Sound Insurance Services Inc. v. Hossein, 2025 ONSC 2644

COURT FILE NO.: CV-21-00661762-0000
DATE: 20250515
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
SOUND INSURANCE SERVICES INC. Plaintiff – and – CHRIS HOSSEIN and GREENSIDES & BREEN INSURANCE BROKERS LIMITED Defendants
Stephen Gleave , for the Plaintiff
Philip Horgan & Raphael Fernandes , for the Defendant Chris Hossein Jeffrey Levine & Anthony Labib , for the Defendant Greensides & Breen Insurance Brokers Limited
HEARD: March 31, April 1, 2, and 3, 2025
AKAZAKI J.
REASONS FOR JUDGMENT
OVERVIEW

[ 1 ] This action provides a glimpse into the back room of the insurance brokerage business. In 2007, Sound Insurance recruited Chris Hossein, a personable and hard-working “producer.” A producer is a salesperson operating under a registered broker. Sound recruited him the proper way, by purchasing Mr. Hossein’s Book of Business (Book) from his existing employer and conveying an undivided 50% interest in exchange for a loan of half the purchase price. In 2021, he parted ways with Sound, believing pastures were greener at another brokerage. He knew this triggered an obligation to buy out Sound’s 50%. Otherwise, he had no business to bring to the new firm, Greensides & Breen.

[ 2 ] Greensides refused to honour its commitment to buy out Sound’s interest, unless Sound agreed to adjust the price after 12 months for the commissions on any policies that did not renew. Sound declined to include such a condition and insisted its negotiating partner was Mr. Hossein, not Greensides. Mr. Hossein, without means to pay the $432,000 amount set by the joint valuator, reported to work at Greensides without having bought Sound’s interest. Mr. Hossein’s lawyer breached the escrow terms of the failed transaction by transmitting to Mr. Hossein the proprietary client renewal data received from Sound. Mr. Hossein urged Greensides to complete the deal without insisting on the adjustment provision. Not knowing what escrow meant, Mr. Hossein unwittingly forwarded all the client data over to Greensides. Greensides put its staff to work compiling Mr. Hossein’s Book and directed Mr. Hossein to start soliciting the policy renewals. He only agreed to do so after receiving an indemnity from the expected lawsuit.

[ 3 ] Sound sued Mr. Hossein for breach of contract and Greensides for inducement of the breach. It also claimed against both defendants for breach of confidence and civil conspiracy. Counsel appearing before me advised that I need not determine the crossclaims or third party claim, because of the bifurcation order of Akbarali J. of June 7, 2023. Counsel for Sound also stated that the plaintiff was not seeking punitive damages and limited it to the $432,000 valuation.

[ 4 ] Mr. Hossein defended the contract claim by asserting that he made a compliant offer, that Greensides’ additional conditions frustrated his obligation to purchase Sound’s 50% share, and that the non-solicitation clause was unenforceable. He defended the tort claims on the basis that he did not misuse confidential information, was not a fiduciary of Sound, and that the plaintiff had failed to prove the elements of civil conspiracy.

[ 5 ] Despite these legal submissions, Mr. Hossein knew Greensides required him to breach the agreement with Sound. His tenure at Greensides turned out to be a nightmare, because he spent much of his time unlawfully soliciting Sound’s clients instead of Greensides buying his right to handle the renewals administratively and leaving him more time to grow his Book. He eventually left Greensides over constant staff conflicts. He also fell into depression and lost his marriage.

[ 6 ] Greensides defended the inducement claim by contending that it could not have induced Mr. Hossein’s breach of contract if Sound was in breach by failing to deliver the Book and if the restrictive covenant was unenforceable. As the recipient of the escrowed information, it also could not have committed a breach of confidence. Finally, it echoed Mr. Hossein’s submission that the facts did not support civil conspiracy.

[ 7 ] Both defendants also defended the damages claim on the basis that Sound continued to earn commissions on renewals during the interval between the closing date and the effective date of the transfer of the Book, and on clients Greensides failed to migrate from Sound. Mr. Hossein also claimed a set-off in the amount of $7,674.30 for unpaid commissions.

[ 8 ] The evidence and the parties’ positions therefore give rise to the following points:

1. Breach of Contract by Mr. Hossein
2. Inducement of Breach of Contract by Greensides
3. Breach of Confidence
4. Civil Conspiracy
5. Damages

[ 9 ] After setting off $7,674.30 and rounding, I have determined that the defendants are liable to Sound for damages assessed in the amount of $350,000, plus prejudgment interest and costs.

1. BREACH OF CONTRACT BY MR. HOSSEIN

[ 10 ] Sound submits that Mr. Hossein breached the 2007 Agreement by failing to purchase Sound’s 50% interest in his Book. To assess the validity of this claim, the court needs first to review the whole contract, to see how it operates. It contained the following material provisions:

1. Sound acquired the Book from Rai Grant Insurance Brokers for $415,864 (preamble and s. 5.2)
2. Sound remained the sole owner of all policy forms, renewal lists, and other client data (s. 5.1)
3. Mr. Hossein acquired 50% of the Book by borrowing half the purchase price from Rai Grant and repaying Sound by taking out a bank loan (s. 5.2)
4. Upon termination, non-solicitation of Sound’s clients for a period of two years, unless Mr. Hossein became 100% owner of his Book (s. 7.1)
5. Once Mr. Hossein became 100% owner of the Book, Sound would not solicit clients included in the Book for two years
6. On Mr. Hossein’s death, disability, or retirement, Sound would purchase the Book (s. 8.1)
7. On termination without retirement, Mr. Hossein would purchase the Book from Sound (s. 8.3)
8. The purchase price for either sale would be determined on consent or by a business valuator, or by arbitration.

[ 11 ] Through talent and industry, as well as support from Sound, Mr. Hossein doubled the value of his Book during the thirteen years he worked there. Sound could have kept him on indefinitely, but it was happy to honour its contractual obligation to send him on his way and cooperate in a seamless manner to ensure his clientele transitioned to the new brokerage. On January 20, 2021, Mr. Hossein tendered his 90-day notice of resignation. This set in motion a process for valuing Sound’s half interest in the Book by April 22, 2021.

[ 12 ] On April 1, 2021, the valuator appointed by Mr. Hossein and Sound, Paul Greenhow, valued the Book at $432,000 based on a mid-point estimate of the longevity of the policy renewals between 2.5 and 4.0+ years. By multiplying $297,951 of annual gross commissions by 2.9, and applying 50% as Sound’s share, Mr. Greenhow rounded the estimate down to $432,000.

[ 13 ] After the valuator’s report, the negotiations for completing the transfer of Sound’s interest made an unfortunate turn. On April 9, 2021, Greensides took over from Mr. Hossein in the transaction and proposed an adjustment agreement clawing back from the purchase price the value of commissions for clients who failed to renew within a 12-month period after the closing. Since that was not in the 2007 agreement, Sound insisted that Mr. Hossein was the counterparty in the transaction and refused to deal with Greensides. Mr. Hossein became the “meat in the sandwich” because his new brokerage was instructing him to require a term that his former brokerage was not required to accept.

[ 14 ] On April 22, 2021, Sound’s lawyer, Steve Borlak, sent an escrow package to Mr. Hossein’s lawyer, Jonathan Frustaglio. It consisted of various transfer agreements and a copy of Sound’s policy expiry list for Mr. Hossein’s Book. The only items missing from the package were signed letters to insurers instructing them to change the brokerage of record from Sound to Greensides. Because Greensides refused to fund the transfer without the adjustment agreement, Mr. Hossein was unable to complete the transaction. Instead, he agreed to solicit the clients over to Greensides, on condition that Greensides agreed to indemnify him for any liability to Sound.

[ 15 ] At this point in the narrative, Sound’s position is that it was ready, willing, and able to close, and that Mr. Hossein breached the agreement to purchase Sound’s share. In his email of April 22, 2021, to Trevor Cruise and Mitch Grossman at Stoneridge Insurance, the parent company of Greenside, Mr. Hossein fully appreciated that once Sound transmitted the letters to insurers transferring the policy renewals to Greensides, “any fall off would be minimal vs. going 1 by one.” In other words, there would be no need to adjust for lost renewals.

[ 16 ] Before leaving the subject of Greensides’ insistence on the adjustment agreement, I pause to observe that the valuator’s methodology included consideration of “payment terms, retention clauses, guarantees, restrictive covenants, indemnity holdbacks, producer contracts etc.” in arriving at the median commission multiplier of 2.9 to arrive at the $432,000 valuation for Sound’s 50% share. By seeking an adjustment clause – a.k.a. retention clause – Greensides was seeking to lower the purchase price when such an adjustment was already factored into the valuation.

[ 17 ] Greensides submitted that Sound did not fulfil its end of the bargain, because the transaction was to close in April 2021, but the transfer letters would not be effective until June. This interval allowed Sound to collect commissions on policies renewing during the month of May. The unchallenged evidence of Mark Giardetti, one of the principals of Sound, was that June was the earliest time for transitioning the policies with the insurers. Setting a cut-off date in April or May was certain to create administrative chaos on the insurer end, because it left no time for them to update their systems to ensure renewal notices went to Greensides instead of Sound. It was completely reasonable to use this practice, to prevent client confusion and having to amend renewal notices. I can think of nothing worse from the client’s perspective than uncertainty about the renewal of an insurance policy. A less orderly transition had the potential to disrupt renewals and thereby derogate from the value of the Book. Greensides’ tolerance for client dissatisfaction with the transition was evidently higher, and its insistence on the adjustment clause insulated it from the short-term financial impact of lost clients.

[ 18 ] A further reason why the June transition was not grounds for holding that Sound was not ready, willing, and able to close, was that the value of the Book was based on a formula and a 2.9-year multiplier for anticipated policy renewals and not on a present value of a finite length of time. Had Mr. Hossein been expected to retire in a period less than three years away, perhaps this issue could have had some materiality.

[ 19 ] Greensides also objected to Sound’s resistance to mid-term transfers of the policies. Sound acknowledged there were two ways to transfer the policies to Greensides. By picking a static date on which the broker of record for all the policies would change from Sound to Greensides, Greensides would take on the service responsibility for policies even though it had not collected a commission for a mid-term transfer of many policies. Sound preferred to have the transfer take effect during the annual renewal period. Greensides’ position was that this allowed Sound to continue to solicit new business from customers earmarked for Greensides.

[ 20 ] In his April 22, 2021, email to Messrs. Cruise and Grossman, Mr. Hossein pointed out that Sound was bound by a non-solicitation provision. Section 7.2 of the 2007 agreement did contain such a provision. In fact, the agreement was silent on the method for Mr. Hossein to port the Book over to the new brokerage. In theory, Sound could have insisted that Mr. Hossein contact each client, one by one, because control over the Book operated by alternating non-solicitation provisions depending on who was purchasing the other’s half interest.

[ 21 ] Neither Sound’s insistence on the June effective date nor its resistance to mid-term transfers provided a commercial advantage to Sound beyond the professional standard of avoiding confusion and disruption to clients. Greensides assumed Sound would breach its agreement with Mr. Hossein by marketing to the clients in the Book during the transition hiatus. This was more a reflection of Greensides’ business culture than a concern supported by evidence. Given that Mr. Hossein, as of April 22, 2021, agreed with Sound’s proposed closing, Greensides’ objections were immaterial. Mr. Hossein’s failure to purchase the Book by that date meant he breached s. 8.3 of the 2007 agreement.

2. INDUCEMENT OF BREACH OF CONTRACT BY GREENSIDES

[ 22 ] As restated by the Court of Appeal in Correia v. Canac Kitchens , 2008 ONCA 506 , at para. 99 , the elements of the tort of inducement of contractual breach are:

1. the defendant had knowledge of the contract between the plaintiff and the third party
2. the defendant's conduct was intended to cause the third party to breach the contract
3. the defendant's conduct caused the third party to breach the contract
4. the plaintiff suffered damage because of the breach

[ 23 ] Greensides conceded knowledge of the contract. It denied any intention to cause Mr. Hossein to breach the agreement, citing its efforts to work with Mr. Hossein’s lawyer to negotiate terms that Sound would accept. Once such negotiations failed, Greensides worked with Mr. Hossein to transfer his 50% interest to the new brokerage, leaving Sound’s 50% with Sound.

[ 24 ] Greensides’ position that it tried to help Mr. Hossein complete the purchase is entirely counterfactual. The reason the deal did not close was that Greensides would not fund the purchase without an adjustment clause that would effectively rewrite the 2007 agreement.

[ 25 ] Nevertheless, Greensides’ decision not to fund would not have amounted to inducement of the breach. Greensides did not stop Mr. Hossein from taking out another bank loan and paying Sound.

[ 26 ] The argument that Greensides worked with Mr. Hossein to bring his own 50% interest to the new brokerage was problematic, in two ways. First, s. 5.2 of the 2007 agreement plainly stated that the Book would be owned by Sound and Hossein “each as to undivided 50% interests.” The word undivided reappeared in the final sentence of that section to define their respective interests for the purpose of clauses such as the obligation to purchase on termination.

[ 27 ] Greensides pointed to evidence that the value of the Book he brought to Greensides by soliciting the customers was approximately half of the revenue of the whole Book. The truth was that Mr. Hossein failed to migrate half the business to Greensides, but Greensides instructed him to take over the whole Book. I will discuss the mechanics of this in the section below about breach of confidence. One cannot divvy up an undivided interest in property unilaterally. The court also heard evidence that a large part of the failed migration was attributable to Greensides’ refusal to write the insurance for one of Mr. Hossein’s biggest clients, a construction company worth $400,000 in annual commissions.

[ 28 ] Although the subject comes up typically in real property cases, the nature of an undivided interest is that it is a share in all the property: J.C.D. Holdings Ltd. v. Buie , at para. 17 . Combined with the s. 5.1 provision that Sound owned the renewal lists, the 2007 agreement’s provisions regarding ownership of the Book made it abundantly clear that it was an intangible asset allowing Mr. Hossein part ownership of the business for the purpose of revenue sharing. The idea of co-ownership is not foreign to most people. Perhaps owning part of a customer loyalty base is more divisible than, say, syndicated ownership of a racehorse, but in this context the contract precluded Mr. Hossein from soliciting any of the clients until he bought out Sound’s portion.

[ 29 ] Greensides argued that the non-solicitation provision in the 2007 agreement was unenforceable. It focused on the wording of s. 7.1, which included a prohibition against both soliciting and accepting business from Sound’s clients for a two-year period. It relied on H.L. Staebler Company Limited v. Allan , 2008 ONCA 576 , at paras. 20-58 , which contains a restatement of the law of restrictive covenants in the employment context. In Staebler , employees left one insurance brokerage to work for another. Non-solicitation clauses are reasonable for “ordinary” salespeople, whereas non-competition clauses are considered overly broad. The Court of Appeal applied the test for enforceability of restrictive covenants as stated in Elsley Estate v. J.G. Collins Insurance Agencies Ltd ., [1978] 2 S.C.R. 916, at pp. 923-24:

A covenant in restraint of trade is enforceable only if it is reasonable between the parties and with reference to the public interest. As in many of the cases which come before the courts, competing demands must be weighed. There is an important public interest in discouraging restraints on trade, and maintaining free and open competition unencumbered by the fetters of restrictive covenants. On the other hand, the courts have been disinclined to restrict the right to contract, particularly when that right has been exercised by knowledgeable persons of equal bargaining power. In assessing the opposing interests the word one finds repeated throughout the cases is the word “reasonable.” The test of reasonableness can be applied, however, only in the peculiar circumstances of the particular case. Circumstances are of infinite variety. Other cases may help in enunciating broad general principles but are otherwise of little assistance.

It is important, I think, to resist the inclination to lift a restrictive covenant out of an employment agreement and examine it in a disembodied manner, as if it were some strange scientific specimen under microscopic scrutiny. 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.

[ 30 ] If courts have shied away from enforcing restrictive covenants in employment contexts, they have treated commercial covenants related to the sale of a business as legitimate commercial interests: Payette v. Guay Inc. , 2013 SCC 45 , [2013] 3 S.C.R. 95, at para. 37 .

[ 31 ] In 2007, Sound bought the whole book of business from Mr. Hossein’s previous brokerage and allowed him to acquire a 50% stake. The half he did not acquire is at issue in this proceeding. Without having to delve into the difference between Mr. Hossein’s status as an independent contractor and an employee, the totality of the circumstances point to the covenant in s. 7.1 as being reasonable and fair. Mr. Hossein knew that he had only paid for half the Book. All he had to do was to finance the purchase of the remaining half, and s. 7.1 no longer applied.

[ 32 ] In his April 22, 2021, email to Messrs. Cruise and Grossman, he pointed to the fact that Sound would be precluded from soliciting clients in the Book. While it is true that Sound’s 50% increased in value over Mr. Hossein’s term, so did his. Instead of trying to find a pigeon-hole for this case in the case law, all the surrounding circumstances pointed to a fair and equitable means of dividing the mutual investment in the Book.

[ 33 ] The idea that Greensides aided Mr. Hossein to solicit the clients over to Greensides was not simply an argument made by its counsel at trial. Sound read in the following extract from Greensides’ examination for discovery (italics added):

178. Q. Well, the deal wasn't going to close on terms that were acceptable to Greensides and Stoneridge; correct?
     A. Yes.
179. Q. So, you advised Mr. Hossein to go ahead and transfer the clients from Sound anyway?
     A. Well, he owned 50 percent .
180. Q. Fair enough. And it was your view that he was entitled to move those clients with him on joining Greensides?
     A. Yes.
181. Q. But it would also be your understanding that Sound may take exception to that and contemplate litigation if the deal didn't close?
     A. Possible.
182. Q. And it's my view that that is, in fact, part of the reason why Greensides and Stoneridge agreed to indemnify Chris Hossein with respect to any action by Sound?
     MR. BROWN-OKRUHLIK: Are you asking him
     to agree with that?
     MR. HORGAN: Yes.
     THE WITNESS: Yes .

[ 34 ] Suspending disbelief about the contention that Greensides only encouraged Mr. Hossein to go after half of the Book, Mr. Grossman’s evidence makes it clear that Mr. Hossein only agreed to solicit Sound’s clients without completing the purchase once Greensides agreed to indemnify him against liability. The indemnity agreement was an inducement for Mr. Hossein to solicit Sound’s clients without having completed the purchase of the Book. The inducement had two logically related consequences.

[ 35 ] The obvious consequence is the breach of s. 7.1 resulting in loss of business and revenues. Greensides’ assertion that it migrated about 50% at least acknowledges that the inducement caused harm to Sound.

[ 36 ] The second consequence was that Mr. Hossein did not perform the obligation under s. 8.3 to buy out Sound’s interest in the Book for $432,000.

[ 37 ] Subject to the appropriate remedy in damages, the conclusion that Greensides is liable for inducement of Mr. Hossein’s breaches of ss. 7.1 and 8.3 of the 2007 agreement is inescapable.

3. BREACH OF CONFIDENCE

[ 38 ] The breach of confidence claim is based on two connected elements. First, Sound refers to the proprietary right to the client lists. Second, whatever its status, Mr. Borlak sent the client policy expiration report – “APS Schedule A Book of Business” – in an April 22, 2021, email to Mr. Frustaglio, stating they were to be held in escrow pending receipt of a wire transfer of $432,000. The only documents that Mr. Borlak did not send over were Sound’s signed transfer notices to insurers. Those transfer notices would have completed the transfer of the Book, by allowing Mr. Hossein and Greenside to have policy renewals sent to Greenside instead of Sound. The expiration report contained information about clients’ insurance policies, effective dates, and expiration date. This compiled data allowed a brokerage to know when to contact a client before insurers sent policy renewals to Sound.

[ 39 ] Incredibly, Mr. Frustaglio forwarded Mr. Borlak’s email, with all the escrowed attachments, to Mr. Hossein, with a note: “See below. please address with trevor.” Mr. Hossein, who testified that he did not understand what “escrow” meant, then forwarded the same email to Messrs. Cruise and Grossman in his April 22 email. Then, as admitted by Mr. Hossein and Bonnie Robinson (Greenside’s Director of Broker Services), orders came from Greensides management to have staff members transpose Sound’s policy expiration report data to a spreadsheet for Mr. Hossein to solicit the clients to renew their policies with the Greensides brokerage.

[ 40 ] The expiry/renewal lists were proprietary, in that Sound’s contract with Mr. Hossein clearly stated Sound was the sole owner, under s 5.1 of the 2007 agreement. Ownership, however, does not mean the information is inherently confidential if the information is already in the recipient’s possession without being disclosed in confidence. Thus, if a departing employee has kept client contact details on a personal device, the information is not inherently confidential: Tar Heel Investments Inc. v. H.L. Staebler Company Limited et al , 2025 ONSC 240 , at para. 197 . However, proprietary information can take on confidential status if the employer or owner would have been the only one capable of compiling it for a specific use: Canadian National Railway Company v. Holmes et al ., 2022 ONSC 1682 , at paras. 163-70 . The method of generating the information and the circumstances of disclosure create the duty of confidence: Lac Minerals Ltd. v. International Corona Resources Ltd ., [1989] 2 SCR 574, at pp. 656-57.

[ 41 ] Without the need to pick over the nuances of this case law, the circumstances of the leak of the lists should have been a red flag for all concerned. Every day, lawyers receive documents in escrow to facilitate efficient closing of transactions. Whether it be consents to court orders, settling litigation, or general assignments of property, lawyers receive such documents knowing there is an implied obligation to hold them without releasing them to their clients, until the clients perform their counterpart duties. The escrow undertaking impressed on the lists a confidential quality, in that no one at Greensides could use them until Sound received the sale proceeds. If the $432,000 had been sent to Mr. Borlak in escrow, and he had casually disbursed it to Sound before Sound sent over all the required transfer documents, the tables in this lawsuit would have been turned.

[ 42 ] Mr. Hossein is therefore liable for the breach of the escrow undertaking committed by his lawyer, acting as his agent. Mr. Hossein’s ignorance of the meaning of the undertaking does not excuse him from the lawyer’s conduct in receiving information in circumstances of confidence and releasing it to him and to Greensides before the transaction closed.

4. CIVIL CONSPIRACY

[ 43 ] The elements of the tort of civil conspiracy are well known and generally hard to establish. The cases fall into two paradigms. The first is conduct of the defendants for the predominant purpose of harming the plaintiff, whether by lawful or unlawful means. The second is unlawful conduct directed toward the plaintiff, that the defendants know or ought to know is likely to cause harm to the plaintiff. In each instance, the defendants must be found to have acted in combination: in concert, by agreement, or with common design: Agribrands Purina Canada Inc. v. Kasamekas , 2011 ONCA 460 , at paras 24-25 .

[ 44 ] The tort of conspiracy usually receives treatment as an alternative claim because it imposes liability where the conduct may fall short of commission of another tort or civil breach. If liability attaches on such other basis, the doctrine of merger makes conspiracy redundant: Wolf v. Attorney General (Ontario) , 2012 ONSC 72 , at para. 48 . See also: Hunt v. Carey Canada Inc ., [1990] 2 SCR 959, at p. 991.

[ 45 ] In this case, I have found Mr. Hossein liable in breach of confidence but not Greensides. I have also found Greensides liable in inducement of Mr. Hossein’s breach of contract. The factual and legal matrix for each of these nominate torts is different, in that the conduct directed at Sound is separate and leads to different remedial outcomes. The requisite element of combination is therefore absent. To the extent the torts committed against Sound required the defendants to act in concert, the doctrine of merger would negate the necessity to make a finding of conspiracy.

[ 46 ] Sound has therefore failed to make out a claim in civil conspiracy. Nevertheless, I would cut off any argument that this failure to prove the pleaded claim should affect the disposition of costs by stating that both the breach of confidence and the inducement of the breach of contract offended basic principles of reasonable and honest business practices.

5. DAMAGES

[ 47 ] The defendants submitted that the $432,000 claim was substantially nullified or mitigated, because Mr. Hossein failed to migrate the entire Book from Sound. What remains in Sound’s business is a stock of policy renewals and access to clients from whom it can build the business.

[ 48 ] The defendants point to earnings by Sound of $303,321 on Mr. Hossein’s Book since April 2021, calculated by running the policy reports from that date to the present time. These consist of nil amounts on clients Mr. Hossein migrated to Greenside or lost from the Book, and commissions earned on premiums from the remainder. The defendants value the retained value of the Book in Sound’s business at $150,476 for a total of $453,797. They also point to the fact that Sound no longer pays a producer for a portion of the commissions.

[ 49 ] Finally, Mr. Hossein has made a set-off claim of $7,674.30 in unpaid commissions which somehow got orphaned in the dispute and the litigation.

[ 50 ] Although the defendants partly characterized their argument in terms of the duty to mitigate, this is not the same as the typical case of an aborted land sale, in which the vendor is required to mitigate losses by putting the property on the market. While the valuator considered the market for the Book, putting up a portion for sale is not as simple as listing a home on MLS. Since Sound is in the insurance business and owed regulatory and professional duties to its clients, it made sense to retain the business instead of offering it up for sale. Therefore, the defence argument that the court should avoid double recovery is more applicable.

[ 51 ] In Agricultural Research Institute of Ontario v. Campbell-High , at paras. 31-40 , the Court of Appeal considered the damages incurred by fruit farmers after the Crown backed out of an agreement to buy a restrictive covenant. The court held that there was no loss, because the value of the covenant depressed the market value by an equivalent amount. It did uphold the award of consequential carrying costs resulting from the failure to purchase the covenant.

[ 52 ] If the value of the remaining Book is about $150,746, however, the fact that it continues to bring in a revenue stream amounts to double counting of the “mitigation.” The adjustment issue aside, Greensides would not have paid $432,000 if it knew that was all it could ever earn from 50% of Mr. Hossein’s Book. One must compare apples with apples. The court must also consider the fact that Greensides and Mr. Hossein targeted the whole Book for migration to Greensides. If the right to solicit was the core object of value in the deal, Greensides received it when it seized on the policy renewal lists and set Mr. Hossein to the task of getting in all the business.

[ 53 ] While a simple reduction of $150,746 might appear obvious, the valuation report provides further insight into the multi-factor analysis that one must engage before arriving at a figure. The valuator considered Mr. Hossein’s Book in the context of his role as the producer, its size and composition. The critical mass of any business is a factor in its longevity. Implicit in the evaluative process is the recognition by both Mr. Hossein and Sound that the Book is worth more in Mr. Hossein’s care than in Sound’s, because it represents goodwill and loyalty cultivated by the producer.

[ 54 ] In his evidence, Sound’s principal Mr. Giardetti testified that there was no guarantee that the figures outputted by its client management system represented profits, and that it would have cost Sound extra person-hours to rebuild the portion of the Book that Mr. Hossein and Greensides failed to take away. In other words, the full value of the Book contained goodwill to Mr. Hossein. Had the defendants proceeded with the purchase in the orderly, fair, and commercially apt method that Sound had proposed on the date of closing, Greensides would have received full value for its money.

[ 55 ] Because of the chaotic outcome of the failed closing, the whole Book likely lost value. Some clients were not happy with the transition to Greensides. Mr. Hossein, who had not counted on spending so much time redeveloping his clientele, was in constant conflict with the staff at Greensides over operational and administrative annoyances. Greensides terminated him in May 2022. The principal of Greensides and Stoneridge, Ted Puccini, told him to get a lawyer, because he would bankrupt Mr. Hossein and his parents and sue his ex-wife.

[ 56 ] Sound’s remainder portion had to be rebuilt without Mr. Hossein’s involvement. In the absence of a better method in the evidence, the reports put into evidence by Greensides of annual commissions earned on Sound’s retention of the Book provides the only fair means of measuring the potential double recovery. Based on an average annual commission stream of about $75,000, I set that as the reasonable deduction from the sale price.

[ 57 ] The resulting figure for damages arising from Mr. Hossein’s breach of s. 8.3 of the 2007 agreement is therefore $357,000. The same figure is the measure of Greensides’ liability for damages arising from inducement of the breach of s. 8.3. After further setting off $7,674.30 owed to Mr. Hossein, the net liability is rounded to $350,000.

[ 58 ] The measure of damages for breach of s. 7.1 and for the breach of confidence is not the same, however. Unlike the breach of contract claim, there is no contractual formula to value and calculate damages based on a book of business. In principle, Mr. Hossein could be liable for the value of two years of commissions earned by breaching the non-solicitation provision in s. 7.1. The breach of confidence claim might seem coterminous with the s. 7.1 claim, but there is the added value of the compiled list in the hands of a competitor. In theory, therefore, the damages are likely to approximate the above figure and perhaps amount to more.

[ 59 ] However, Sound’s evidence on the issue of damages focussed on the principal legal theories in the action, in breach of contract and inducement of breach. In the absence of cogent evidence to measure the damages resulting from the s. 7.1 breach and the breach of confidence, I will decline to engage in a separate assessment of the damages arising from these breaches. Therefore, I assess the damages owed to the plaintiff, no matter the basis of liability, at $350,000.

CONCLUSION

[ 60 ] The defendants are jointly and severally liable to the plaintiff for damages in the amount of $350,000, plus prejudgment interest and costs. Prejudgment interest shall accrue from April 22, 2021.

[ 61 ] I encourage the parties to settle the prejudgment interest calculation and the costs liability resulting from this judgment. In the event they are unable to do so, the plaintiff may contact my judicial assistant for a schedule for exchange of written submissions.

Akazaki J.
Released: May 15, 2025.

COURT FILE NO.: CV-21-00661762-0000
DATE: 20250515
ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: SOUND INSURANCE SERVICES INC. Plaintiff – and – CHRIS HOSSEIN and GREENSIDES & BREEN INSURANCE BROKERS LIMITED Defendants REASONS FOR JUDGMENT Akazaki, J.

Released: May 15, 2025.