Investors Group Financial Services et al. v. MacGillivray,

• Jurisdiction: Nova Scotia
• Judge: Richardson
• Neutral Citation: 2003 NSSM 7
• Citation: (2003), 257 N.S.R.(2d) 1 (SmCl),2003 NSSM 7,257 NSR(2d) 1,(2003), 257 NSR(2d) 1 (SmCl),257 N.S.R.(2d) 1
• Date: 14 April 2003
• Court: Small Claims Court of Nova Scotia (Canada)

Inv. Group Financial v. MacGillivray (2003), 257 N.S.R.(2d) 1 (SmCl);

    820 A.P.R. 1

MLB headnote and full text

Temp. Cite: [2007] N.S.R.(2d) TBEd. AU.024

Investors Group Financial Services and I.G. Investment Management Ltd. and Douglas Anthony Bray (claimants) v. Ronald G. MacGillivray (defendant)

(Claim No. 188423; 2003 NSSM 7)

Indexed As: Investors Group Financial Services et al. v. MacGillivray

Nova Scotia Small Claims Court

Richardson, Adjudicator

April 14, 2003.

Summary:

MacGillivray received $9,141 from Investors Group as advances on commissions. MacGillivray resigned. Investors Group brought an action seeking repayment of the advances.

An Adjudicator of the Nova Scotia Small Claims Court dismissed the claim.

Contracts - Topic 2065

Terms - Implied terms - To achieve business efficacy - MacGillivray received $9,141 from Investors Group as advances on commissions - MacGillivray resigned - Investors Group brought an action seeking repayment of the advances - An Adjudicator of the Nova Scotia Small Claims Court dismissed the claim - The issue was whether the "debt" survived the end of the relationship and any ability to generate commission income - Here, it did not because, first, the parties' agreement required MacGillivray to report the advances as income for tax purposes even after the agreement was terminated - Second, there was no express provision requiring repayment after the "consultant" was no longer associated with Investors - The court refused to imply such a term where (i) Investors Group was a sophisticated business which had drafted the agreement, (ii) an objective person could just as easily have said that the advance was waived if the consultant was unable to earn commissions and (iii) the agreement contained an express clause requiring the payment to be reported as income even after termination - Business efficacy did not require the court to imply the term - There was no ambiguity regarding the characterization of the "debt" - See paragraphs 48 to 66.

Contracts - Topic 5603

Unenforceable contracts - General - Unenforceable contract defined - MacGillivray received $9,141 from Investors Group as advances on commissions - MacGillivray resigned - Investors Group brought an action seeking repayment of the advances - An Adjudicator of the Nova Scotia Small Claims Court dismissed the claim - Having determined that there was no express or implied term requiring repayment in the event of termination, the court considered whether such a term, if it existed, was enforceable - There was an inequality of bargaining power between the parties - The agreements were contracts in restraint of trade in that they prohibited MacGillivray from acting as anything other than an Investors Group representative and limited his actions after termination of the relationship - Investors Group knew that MacGillivray had no experience with working on 100% commission and had "puffed up" the potential for sales in his area - In those circumstances, the agreement was unenforceable - If it were enforceable, Investors Groups would be able to pay a consultant nothing in exchange for the consultant exclusively marketing Investors Group's products, bearing the costs of such marketing and agreeing not to compete with Investors Group for one or two years after termination - See paragraphs 67 to 90.

Contracts - Topic 6732

Illegal contracts - Contrary to public policy - Restraint of trade - Agreements not to compete or solicit - [See Contracts - Topic 5603 ].

Master and Servant - Topic 303

Nature of relationship - What constitutes an employer-employee relationship - MacGillivray received $9,141 from Investors Group as advances on commissions - MacGillivray resigned - Investors Group brought an action seeking repayment of the advances - An Adjudicator of the Nova Scotia Small Claims Court dismissed the claim - The court rejected Investors Group's argument that MacGillivray was an independent contractor and that the relationship between the parties was one between two businesses - A master and servant relationship existed - Investors Group exercised close control and direction of MacGillivray's activities - MacGillivray met with a supervisor more than once a month to review sales efforts - As a "sales representative", MacGillivray was not permitted to act for any other competitor - The indicia of employment status all pointed toward MacGillivray being an employee - See paragraphs 43 to 46.

Master and Servant - Topic 2047

Remuneration - Advances - Repayment of unearned advances - [See Contracts - Topic 2065 ].

Cases Noticed:

Schroeder (A.) Music Publishing Co. v. Macaulay, [1974] 3 All E.R. 616 (H.L.), refd to. [para. 41].

Stenhouse Australia Ltd. v. Phillips, [1974] 1 All E.R. 117 (P.C.), refd to. [para. 41].

Olympic Industries Inc. v. McNeill (1993), 38 B.C.A.C. 254; 62 W.A.C. 254; 86 B.C.L.R.(2d) 273 (C.A.), appld. [para. 61].

Crown Life Insurance Co. v. de Savoye (1998), 107 B.C.A.C. 74; 174 W.A.C. 74 (C.A.), dist. [para. 64].

Johnson v. Investors Group Financial Services Inc. (1999), 220 N.B.R.(2d) 13; 565 A.P.R. 13 (T.D.), affd. (2000), 227 N.B.R.(2d) 49; 583 A.P.R. 49 (C.A.), dist. [para. 82].

Johnson v. Investors Group Financial Services Inc. (1999), 217 N.B.R.(2d) 317; 555 A.P.R. 317 (T.D.), dist. [para. 82].

Counsel:

Ann Smith, on behalf of the claimants;

Ronald MacGillivray, on his own behalf.

This action was heard by Richardson, Adjudicator, of the Nova Scotia Small Claims Court, who delivered a decision on April 14, 2003. On August 22, 2007, the text of the original decision was revised and replaced with the following decision.