COURT FILE NO.: CV-21-00000075-0000
DATE: 2021-12-14
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: TRACEY LYNN KIRSTINE v. NEIL KIRSTINE, JEREMY ELLIS, CHRISTINE BRANDT, TONE VALERIOTE and DONNA SPARKS
BEFORE: Van Melle J.
COUNSEL: M.A. Cummings, for the Plaintiff J. Fischer, for the Defendants Neil Kirstine and Jeremy Ellis L. Book, for the Defendant Christine Brandt Tone Valeriote in person Donna Sparks in person
HEARD: November 25, 2021
E N D O R S E M E N T
[1] The plaintiff, Tracey Kirstine ("Tracey") obtained an interim interlocutory injunction from Justice Sproat on May 14, 2021. On November 25, 2021, I heard a one-day motion. Tracey asks that the injunction be continued until the issues between the parties have been resolved through litigation or on consent. She also seeks an order that the defendants be restrained from soliciting her clients. The defendants seek to have this motion dismissed.
[2] As will become apparent, the interests of the defendants Neil Kirstine ("Neil") and Jeremy Ellis ("Jeremy") are different from those of the other defendants.
[3] Christine submits that as she was not a partner she should not be a party to this motion and that the request for Christine to be bound by the injunction is overreaching and heavy-handed. Tone Valeriote ("Tone") filed materials but did not make any submissions on the motion. I assume that his position is the same as Christine's. Donna Sparks, who is self-represented, did not file any materials, and made no submissions.
[4] In support of this motion 1,712 pages (not including Tone's single spaced 6-page affidavit) were uploaded to CaseLines on behalf of 5 parties. While many of the documents were uploaded separately which made it somewhat easier to navigate, the documents, including the facta, were not consistently hyperlinked. In some of the facta, the cases were hyperlinked, but only to the case in general, not to the specific reference. (This was particularly difficult where a quote from a case did not have the page number of the quote and was not underlined). Where affidavits, cross-examinations were referenced, hyperlinks should have been inserted which would have made it easier to attempt to follow and the respective arguments.
[5] The parties did upload the documents and exhibits separately, which made my job a bit easier, although a separate document listing all the uploaded documents (and the CaseLines page numbers) would have been helpful.
[6] After the conclusion of the hearing while reviewing the documents, I realized that Tone had filed an affidavit that had not been uploaded to CaseLines. I was able to obtain a copy directly from the trial office. If this litigation continues and if Tone files more material, he should be aware of his obligation to upload his documents to CaseLines. If he does not do so, he runs the risk that the presiding judge will not have his materials.
[7] I mention the above because it has taken me longer than it should have to write and release this decision. It takes a long time to go back and forth between many documents and pages electronically.
[8] I had to examine the affidavits especially carefully as there was a submission by Tracey that the defendants' affidavits are flawed. Tracey submitted that the affidavits do not comply with the requirements for affidavits in the Rules of Civil Procedure in that the affidavits are replete with hearsay. Where it is apparent that the information in the affidavit is not from personal information there is no indication in the affidavits as to the source. By way of example, Jeremy describes Neil and Tracey's relationship. Much of what he says is not information of which he would have personal knowledge, yet there is no explanation as to how he came to know this information. This is particularly important given the Neil did not provide an affidavit for this motion and relies upon Jeremy's evidence.
[9] Christine admitted in her cross-examination that much of what is in her affidavits was gleaned from the defendants' motion record. Again, this is not referenced in the affidavits itself.
[10] The jurat on Tone's affidavit is signed by a person who is not identified under the signature (the signature is not legible) and says: Commission for Taking Affidavits (or as may be). While the swearing of affidavits in the virtual world has changed, it appears that this document was signed in person before someone who may (or may not) have been a commissioner of oaths.
[11] The affidavits of all three were expanded upon by cross-examination. It became apparent that the affidavits could not be relied upon except as confirmed or expanded upon in cross-examination.
[12] On May 14, 2021, Justice Sproat found that it would be appropriate, based on the evidence before him, to grant an interim interlocutory injunction. In his endorsement he sets out the background to the dispute between Tracey and the defendants. Briefly, Tracey and Neil were married to each other. They worked together as real estate agents. They separated on May 14, 2019 and entered into a separation agreement dated May 27, 2020. Tracey, Neil and Jeremy entered into a partnership agreement whereby they agreed to carry on a real estate business in partnership for two years commencing January 1, 2020 under the name The Kirstine Group.
[13] The partnership was terminated as of May 1, 2021. The parties attempted to negotiate their differences, however when that failed Tracy brought a motion for an injunction returnable on May 12, 2021.
[14] Neil and Jeremy's counsel for the May 12th hearing was not the counsel who appeared on their behalf before me. In the hearing before me, counsel for Neil and Jeremy said that they were "rushed to the courtroom door", however Justice Sproat granted the requested adjournment subject to conditions. (He also found that the defendants knew since April 14 that failing agreement, some action would be taken by Tracey.) Those conditions were that the defendants were restrained from certain actions and there was a timetable for the preparation and exchange of materials.
[15] Justice Sproat set out the law relating to partnerships. He referenced McCormick v. Fasken Martineau Dumoulin LLP, 2014, SCC wherein at paragraph 47 the Supreme Court of Canada quoted from the Partnership Act section 22 (1) A partner must act with the utmost fairness and good faith towards the other members of the firm in the business in 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.
[16] At paragraph 48 of McCormick the Supreme Court said:
This duty is an important source of protection for partners: Hitchcock v. Sykes (1914), 1914 5 (SCC), 49 S.C.R. 403, at p. 407; Cameron v. Julien (1957), 1957 367 (ON CA), 9 D.L.R. (2d) 460 (Ont. C.A.); Rochwerg v. Truster (2002), 2002 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…
[17] Justice Sproat went on to quote from In Rochwerg v. Truster (2002), 2002 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.
[18] Justice Sproat indicated that he was not making any findings of fact as to what occurred. He was simply reviewing the evidence before him to determine whether it would be appropriate to grant interim relief pending the adjournment. Of the allegations he said: "There is certainly evidence which, if ultimately accepted after all affidavits are filed and cross-examinations conducted, would indicate that Neil and [Jeremy] did not honour their obligations as partners."
[19] The evidence to which Justice Sproat referred appears at paragraph 14 of his endorsement:
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 Facebook 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.
[20] After the exchange of affidavits and cross-examinations, it is confirmed that the events to which Justice Sproat referred, all occurred.
[21] During cross-examination Jeremy acknowledged that he and Neil did not comply with the requirements of a letter dated April 9, 2021 from Tracey's counsel requiring Jeremy and Neil to:
a) Provide Tracey with the password for Donna Sparks' email account, which Tracey had always had;
b) Instruct Donna Sparks to assist Tracey with administrative tasks in the normal course including the preparation of flyers and other promotional materials;
c) Ensure that Tracey was included in group communications regarding the business and affairs of the partnership;
d) Cease and desist making inflammatory and disparaging remarks about Tracey; and
e) Ensure that all business records, including client files, were preserved.
[22] Of particular concern is the failure to cease and desist making inflammatory remarks and to the failure to ensure that all business records, including clients' files, were preserved.
[23] The defendants went so far as to post on The Kirstine Group Facebook page on the day of the motion, some 12 days after the termination of the partnership.
[24] By way of cross-examination, Jeremy confirmed that Tone was added to the Facebook group after The Kirstine Group's media was to be shut down. He was also added as a moderator to the group. It was Jeremy's belief that the admin staff reinstated Tone. He acknowledged that he and Neil would have instructed the admin staff to reinstate Tone after the partnership was supposed to have been dissolved. Jeremy acknowledged that Tone made a number of postings to the Facebook page on that date as well.
[25] Despite the fact the no one was to be using the Facebook page belonging to The Kirstine Group, posts continued to appear on May 2, 3, 4. After May 1 all the defendants became moderators on the Facebook page of The Kirstine Group despite the fact that that Facebook page was not to be used after May 1. He said:
We expanded it to have the, the remaining team members to have access to [the Facebook page], not the member that left the team to have access to the team account.
[26] Even more troubling, I accept Tracey's allegations that in addition to the above, the defendants continued their behaviour after Justice Sproat's Order.
[27] For example on May 25, 2021 a joint statement was posted to The Kirstine Group's Facebook page. The wording had been agreed to, but there were photographs at the bottom of the page which were only of the defendants with their contact information. The photograph contains the logo used by The Kirstine Group. On the left side of the page, under the photograph which says the Kirstine-Ellis group, there is a smaller photograph of the defendants with the words the Kirstine-Ellis Group in small letters next to the words, in larger print and bold, The Kirstine Group, under which appears "@thekirstineellisgroup – Real Estate". The email address on the page was: donnasparks@kw.com. This posting would have created confusion in the minds of the public and anyone who viewed this page. Jeremy acknowledged during his cross-examination that on May 25, 2021 The Kirstine Group was still running, but is unable to say for how long.
[28] Jeremy confirmed that the Facebook page was used to boost promotions with paid advertising and that the defendants continued to use The Kirstine Group page to do so after May 1, 2021 and after Justice Sproat's interim interlocutory injunction. There is nothing to say that the defendants are not continuing to use that page.
[29] On August 24, 2021 Neil posted on the Facebook page of another sales representative: "Jenn, a big welcome from the Kirstine group."
[30] The defendants continued to use signs with the logo of The Kirstine Group until June 2021. They simply pasted their new name over the old signs.
[31] The defendants did not comply with Justice Sproat's order that all records of all calls to the new phone number on the Facebook page of The Kirstine Group 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.
[32] The failure of the defendants to comply makes it very difficult to assess damages.
[33] In addition to the examples that I have set out showing non-compliance with Justice Sproat's order, Jeremy in one of his affidavits says that the order goes beyond what was contemplated by the partners and is profoundly unfair. I have no doubt that Jeremy's opinion of the order is one of the reasons for non-compliance.
[34] The defendants are resisting the request for a non-solicitation order. Neil and Jeremy resist on the grounds that there is no such requirement in their partnership agreement. Christine and Tone take the position that there is no document compelling non-solicitation from them. Both of them conveniently seemed to forget that the contract they signed as independent contractors continued from year to year. Tone's contract, dated April 24, 2105, commences with the following:
All parties understand that this agreement is for a period of 12 consecutive months, commencing on April 22, 2015. It is also understood that this agreement is automatically renewable based on the stipulations herein laid out.
[35] Although the contract is between Neil and Tone, Tone agrees that he is to work exclusively as a Sales Representative for The Kirstine Group. The agreement specifically provides for non-solicitation of clients for a 24 month period after termination of the contract.
[36] Although no signed copy was produced, it appears that Christine entered into a similar contract on February 1, 2017. It also had a provision that the contract was automatically renewable. It also contained the provision that there was to be no solicitation of clients for 24 months following the termination of the contract.
[37] As far as Neil and Jeremy are concerned, early on in these proceedings previous counsel confirmed that there would be no solicitation of the others' clients. Neil and Jeremy's counsel at the motion acknowledged that this agreement was made.
[38] Christine and Tone ask to be released from this lawsuit on the basis that the dispute is between the partners and does not involve them. I decline to accede to this request. They too have personally been involved in actions that could be damaging to Tracey. They have also been involved in such actions on behalf of Neil and Jeremy. (For example, Tone continued to show that he was associated with The Kirstine Group on his Linked-in page)
Test for Injunctive Relief
[39] Section 101 of the Courts of Justice Act, R.S.O. c. C.43, provides that an interlocutory injunction may be granted where it appears to the judge to be just or convenient to do so. The test for granting an injunction is set out in the SCC decision of RJR MacDonald Inc. v. Canada (Attorney General) 1994 117 (SCC), [1994] 1 SCR 311 and consists of three parts:
a. There is a serious issue to be tried;
b. The moving party will suffer irreparable harm if the relief is not granted; and
c. The balance of convenience favours granting the injunction.
The test is not to be rigidly applied. It is to be considered as a whole. Strength in one part of the test can make up for a weakness in another. The court is to consider, in light of the three parts of the test, whether injunctive relief is appropriate: Brown v. First Contact Software Consultants Incorporated, 2009 48504 (ONSC), at paras. 21-22.
[40] Applying the 3-part test to the facts of this case, I find that there is a serious issue to be tried. Despite the Partnership Act and the McCormick case Neil and Jeremy have not conducted themselves with utmost fairness and good faith. They have breached their duty of disclosure concerning full information of all things affecting their partnership.
[41] As far as irreparable harm is concerned, the defendants' behaviour in continuing to use the name of The Kirstine Group and in failing to produce the records that they were ordered to produce by Justice Sproat, is a claim that cannot be quantified in dollars. It is very possible that Tracey has lost good will and damage to her reputation and loss of market share.
[42] It cannot be overstated that the defendants' view of Justice Sproat's order and their failure to abide by Justice Sproat's order is a problem. This failure undermines their credibility before this Court and causes concerns regarding their actions vis-à-vis Tracey.
[43] Given all the defendants' failure to act in accordance with their obligations I find that the balance of convenience favours Tracey. Regarding the balance of convenience Justice Gilmore was quoted in Celnza v. Remax Premier Inc. 2017 ONSC 7334, by Justice Favreau, at paragraph 42:
The balance of convenience favours the granting of the injunction. Such an order will not affect Mr. Celenza's ability to carry on his busines as a real estate agent. He is not prevented from earning an income, just from engaging in certain behaviour.
[44] This is on all fours with the case at bar. The defendants can carry on their business but must stop engaging in the behaviour that has brought them before the court.
[45] I will grant an order continuing the order made by Justice Sproat, (as requested by Tracey) once I have the issued and entered order. (At present I have a draft order which has not been finalized). Until I am able to grant an order, the conditions set out in Justice Sproat's endorsement dated May 14, 2021 will continue to be in effect. Once the order has been issued and entered it is to be forwarded to me by Tracey. I will also require draft wording for a non-solicitation order and will want it to reflect the agreement among the parties that was made at the outset. If the parties are unable to agree on the wording, they can send me their version and I will include it in my order.
[46] I am mindful that Justice Sproat reserved the issue of costs on the May 12, 2021 motion to this motion. In that regard I would suggest that counsel and the self-represented parties discuss the issue of costs among themselves. Absent any relevant Offers to Settle, Tracey is entitled to her costs for both appearances from all the defendants. If the parties cannot agree on the issue of costs, I will accept costs submissions of three pages double spaced, not including a Bill of Costs and any relevant Offers. The plaintiff will have until January 15, 2022 to submit her submissions and the defendants will have 10 days thereafter to respond. There is no right of reply. The cost submissions are to be sent to Brenda.berger@ontario.ca.
Van Melle J.
DATE: December 14, 2021
COURT FILE NO.: CV-21-00000075-0000
DATE: 2021-12-14
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: TRACEY LYNN KIRSTINE
AND
NEIL KIRSTINE, JEREMY ELLIS, CHRISTINE BRANDT, TONE VALERIOTE and DONNA SPARKS
BEFORE: The Honourable Justice Van Melle
COUNSEL: M.A. Cummings, for the Plaintiff J. Fischer, for the Defendants Neil Kirstine and Jeremy Ellis L. Book, for the Defendant Christine Brandt Tone Valeriote in person Donna Sparks in person
ENDORSEMENT
Van Melle J.
DATE: December 14, 2021