Evans v. Sports Corp., 2013 ABCA 14

• Judge: Côté, O'Brien and Bielby, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: November 30, 2012
• Citations: 2013 ABCA 14;(2013), 542 A.R. 330

Evans v. Sports Corp. (2013), 542 A.R. 330; 566 W.A.C. 330 (CA)

MLB headnote and full text

Temp. Cite: [2013] A.R. TBEd. JA.088

Richard E. Evans (appellant/plaintiff) v. The Sports Corporation (respondent/defendant)

(1103-0298-AC; 2013 ABCA 14)

Indexed As: Evans v. Sports Corp.

Alberta Court of Appeal

Côté, O'Brien and Bielby, JJ.A.

January 18, 2013.

Summary:

Evans was a sports agent. He was employed by The Sports Corporation (TSC), an Edmonton based sports agency, assisting in the management of current and prospective NHL hockey players. After Evans left his employment with TSC in April 2006, he sued TSC for wages and bonuses he alleged were owed to him. TSC counterclaimed, alleging that Evans breached the restrictive covenant in his employment agreement, and that he also breached his fiduciary obligations to TSC by competing in the industry and soliciting TSC's employees and clients.

The Alberta Court of Queen's Bench, in a decision reported at 523 A.R. 22, upheld Evans' claim in part. However, the court also upheld TSC's counterclaim, by finding that Evans had solicited TSC's employees and clients, breaching both the restrictive covenant in the employment contract and his fiduciary duty to TSC. Evans appealed those latter findings.

The Alberta Court of Appeal dismissed the appeal.

Equity - Topic 3606

Fiduciary or confidential relationships - General principles - What constitutes a fiduciary relationship - [See first Equity - Topic 3726 ].

Equity - Topic 3726

Fiduciary or confidential relationships - The employer-employee relationship - Duty of employee after termination - Evans was a sports agent - He was employed by The Sports Corporation (TSC), an Edmonton based sports agency, assisting in the management of current and prospective NHL hockey players - The trial judge found, inter alia, that after Evans left his employment with TSC, he breached his fiduciary duty to TSC - On appeal, the Alberta Court of Appeal held that the trial judge did not err in finding that Evans was a fiduciary - While the Eastern European market was merely a segment of the overall business operations of TSC, Evans was entrusted with primary responsibility for its successful operation - Players recruited by others were turned over to Evans, who could then use the power and influence arising from the personal relationship developed with those players, either for the benefit of TSC, or for himself - "The great majority of the revenues flowing to Evans and his company, after he left TSC, were from the players originally entrusted to his care by TSC. While the trial judge did not frame it this way, the situation is akin to the appropriation of a corporate opportunity; namely, players entrusted to Evans to develop on behalf of TSC were diverted to his own benefit" - See paragraphs 31 to 35.

Equity - Topic 3726

Fiduciary or confidential relationships - The employer-employee relationship - Duty of employee after termination - Evans was a sports agent - He was employed by The Sports Corporation (TSC), an Edmonton based sports agency, assisting in the management of current and prospective NHL hockey players - The trial judge found, inter alia, that after Evans left his employment with TSC in April 2006, he breached his fiduciary duty to TSC - On appeal, Evans cited ADM Measurements Ltd. v. Bullet Electric Ltd. (2012 ABQB), submitting that even if he had fiduciary obligations, they were relieved when he was "wrongfully dismissed" on April 12, 2006 - The Alberta Court of Appeal stated that "Evans' situation is much different than that of the employee in ADM, nor do we subscribe to the view that a termination of employment will automatically relieve a former employee of ongoing fiduciary obligations. Here, it was only after Evans gave notice that he would be departing on April 17 that TSC required that he immediately leave his office and asserted that it had no further need for his services. While we do not condone the failure of TSC to make payment for the five-day balance of the term, it is doubtful that the breach to make payment constituted a 'wrongful dismissal' and, in any event, involved no repudiation of the employment contract. In these circumstances, TSC's relatively minor breach of contract is irrelevant to Evans' ongoing fiduciary obligations, and does not serve to relieve him of them" - See paragraphs 36 to 37.

Master and Servant - Topic 1323

Contract of hiring (employment contract) - Covenants in restraint of trade - Restrictive covenants - Whether reasonable - General - Evans was a sports agent - The trial judge found that after Evans left his employment with The Sports Corp. (TSC), he solicited TSC's employees and clients, breaching the restrictive covenant in his employment agreement with TSC - On appeal, Evans argued that the restrictive covenant in clause 7(c) of the employment agreement was ambiguous - The Alberta Court of Appeal stated that "the non-solicitation clause in 7(c) is directed at 'any client of the Company which has been a client of the Company or any other company to whom Evans provided any services related to the Company's business'. It seems likely that this provision is aimed at prohibiting solicitation of other people previously given services by Evans while they were clients of this or a related company. However, the clause can also be read as prohibiting solicitation of past clients of TSC. It is difficult to understand why it would be reasonable to restrain Evans from soliciting past clients which have already left the company. In short, we are not satisfied that the restrictive covenant in clause 7(c) is plain or readily interpretable. Rather, its meaning is ambiguous and its reach undeterminable" - The court concluded that if a restrictive covenant was ambiguous, it was not possible to demonstrate that it was reasonable - See paragraphs 26 to 29.

Master and Servant - Topic 1330

Contract of hiring (employment contract) - Covenants in restraint of trade - Restrictive covenants - Breach of - What constitutes - Evans was a sports agent - He was employed by The Sports Corporation (TSC), an Edmonton based sports agency, assisting in the management of current and prospective NHL hockey players - The trial judge found that after Evans left his employment with TSC, he had solicited TSC's employees and clients, breaching both the restrictive covenant in the employment contract, and his fiduciary duty to TSC - The trial judge accepted Evans' evidence that he did not personally solicit TSC's client hockey players - He also seemed to have accepted that Evans did not directly ask Kadlecek and Henys (who had previously recruited hockey players for TSC) to actively solicit those players - However, he concluded that Kadlecek and Henys were pursuing players on Evans' behalf, and that Evans knew of their efforts and accepted the benefit thereof - He came to that conclusion by inference based on the evidence - Evans appealed - The Alberta Court of Appeal held that there was sufficient evidence before the trial judge for him to draw the inferences he did with regard to solicitation - The court stated, inter alia, that "the solicitation of Henys and Kadlecek was the first step in the solicitation of the players, and may be considered a part thereof. Whether the solicitation of these employees of TSC may be regarded as a form of de facto solicitation of the players, or whether the damages are foreseeable as flowing from the breach of 7(b) [of Evans' employment agreement], or his concurrent fiduciary obligations, makes no practical difference: ... The connection between the solicitation of Henys and Kadlecek, and that of the players, is apparent" - See paragraphs 38 to 60.

Master and Servant - Topic 4207

Duties of servant - Fiduciary duty - [See both Equity - Topic 3726 ].

Cases Noticed:

Firemaster Oilfield Services Ltd. v. Safety Boss (Canada) (1993) Ltd. (2000), 87 Alta. L.R.(3d) 366; 2000 ABQB 929, refd to. [para. 19].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 25].

Globex Foreign Exchange Corp. v. Kelcher et al. (2011), 513 A.R. 101; 530 W.A.C. 101; 337 D.L.R.(4th) 207; 2011 ABCA 240, refd to. [para. 25].

KRG Insurance Brokers (Western) Inc. v. Shafron et al., [2009] 1 S.C.R. 157; 383 N.R. 217; 265 B.C.A.C. 1; 446 W.A.C. 1; 2009 SCC 6, refd to. [para. 29].

Anderson, Smyth & Kelly Customs Brokers Ltd. v. World Wide Customs Brokers Ltd. et al. (1996), 184 A.R. 81; 122 W.A.C. 81; 39 Alta. L.R.(3d) 41; 1996 ABCA 169, refd to. [para. 34].

ADM Measurements Ltd. v. Bullet Electric Ltd. et al. (2012), 534 A.R. 333; 9 Alta. L.R.(5th) 278; 2012 ABQB 150, refd to. [para. 36].

Physique Health Club Ltd. v. Carlsen et al. (1996), 193 A.R. 196; 135 W.A.C. 196; 1996 ABCA 358, refd to. [para. 40].

Christie (W.J.) & Co. v. Greer and Sussex Realty & Insurance Agency Ltd., [1981] 4 W.W.R. 34; 9 Man.R.(2d) 269; 121 D.L.R.(3d) 472 (C.A.), refd to. [para. 41].

Clarke et al. v. Rossburger et al. (1999), 254 A.R. 30; 1999 ABQB 821, refd to. [para. 42].

Alberts (Edgar T.) Ltd. v. Mountjoy (1977), 79 D.L.R.(3d) 108 (Ont. H.C.), refd to. [para. 43].

Tree Savers International Ltd. et al. v. Savoy et al., [1991] 6 W.W.R. 84; 81 Alta. L.R.(2d) 325 (Q.B.), affd. (1992), 120 A.R. 368; 8 W.A.C. 368; 1992 ABCA 34, refd to. [para. 43].

Capital Estate Planning Corp. v. Lynch et al. (2011), 510 A.R. 244; 527 W.A.C. 244; 337 D.L.R.(4th) 523; 2011 ABCA 224, refd to. [para. 43].

GasTOPS Ltd. v. Forsyth et al., [2009] O.T.C. Uned. M66 (Sup. Ct.), affd. (2012), 288 O.A.C. 201; 2012 ONCA 134, refd to. [para. 43].

RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc. et al., [2008] 3 S.C.R. 79; 380 N.R. 166; 260 B.C.A.C. 198; 439 W.A.C. 198; 2008 SCC 54, refd to. [para. 58].

Counsel:

S.J. Livingston, for the appellant;

P.D. Wilson, Q.C., and M.M. Deacon, for the respondent.

This appeal was heard on November 30, 2012, before Côté, O'Brien and Bielby, JJ.A., of the Alberta Court of Appeal. The Court of Appeal delivered the following memorandum of judgment on January 18, 2013.