Court File and Parties

COURT FILE NO.: CV-21-075

DATE: 20210514

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Tracey Lynn Kirstine, Plaintiff

AND:

Neil Kirstine, Jeremy Ellis, Christine Brandt, Tone Valeriote and Donna Sparks, Defendants

BEFORE: Justice J.R. Sproat

COUNSEL: M.A. Cummings, for the Plaintiff

N. Gupta, for the Defendants Kirstine and Ellis

Brandt, Valeriote and Sparks, self-represented

HEARD: May 12, 2021

ENDORSEMENT

Introduction

[1] The plaintiff Tracey Kirstine was married to the defendant Neil Kirstine. They separated on May 14, 2019. To avoid confusion counsel referred to the Kirstines by their first name and I will do the same.

[2] The separation agreement is dated May 27, 2020. It attaches a copy of a partnership agreement among Tracey, Neil and the defendant Jeremy Ellis whereby they will carry on a real estate business in partnership for two years commencing January 1, 2020. The business used the name The Kirstine Group.

[3] While the parties differed somewhat as to how and why the termination came about, it was common ground that the partnership was terminated as of May 1, 2021. The parties attempted to negotiate their differences, however, when that failed Tracey brought an application for an injunction which was made returnable on May 12, 2021.

[4] Ms. Gupta agreed to take on the file on May 7, 2021, subject to checking for any conflicts and obtaining a retainer. She was formally retained on May 10, 2021. Ms. Gupta did an excellent job in preparing responding materials and presenting argument on short notice.

[5] Ms. Gupta suggested that I should factor into my decision the fact that more detailed materials could have been provided but for the short notice. I would, however, give this little weight given that the defendants had retained Ms. Cummings and that she had advised on April 14, 2021, that there was the possibility of a court application if necessary. Further, as I will later explain, the court application was precipitated by communications purportedly on behalf of The Kirstine Group after the termination of the partnership agreement.

[6] Tracey relied upon her own affidavit and supplementary affidavit. Neil and Mr. Ellis relied upon the affidavit of Mr. Ellis.

[7] Ms. Gupta requested an adjournment to file further and better evidence and to allow for cross-examinations. Ms. Cummings did not take issue with that, however, submitted that the adjournment should be granted subject to certain conditions.

THE LAW

[8] In McCormick v. Fasken Martineau Dumoulin LLP, 2014 SCC 39, [2014] 2 S.C.R. 108, at paras. 47-48 (emphasis in original), the Supreme Court of Canada stated:

[47] …One of the duties partners owe each other is the duty of utmost fairness and good faith, set out in s. 22 of the Partnership Act

22 1) A partner must act with the utmost fairness and good faith towards the other members of the firm in the business of the firm.

(2) The duties imposed by this section are in addition to, and not in derogation of, any enactment or rule of law or equity relating to the duties or liabilities of partners.

[48] This duty is an important source of protection for partners: Hitchcock v. Sykes (1914), 1914 CanLII 5 (SCC), 49 S.C.R. 403, at p. 407; Cameron v. Julien (1957), 1957 CanLII 367 (ON CA), 9 D.L.R. (2d) 460 (Ont. C.A.); Rochwerg v. Truster (2002), 2002 CanLII 41715 (ON CA), 58 O.R. (3d) 687 (C.A.). While this case does not require us to decide the point, the duty of utmost good faith in a partnership may well capture some forms of discrimination among partners that represent arbitrary disadvantage…”

[9] In Rochwerg v. Truster (2002), 2002 CanLII 41715 (ON CA), 58 O.R. (3d) 687 (C.A.), at paras. 22-23, the Ontario Court of Appeal noted that partners have a duty of good faith, including disclosure of relevant information:

[22] Equitable principles recognized by the courts during the last 100 years impose on partners duties of loyalty, utmost good faith and avoidance of conflict and self-interest. In Ontario, the principles which inform these duties are partially reflected in the Act. At all times while Rochwerg was a partner of RTZ, he owed these duties to his partners.

[23] In equity and under the Act, partners are subject to a strict duty of disclosure concerning full information of all things affecting their partnership.

THE EVIDENCE

[10] At this stage I am not making any findings of fact as to what occurred. I am simply reviewing the evidence before the court to determine whether it would be appropriate to grant interim relief pending the adjournment.

[11] There was a partners’ meeting on April 1, 2021. It was common ground that this meeting was to discuss planning as Neil transitioned towards retirement and Tracey transitioned to greater time off and bringing her daughter, Livia, along in the business. Tracey’s perspective was that fundamental changes to the partnership would take place at the end of its term although she did agree that it was appropriate to make some relatively minor adjustments to the financial arrangements. Neil’s perspective was that Tracey was looking to reopen the partnership agreement.

[12] Neil then sent a text to Tracey and Mr. Ellis on the evening of April 5, 2021, suggesting that there be fundamental changes to the partnership agreement and that if the others did not want to stay as a team he was prepared to go it alone.

[13] Tracey then called Neil and they had a heated discussion. Tracey then sent Neil a text indicating that he should feel free to go and should confirm his intentions. Neil texted back that he had made his decision and he suggested May 1 as a date to implement the change, effectively being the termination of the partnership.

[14] There is certainly evidence which, if ultimately accepted after all affidavits are filed and cross-examinations conducted, would indicate that Neil and Mr. Ellis did not honour their obligations as partners. This evidence includes the following:

(a) commencing April 8, 2021, Tracey was denied access to employee email accounts which she typically accessed in her role as branch manager; she was not invited to team meetings and was not sent pertinent information such as new listings obtained by the team;

(b) Neil and Mr. Ellis failed to attend, or even send a response, to a meeting Tracey called pursuant to the Partnership Act:

(c) Donna directed a client who called for Tracey to Neil;

(d) on May 2, 2021, Neil and Mr. Ellis had someone change the banner on the Kirstine Group Facebook page so that it no longer had photos of the team and changed the phone number;

(e) on May 2, 2021, The Kirstine Group Facebook page announced that Donna Sparks was now a licenced sales representative;

(f) on May 3, 2021, there was a somewhat bizarre posting on The Kirstine Group Facbook page referring to “Time and Karma”, and people who were once powerful ceasing to be. Tracey interpreted this as disparaging her.

(g) on May 4, 2021, The Kirstine Group Facebook page stated that The Kirstine Group had been rebranded as Keller Williams Innovation Realty and that a core value was that a group can accomplish much more than an individual. This was obviously misleading as The Kirstine Group included Tracey. Tracey interpreted the reference to an individual to be a reference to her.

ANALYSIS

[15] The leading authority continues to be R.J.R. Macdonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311. Having noted the exacting duty of good faith that partners have, I have no difficulty in concluding that there is a serious issue to be tried.

[16] Tracey’s claim is that communications purporting to be on behalf of “The Kirstine Group” have damaged her reputation. I agree that this is a claim that cannot be quantified in dollars. R.J.R. Macdonald states that, “… irreparable harm includes loss of good will or irrevocable damage to reputation and loss of market share” (at pp. 405 – 6).

[17] The order sought by Tracey, subject to modifications I will discuss, will correct some of the misleading statements posted on behalf of The Kirstine Group and will not harm the legitimate business interests of the defendants. As such, the balance of convenience favours Tracey.

[18] I will refer to Tracey’s draft order and indicate how it should be amended to implement these reasons.

[19] Aa to paragraph one, I would delete the words “and competing with the Plaintiff or otherwise breaching the agreement reached between the Plaintiff and the Defendants”. Given they will all be in the real estate business they will be competing and there is considerable uncertainty as to whether there was an agreement and, if so, exactly what was agreed. I would add to the end of the paragraph the following:

For this purpose, a customer of the Plaintiff is a client who has listed or sold a property with The Kirstine Group and for whom Tracey or Livia Cassidy were recorded as the listing agent or otherwise recorded as being entitled to the agent’s commission in relation to any transaction. Tracey shall provide the defendants with as complete a list as possible of who she says her customers are within 10 days.

[20] I agree there should be an order in the words of the paragraph two requirement, to cease and desist from using The Kirstine Group name. That will have no impact on the ability of the defendants to earn income.

[21] The paragraph three requirement to post an agreed Facebook message concerning the dissolution of the partnership is probably mutually beneficial. If the parties cannot agree within five days, they each should send me the version they propose, and I will determine what should be posted. The parties should be able to agree and there may be cost consequences if they do not act reasonably.

[22] Paragraph four is directed to determining, and perhaps limiting, any harm caused by the defendants who posted on Facebook that “The Kirstine Group” had a new phone number. The defendants shall produce records of all calls to that office number from May 1, 2021 to 14 days after the date of the Facebook posting of the dissolution of the partnership. That includes copies of all texts, emails or other communications from the person taking the call at that number, or reviewing voicemail messages left at that number, to any of the defendants regarding the call or message. Records to and including May 14 shall be produced by 3:00 p.m. on May 19, 2021. Thereafter, records shall be produced every second business day until 14 days after the Facebook posting announcing the dissolution of the partnership. I do not order the defendants to produce records related to calls to their personal phone numbers.

[23] While I would certainly not have entertained a stand-alone request for five lockboxes, I agree paragraph five of the draft order is reasonable and should be ordered.

[24] Costs of the May 12, 2021 motion are reserved.

[25] The schedule to proceed shall be as follows:

(a) further affidavits by May 25, 2021;

(b) cross-examinations by June 4, 2021;

(c) answers to undertakings by June 11, 2021;

(d) injunction hearing June 18, 2021, before Sproat J.

[26] I will, however, repeat what I said to the parties at the hearing. Based on long experience, it appears to me that this may turn out to be a case in which the legal fees incurred on both sides will far exceed any damages that might be awarded. The parties should consider a mediation–arbitration process. This might include reliance on affidavit evidence, time limited cross-examination and a final offer selection provision, as a means to contain the legal costs. If the parties agree, the schedule above may be extended or held in abeyance to allow for mediation–arbitration.

[27] I also note that the defendants have complaints about Tracey permanently deleting Instagram and YouTube content they say had value. While this has minimal relevance to the issues on the injunction, if the matter does not settle, these complaints will no doubt be advanced and further prolong matters.

SPROAT J.

Date: May 14, 2021