years;
• While not without some performance issues, the evidence suggests that he was an otherwise productive employee; he is described as the “face” of IHM at the Cardinal office; he was the sole producer; he was able to generate a reasonable book of business;
• The conduct was not such as to justify termination under the framework set out in the Office Policy Manual in place at IHM since 2009; the Manual provides for three instances when termination may be appropriate and justified, namely:
  • Incidents of the most serious nature (fraud, theft, violence, harassment, etc.)
  • Repeated issues for which a suspension has been previously imposed;
  • Where a performance management process has failed to result in necessary improvement.

[651] Therefore, the Court finds that IHM did not have just cause to summarily terminate T.C.’s employment.

2. If not, what is the amount to be paid by IHM to T.C. in lieu of notice?

[652] The Court’s view is that the appropriate period of reasonable notice in this matter is 15 months.

[653] Based on an average annual income of $70,494.89 with IHM for the years 2008, 2009 and 2010, this translates into a sum of $88,118.62.

[654] The 15 months period of reasonable notice is based on the following considerations:

• T.C. was 54 years old when he was dismissed;
• He had worked at IHM for 10 years;
• He was bound by a non-competition clause at the time of his termination which would impact on his ability to find comparable employment in a 90 km parameter from Prescott;
• He was able to find employment as an insurance broker within 6 months of his dismissal;
• Remuneration as a broker is through commission based on his book of business (his clients); the evidence is that he has not as of 2015, reached the level he had at IHM with his new brokerage.

[655] Therefore, IHM is ordered to pay T.C. damages in the amount of $88,118.62 in lieu of notice coupled with pre-judgment interest pursuant to the Courts of Justice Act starting December 1, 2011.

3. Is T.C. entitled to special damages against IHM by reason of the wrongful dismissal?

[656] The Court rejects T.C.’s claim for the special damages set out in his Damages Brief.

[657] These are not seen as fairly and reasonably arising naturally, “according to the usual course of things” from his wrongful dismissal. Nor can they be reasonably “supposed to have been in the contemplation of both parties, at the time they made the contract.”

• Hadley v. Baxendale op. cit.

[658] Specifically, the Court notes the following:

• The legal fees incurred in the RIBO proceedings do not flow from the wrongful dismissal;
• The complaint to RIBO was filed by Leanne Sullivan prior to G.K. being made aware of the issues in this file;
• Ultimately, T.C. admitted to some wrongdoing in the Sullivans’ matter as evidence by his guilty plea before RIBO;
• There are a number of issues with T.C.’s claim for 2011-2012-2013 employment expenses:
  • If these were incurred as part of carrying business from his home, these would have been incurred in contravention of the non-competition clause set out in the employment contract; as such, they could not reasonably have been in the contemplation of both parties;
  • The evidence is that T.C.’s income with IHM was strictly from commission; he was not paid for the type of expenses set out by him in his claim; it is not reasonable to suggest that the parties would have contemplated such expenses on dismissal;
  • These are not particularized.

4. Is T.C. entitled to compensation for vested business as provided for in his employment contract?

[659] The Court is of the view that a fair and reasonable interpretation of the vesting provision in T.C.’s employment contract leads to a finding that while a breach of the non-competition clause does not vitiate entitlement, it does impact on quantum.

[660] As stated by the Ontario Court of Appeal in Cabell v. Personal Insurance Co. [2011] I.L.R. 1-5117, at paragraph 15:

“…the normal rules of construction lead a court to search for an interpretation which, from the whole of the contract, would appear to promote or advance the true intent of the parties at the time of entry into the contract… Where words may bear two constructions, the more reasonable one, that which produces a fair result, must certainly be taken as the interpretation which would promote the intention of the parties.”

[661] A fair result in this matter must reflect the following:

• The vesting provision was significant to T.C. as it was seen as his “retirement fund”;
• The non-competition clause was significant to IHM to preserve its business interest.

[662] The end result is as follows:

1. T.C. is entitled to the vesting set out in paragraph 8 of the employment contract;
2. The value of the vesting is set at $83,597.55;
3. The amount payable by IHM is reduced by $11,364.01, being the amount shown to have been generated by T.C. in breach of the non-competition clause;
4. The damages payable to T.C. by IHM for breach of the vesting provision is set at $72,233.54;
5. The pre-judgment interest is set at half the pre-judgment interest rate set by the Courts of Justice Act as of May 6, 2011, being the date of termination; the reduction to half reflects the fact that the amount was payable over a period of 5 years.

5. Did T.C. breach the terms of his contract in regards to non-competition and/or his fiduciary duty to IHM?

[663] The Court finds that T.C. has breached both the non-competition clause and his fiduciary duty.

[664] Dealing first with the restrictive covenant, it is found to be reasonable and therefore enforceable. This finding is based on a consideration of the clause, the agreement within which it is found and all of the surrounding circumstances. The Court finds that:

• IHM had a propriety interest entitled to protection;
• The temporal and spatial features are not seen as too broad;
• The clause is not limited to proscribing solicitation of clients of IHM but is nonetheless not directed at competition generally.

[665] It is seen as a fair balance between IHM’s business interests and open competition.

[666] The Court notes the following considerations in support of this conclusion:

• The covenant was part of the contract from the inception of the employer-employee relationship;
• It was consideration given by T.C. for the employment. He testified that he agreed to the clause because he wanted the work. He also stated that he agreed because he wanted the “vesting provision” which he saw as his pension plan. He was therefore given significant consideration for the clause;
• The terms of the covenant were negotiated by the parties. The initial version did not provide for a territorial limit. The “90 km distance from Prescott” was the product of a negotiated agreement;
• IHM is seen as a relatively small organization. There are two offices, one in Prescott and the other in Cardinal. There were only two employees working out of the Cardinal office, T.C. and a C.S.R. The office manager Tracy would attend once or twice monthly. T.C. worked autonomously from the Cardinal office for the most part. This in turn would provide him with some independence in the running of the Cardinal office;
• T.C. was the only producer working out of the Cardinal office. His job was to generate new business, which in turn entails dealing with clients. The Court accepts G.K.’s evidence that T.C. was the face of IHM in Cardinal which is a small rural community. It is through the relationship with clients that IHM generated income;
• IHM has a propriety interest in its book of business;
• The covenant is limited in space. As agreed upon by the parties, it is restricted at 90 km from Prescott;
• It is also limited in time, that is, for a period of 3 years from the termination of the employment;
• It is restricted to the type of business operated by IHM;
• T.C. testified that once he was terminated by IHM and started working for a new brokerage, he was contacted by a number of his former clients who were part of his book of business with IHM seeking to transfer their coverage;
• There is no restriction on T.C. working as a producer from his new employer’s place of business in Ottawa;
• The terms of the non-competition are clear;
• Paragraph 21 of the contract reads:

“21. The Employee acknowledges that he has read and understands this agreement, and acknowledge that he has had the opportunity to obtain independent legal advice with respect to it.”

[667] In regards to the existence and breach of a fiduciary duty, the Court’s view is that such findings is warranted by the evidence;

[668] The nature of the relationship is such as to create a situation of trust. T.C. is found to have been in a unique position of trust within IHM’s organization. He was a key employee.

[669] This trust relationship is grounded in the agreement. It is part of the contract. Reference is made to clauses 1(4), 5 (confidential information), 6 (non-competition) and 7 (employer’s property).

[670] Its inclusion in the contract confirms that the existence of such a duty was agreed upon as being part of the relationship and the mutual expectations of the parties.

[671] The considerations which were noted by the Court in support of its finding on the enforceability of the restrictive covenant are also supportive of the existence of a fiduciary duty. These should be seen as part of the Court’s reasoning in finding that there was a fiduciary duty owed by T.C. to IHM.

[672] The Court would add the following considerations:

• He had access to client information;
• He had insight into IHM’s operation;
• The evidence shows that business can easily be removed from IHM.

[673] The scope of the fiduciary duty is clearly defined. The most significant duty was not to be involved in the insurance business for a period of 3 years within a 90km distance of Prescott.

[674] The end result is that T.C. is found to have breached the non-competition clause and his fiduciary duty.

6. If so, what are the appropriate damages payable by T.C. to IHM?

[675] As already discussed, T.C.’s breach of contract and fiduciary duty is reflected in a reduction of the amount payable to him by IHM.

[676] The end result is that IHM is entitled to damages in the amount of $11,364.01 but same as already been accounted for in considering the quantum payable to T.C.

7. Does the evidence establish that G.K. is liable to T.C. on the basis of conspiracy, intimidation and/or slander?

[677] These claims are predicated on the notion that G.K. acted so as to deflect his and IHM’s deficiencies. The suggestion is that the Sullivans’ file coupled with the Peer matter would reveal to RIBO systemic problems with the operation of the brokerage. The premise is that identifying T.C. as the cause of these would shield G.K. and IHM.

[678] T.C.’s argument is that G.K. achieved his purpose by conspiring with others, forcing him to file an inculpatory and incorrect statement to RIBO and communicating false information concerning his performance as a broker to RIBO.

[679] Having considered all of the circumstances, the Court is of the view that the evidence does not support the notion that T.C. was used by G.K. as the “fall guy” or “scapegoat”.

[680] This conclusion is based on the following considerations:

• The evidence does not disclose the existence of systemic problems in the way IHM operates which required to be diverted from RIBO;
• The errors made in both the Sullivans and Peer matters cannot be explained by shortcomings on how IHM operates its business. The Sullivans’ application should have been sent to Portage. It wasn’t sent. The Peer application should have included 16 units. It missed 4 units;
• There is an abeyancing system in place which appears straightforward, “user friendly” and accessible by all the employees;
• From T.C.’s own account, there was a clear division of responsibilities in the office between him as a producer and the CSR. He referred to the letter of G.K. dated May 28, 2010 wherein he was told to treat Patricia MacDonald as an “equal”. He explains that he wasn’t going to tell her how to do her job. So that there can be no suggestion of confusion in regards to his and the CSR’s responsibilities. In his mind, G.K.’s clear directives were that his responsibilities end once he places the documents on the CSR’s desk. T.C.’s evidence was “the CSR is the one who makes sure things were done”;
• The evidence shows that the Peers filed their complaint against G.K. with RIBO in a letter dated February 16, 2011. G.K. was notified of the complaint on February 20, 2011. While there is no question that both the Sullivans and Peer complaints were thereafter investigated by RIBO, the point remains that, on January 27, 2011, G.K. could not have known that a complaint would be filed against him by the Peers approximately one month later. In the end, G.K. could not have been motivated in pressuring T.C. on January 27, 2011 by an event which had not yet occurred;
• It is difficult to understand how anything done or not done by T.C. in the Sullivans’ file could be seen as capable of diverting RIBO from G.K.’s wrongdoings in the Peers’ matter;
• There is no indication that G.K. ever denied that he was responsible for the errors in the Peer matter. He readily admits that 4 units out of 16 were missed when there was a change in providers;
• Ultimately, the account provided by T.C. to RIBO is not found to be an admission through which he shoulders an “inordinate share of the blame” as suggested by counsel. In cross-examination, T.C. indicated that his report suggests that he is the one who had sent the documents to RIBO. In fact, it doesn’t indicate who had sent these to Portage. In light of the uncertainty as to who had sent these documents, this version is not seen as unfavourable to him.

[681] The Court will now deal with each specific tort raised by T.C.

Conspiracy

[682] In her written submissions, counsel for T.C. suggests that G.K. “…with the knowing collaboration of other parties each of whom vetted their statements to RIBO through Mr. Kenney, pressured Mr. Cassell to shoulder an inordinate share of the blame for the things that went wrong on the Sullivan file.

[683] However, counsel does not articulate an argument in support of the claim based on conspiracy. She states that since the conspiracy merges with the tort of intimidation, “her submissions will focus on the latter.”

[684] While it is correct that conspiracy merges in any subsequent tortious act in furtherance of the conspiracy, conspiracy was plead as an independent basis of liability in the Statement of Claim and not abandoned. Therefore, the Court must make a finding on this issue.

[685] The Court finds that T.C. has not established the existence of a conspiracy on a balance of probabilities.

[686] There is no direct or indirect evidence allowing for a finding that G.K. was party to an agreement for the purpose suggested by counsel.

[687] The Court notes the following:

• For the reasons already stated, the Court rejects the notion that G.K. acted so as to deflect his and IHM’s deficiencies;
• The individuals with whom G.K. would have come to an agreement are not specifically identified by T.C. in his submissions. The only reference is to “other parties each of whom vetted their statements to RIBO through Mr. Kenney…” The Court assumes that the “other parties” referred to are Patricia MacDonald, Pamela Southern, Pino Dutillio and Tracy Young;
• To succeed, the claim of conspiracy must show, on balance, that G.K. came to an agreement with one or more of these individuals that they would work in concert so as to incriminate T.C. in the Sullivans matter. That they would do so by providing false information to RIBO or, at least, let G.K. review their statements to ensure it provides support to his purpose. The evidence doesn’t support such a proposition. The Court refers to the following evidence:
  • Patricia MacDonald: She did ask G.K. what she should put in her statement to RIBO; she wanted to make sure; G.K. told her to tell the truth; he didn’t tell her what to say; there was never any agreement to harm T.C.;
  • Tracy Young: She has an independent recollection of the January 27, 2011 meeting between G.K. and T.C.; she was present; she was never questioned on being party to an agreement with G.K.;
  • Pamela Southern: She did participate with Pino Dutillio (area manager for Portage) in the preparation of a response to RIBO and acknowledges that same was sent to G.K. by Dutillio for his review; her evidence is that she doesn’t know why it was sent to G.K.; she is never questioned on being part of an agreement with G.K.; there is no evidence to suggest that her version was changed in any way to support G.K.; if Dutillio’s purpose in sending the proposed report to RIBO was part of a conspiracy, Pamela Southern is not part of same since she didn’t know why it was sent to G.K.;
  • Pino Dutillio: This individual was never called as a witness; the sending of the e-mail asking G.K. if the attached proposed letter to RIBO “is sufficient to resolve this matter…” does not amount to circumstantial evidence that this was done in furtherance of a conspiracy; G.K. was never questioned on his dealings with Dutillio.

[688] Therefore, the Court rejects T.C.’s claim based on conspiracy.

Intimidation

[689] T.C.’s claim based on intimidation rests on G.K. having conveyed “a thinly-veiled threat” to provide false or misleading information to RIBO if he did not submit a substantial edited, self-incriminating account of his interactions with the Sullivans and later, of IHM’s abeyancing procedures. This in turn would amount to a threat to do something illegal, namely:

• Not acting with courtesy and good faith with a broker;
• Providing false or misleading information to RIBO.

[690] Such conduct is proscribed under the Registered Insurance Brokers Act.

[691] The Court rejects the suggestion that G.K. is liable for intimidation. The evidence does not establish, on a balance of probabilities, the communication by G.K. of a threat to T.C. for the purpose of compelling him to mislead RIBO.

[692] The words spoken by G.K. during the January 27, 2011 meeting do not reasonably and objectively lead to the conclusion that the intent was to convey a threat to compel action.

[693] T.C. reports that G.K. told him:

• “Oh that’s not going to fly, that’s not how we do things around here”
• “Would have a slap on the wrist”
• “He had drinks with the boys at RIBO”

[694] In cross-examination, he agrees with the suggestion that the spirit of the meeting was to try and resolve the problem. That he interpreted G.K.’s words that he had gone through process as an indication that he would “help him through the process”.

[695] He interpreted the words “beers with the boys from RIBO” as G.K. telling him he had power.

[696] He has no recollection of G.K. telling him to cooperate with RIBO.

[697] G.K.’s version of what he told T.C. during the meeting is supported by Tracy Young.

[698] She testified that G.K. told T.C. to be honest and upfront with RIBO. That the RIBO people were brokers like them. T.C. was very upset but did not appear intimidated or afraid. G.K. was trying to be helpful.

[699] This is corroborative of G.K.’s evidence on his purpose when he met with T.C. who was very tense. He wanted to comfort him. There was no need for concern if he told the truth.

[700] His purpose in telling T.C. to make changes to his accounts to RIBO was so that he didn’t “dig a bigger hole for himself”. He noted that T.C. had changed his version on the question of the faxing of the documents to Portage. G.K. advised him that this “wouldn’t fly” as it did not reflect the procedure in place.

[701] While the following is not seen as overly significant and the Court is mindful that demeanor in a witness box can be deceiving, T.C. does not come across as an individual easily intimidated. He made the following comments during cross-examination:

• “You can say what you want but I know the truth.” (10:52:17);
• “To say I am responsible, this is ridiculous.” (11:15:01);
• “This thing about Portage suspending my binding authority is non-sense.” (11:16:09);
• “I don’t know where you are getting this magical fucken 5 days…” (11:27:05);
• “You can suggest what you want but…” (11:31:05);
• “You are trying to twist words here.” (2:05:41);
• “I don’t even understand the question…you just babbled on.” (2:13:15);
• “You are putting words into my mouth.” (2:25:56);
• “You’re kind of talking on the both sides of your mouth.” (2:30:30).

[702] The claim based on intimidation is also dismissed.

Slander

[703] This claim is based in good part on oral statements made by G.K. to RIBO. Specifically:

• Misstating office procedures in order to implicate T.C. in a breach thereof;
• Accusing T.C. of “covering his tracks” on the Sullivan matter;
• Alleging that T.C. had performed incompetently on other files.

[704] It is also based on what T.C.’s step-daughter, Christina Wright, reports having been told by Patricia MacDonald when she called the office wanting to speak to T.C. She was told that he was either told that he wasn’t available for “legal reasons” or “legal matters”.

[705] Dealing first with the words said to have been stated by Ms. MacDonald to Ms. Wright, the Court finds that these are not slanderous words capable of supporting such a claim against G.K.:

• They are not uttered by G.K.;
• There is no indication that G.K. directed Patricia MacDonald to respond to the public as she is reported doing;
• G.K. testified that he did not give such instructions;
• Patricia MacDonald denies having responded as suggested by Ms. Wright;
• There is no evidence that this was an IHM script as suggested by counsel;
• The sending of an e-mail by T.C. to Ms. MacDonald does not establish a script;
• There is no evidence to support that these words were conveyed to other clients.

[706] In regards to the three statements made by G.K. to RIBO, the Court is of the view that the evidence does not provide, on balance, for a finding of liability.

[707] In essence, the Court’s finding is that the statements are subject of qualified privilege and are probably true thus covered by justification. Nor does the Court accept, for the reasons already articulated, that G.K. acted with a malicious intent or purpose.

[708] In arriving at these conclusions, the Court has considered the following:

• There are no particulars of what statement was made by G.K. to RIBO in regards to the office procedures. Nor does it relate to a falsehood about T.C.;
• The Court accepts as proven that G.K. told RIBO that T.C. was “covering his tracks” and that “he had performed incompetently on other files”. This amounts to publication to a third person;
• The Court also accepts that there is no necessity of proving special damages since it relates to T.C.’s profession and employment activity;
• G.K.’s communications to RIBO are found to be covered by a qualified privilege. As the principal broker he is bound to provide information to this regulatory body. He has a legal duty to do so. In turn, RIBO has an interest and duty to receive these communications. All of this transpired in the context of a complaint filed by an insured against a broker who is governed by RIBO.
• The impugned statements are not found to be tainted by malice so as to vitiate the qualified privilege. The Court has already articulated why it rejects the notion that G.K. acted so as to deflect his or IHM’s deficiencies;
• The Court finds that it is more probable then not that T.C. acted so as to cover his tracks as suggested by G.K. So that G.K.’s statement to RIBO is, on balance, found to be true. In fact, T.C.’s own evidence reveals that his actions in the Sullivans’ matter were reckless. At best, his efforts at explaining same are unreasonable and suspect. The Court highlights the following:
  • He can’t confirm whether or not he had sent the documents to Portage. How then can he state that he had done his part and that it was out of his hands?
  • It is suspect that the two fax cover sheets destined for Portage were prepared and signed by him and yet there is no confirmation for either?
  • He describes IHM’s abeyancing system as a joke. Documents were often sent out late and sometimes never sent to the providers. He states that clients were upset. Some received coverage for wrong vehicle. If this is true, common sense would suggest that more than simply asking the CSR and being told that Portage was way behind was required. Any experienced broker knowing that the system was deficient would inquirer further. Not doing so amounts to recklessness and/or wilful blindness.
  • He states that on January 26, 2011, he couldn’t remember having faxed the documents. There is a very strong inference that he wouldn’t have remembered when the issue first came up with Ms. Sullivans in November 2011. Why then did he not simply look in the file to ascertain whether or not he had done so?
  • It is not reasonable for him to suggest that he accepted Patricia’s statement that Portage was way behind without more. The tenant package had been sent in some 5 months prior. The binder for the next home had been sent some 2 months prior to November. At a minimum, he should have looked at the file. As a reasonable broker, the expectation would have been for him to contact the provider.
  • Patricia MacDonald’s evidence contradicts T.C.’s version. She states that she had no dealings with the Sullivans’ file. Nor had she been asked the status of same. She indicated that she has never seen a situation where a provider was 5 months behind. She also explains that had she been asked such questions, she would have looked at the file and made inquiries.
  • His evidence in regards to the 13 km distance from the fire hall issue is also concerning. He recognizes that this may have meant that the Sullivans had no coverage. Yet, he does very little, in the circumstances, to contact the Sullivans. Does it matter that he discovered this on a Friday which was a day off? Why not communicate on Saturday and/or Sunday? Why not look into this first thing Monday morning?
  • There is no explanation as to why he would put his mind to the distance between the Sullivans’ new home in Brinston and the fire hall on his way to a hockey game with his daughter.
  • His evidence that he had left messages for the Sullivans at their home is contradicted by Leanne Sullivan.
• The Court also finds that T.C. probably did, at times, perform incompetently on other files as stated by G.K. to RIBO in response to their questions. The evidence reveals the following:
  • T.C. testified that he was told on a number occasions to be timely in submitting application;
  • He was warned in writing that this needed to be corrected and could lead to dismissal;
  • The Strader file;
  • The Cryderman file.

[709] In the end, the Court dismisses T.C.’s claim against G.K. based on slander.

8. If so, what is the appropriate measure of damages to be paid by G.K. to T.C.? Is he entitled to aggravated and punitive damages?

[710] The Court having found that T.C. has not established his claims against G.K. based on conspiracy, intimidation and slander, G.K. is not liable to pay any damages.

9. Is T.C. entitled to punitive and/or aggravated damages against IHM by reason of the manner he was dismissed?

[711] As T.C.’s claim for punitive damages against IHM rests on the alleged tortious acts of G.K. which were rejected by the Court, (conspiracy, intimidation, slander), the claim for punitive damages is rejected as there is no finding of an independent actionable wrong.

[712] The Court is also mindful of Justice Bastarache’s words in Honda Canada Inc. v. Keays, op. cit, that Courts should resort to punitive damages in exceptional cases.

[713] G.K.’s conduct in dismissing T.C. was not “harsh, vindictive, reprehensible and malicious. It is not deserving of full condemnation and punishment.

[714] Nor is there, in the Court’s view, a basis to grant aggravated damages which relate to “mental distress” stemming from the manner of dismissal.

[715] Even assuming that such “mental distress” was contemplated by the parties, there is very little, if any evidence, of the impact of the dismissal on T.C. At one point, he states that “this has been hard financially and emotionally”.

[716] As stated again by Justice Bastarache:

“…if the employee can prove that the manner of dismissal caused mental distress that was in the contemplation of the parties, those damages will be awarded not through an arbitrary extension of the notice period, but through an award that reflects the actual damages.”

[717] In the end, the claim for aggravated damages is rejected on the basis that there is no evidence to assess damages of mental distress. Furthermore, IHM cannot be held liable for the RIBO proceedings. The complaint was filed by Leanne Sullivan.

Conclusion

[718] The Court makes the final orders:

1. IHM shall pay damages to T.C. in the amount of $88,118.62 for wrongful dismissal. Pre-judgment interest in accordance with the Courts of Justice Act is payable as of December 1, 2011;
2. T.C.’s claim for special damages against IHM by reason of the wrongful dismissal is dismissed;
3. IHM shall pay damages to T.C. in the amount of $72,233.54 for breach of the vesting provision found in article 8 of the employment contract. Pre-judgment interest in accordance with half of the rate provided for in the Courts of Justice Act is payable as of May 6, 2011;
4. IHM’s claim against T.C. for breach of the non-competition clause and/or his fiduciary duty to IHM is granted. The damages are set at $11,364.01, being the amount deducted from the above-noted vesting provision;
5. T.C.’s claim against G.K. based on conspiracy, intimidation and/or slander is dismissed;
6. T.C.’s claim against IHM for punitive and/or aggravated damages is dismissed.

[719] The parties are asked to attempt to resolve the question of costs for these proceedings on consent. If they are unable to do so, they shall exchange written submissions on or before October 15, 2016 (maximum 5 pages). They may reply on or before October 20, 2016 (maximum 2 pages). All submissions shall be filed with the Court on or before October 30, 2016.

Justice Ronald M. Laliberte Jr. Released: September 13, 2016