Paso Services Ltd. v. Ratz et al., (2008) 322 Sask.R. 79 (QB)

• Judge: Foley, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: September 09, 2008
• Jurisdiction: Saskatchewan
• Citations: (2008), 322 Sask.R. 79 (QB);2008 SKQB 356

Paso Services Ltd. v. Ratz (2008), 322 Sask.R. 79 (QB)

MLB headnote and full text

Temp. Cite: [2008] Sask.R. TBEd. OC.045

Paso Services Ltd. (plaintiff/defendant by counterclaim) v. Terry Ratz (defendant/plaintiff by counterclaim) and Paul Collyer (third party)

(2004 Q.B.G. No. 1835; 2008 SKQB 356)

Indexed As: Paso Services Ltd. v. Ratz et al.

Saskatchewan Court of Queen's Bench

Judicial Centre of Saskatoon

Foley, J.

September 9, 2008.

Summary:

Paso Services Ltd. (Paso) and Impact Marketing Services Ltd. (Impact) were competitors engaged in the sale of promotional products in the Saskatoon area. Ratz was employed by Paso until August 27, 2004. He commenced employment with Impact on September 1, 2004. Paso sued Ratz, alleging that by taking employment with Impact, Ratz was in breach of a two-year non-competition provision set out in paragraph 2 of a restraint agreement. Paso also alleged that Ratz breached his common law fiduciary obligation not to use confidential information he acquired from Paso for its competitors' benefit. Ratz counterclaimed asserting that he had been constructively dismissed. Ratz also brought a third party claim against Collyer alleging the commission of various torts by Paso and Collyer framed as defamation, harassment and interference with contractual relationships.

The Saskatchewan Court of Queen's Bench dismissed the action, the counterclaim and the third party claim.

Contracts - Topic 6726

Illegal contracts - Contrary to public policy - Restraint of trade - Public interest - [See Master and Servant - Topic 1324 ].

Equity - Topic 3607

Fiduciary or confidential relationships - Relationships which are not fiduciary - Paso Services Ltd. (Paso) and Impact Marketing Services Ltd. (Impact) were competitors engaged in the sale of promotional products in the Saskatoon area - Ratz was employed by Paso until August 27, 2004 - He commenced employment with Impact on September 1, 2004 - Paso sued Ratz, asserting that Ratz breached his common law fiduciary obligation not to use confidential information he acquired from Paso for its competitors' benefit - The evidence established that Ratz solicited business from many of his former clients for his own benefit and that of Impact - Paso submitted that this conduct constituted a disclosure and unfair use of "information" Ratz acquired during his employ and constituted a breach of his common law fiduciary obligation - The Saskatchewan Court of Queen's Bench dismissed the action - Ratz's role as commission salesman for Paso was merely to sell the promotional products detailed in various distributors catalogues, all of which were available to and were used by Paso's competitors - Ratz operated within a specific assigned sales area and exercised no control over procurement, pricing policy or management - Consequently, Paso did not repose in Ratz that degree of "trust and confidence" which might, in some circumstances, give rise to a fiduciary obligation - Ratz was simply a salesman who did not function at an "elevated" position and, in result, was not in a fiduciary position vis-à-vis Paso - See paragraphs 24 to 29.

Equity - Topic 3648

Fiduciary or confidential relationships - Breach of fiduciary relationship - By employee - Solicitation of business - [See Equity - Topic 3607 ].

Equity - Topic 3726

Fiduciary or confidential relationships - The employer-employee relationship - Duty of employee after termination - [See Equity - Topic 3607 ].

Libel and Slander - Topic 641

The statement - What constitutes defamatory statements - General principles - Paso Services Ltd. (Paso) and Impact Marketing Services Ltd. (Impact) were competitors engaged in the sale of promotional products in the Saskatoon area - Ratz was employed by Paso until August 27, 2004 - He commenced employment with Impact on September 1, 2004 - Paso sued Ratz, alleging that by taking employment with Impact, Ratz was in breach of a two-year non-competition provision - Ratz brought a counterclaim and a third party claim against Collyer (Paso's president) alleging the commission of various torts by Paso and Collyer framed as, inter alia, defamation - The allegations were founded on alleged post-employment conduct - Ratz asserted that after he accepted employment with Impact, Collyer initiated a vindictive campaign against Ratz via communication with, inter alia, Ratz's wife - Ratz alleged that the slanderous statements made by Collyer were: "(a) That Terry Ratz was not focused on selling, was burnt out of the business and was simply playing solitaire on his computer all day. (b) That the orders that Terry Ratz did have were not being processed correctly. (c) That Terry had probably not told his wife about the situation and that although the Third Party's lawyer had sent a letter to their home, Terry had probably gotten to it before her so that she wouldn't see it. (d) That the Third Party had all kinds of information that could destroy Terry, but he didn't want to have to go there." - The Saskatchewan Court of Queen's Bench dismissed Ratz's counterclaim and third party claim - Allegations (b), (c) or (d) did not survive a literal meaning test of "defamation" - In relation to allegation (a), the fact that Ratz left for Impact as he did underscored his disaffection - The phrases used by Collyer, including "burnt out", "not focussed" and even "playing computer", certainly described aspects of Ratz's behaviour - The defence of justification succeeded - See paragraphs 67 to 71.

Libel and Slander - Topic 641

The statement - What constitutes defamatory statements - General principles - Paso Services Ltd. (Paso) and Impact Marketing Services Ltd. (Impact) were competitors engaged in the sale of promotional products in the Saskatoon area - Ratz was employed by Paso until August 27, 2004 - He commenced employment with Impact on September 1, 2004 - Paso sued Ratz, alleging that by taking employment with Impact, Ratz was in breach of a two-year non-competition provision - Ratz brought a counterclaim and a third party claim against Collyer (Paso's president) alleging the commission of various torts by Paso and Collyer framed as, inter alia, defamation - The allegations were founded on alleged post-employment conduct - Ratz asserted that after he accepted employment with Impact, Collyer initiated a vindictive campaign against Ratz via communication with, inter alia, Impact - Collyer sent an email to Impact and the plain meaning of the statements therein complained of was: "(a) Ratz may prove not to be a valuable employee; (b) Ratz has not been performing and plays solitaire rather than seek new business; (c) Ratz may look for a job while holding yours; (d) Ratz threatened me." - The Saskatchewan Court of Queen's Bench dismissed Ratz's counterclaim and third party claim - None of the allegations per se amounted to an actionable libel, but even if any did, the allegations were supported by the evidence such that the facts alleged were substantially true - Although one might challenge Collyer's comments as intrusive and mean-spirited, it did not follow that the communications were defamatory - The words had to meet the stringent tests the law of slander and libel imposed - See paragraphs 72 to 77.

Libel and Slander - Topic 2861

Defences - Justification or truth - General - [See first Libel and Slander - Topic 641 ].

Master and Servant - Topic 1324

Contract of hiring (employment contract) - Covenants in restraint of trade - Restrictive covenant - Whether reasonable - Interest protected - Paso Services Ltd. (Paso) and Impact Marketing Services Ltd. (Impact) were competitors engaged in the sale of promotional products in the Saskatoon area - Ratz was employed by Paso until August 27, 2004 - He commenced employment with Impact on September 1, 2004 - Paso sued Ratz, alleging that by taking employment with Impact, Ratz was in breach of a two-year non-competition provision set out in paragraph 2 of a restraint agreement - Ratz submitted that the protection which was sought was one against competition, rather than any identifiable proprietary interest - The Saskatchewan Court of Queen's Bench dismissed Paso's action - The court stated that "[h]ad Paso wished to protect its proprietary interests over those clients with whom Ratz had developed particular relationships or contacts, then appropriate wording of the clause could have effectively restrained Ratz from soliciting such clients for his new employer. The wording in this case, however, purports to prevent Ratz from competing at all regardless of the source of his clientele. This wide restraint of competition contravenes the long-standing public policy against unreasonable restrictions of trade and employment and is consequently unenforceable. It purports to restrain Ratz from marketing like promotional products at all, whether or not he scrupulously refrained from providing services to any of Paso's clientele, whether or not he solicited such clientele or whether or not such clientele independently requested his services. Indeed, the clause is of such width that where a particular client, either concurrently or sequentially, obtained services from both Paso and one of Paso's competitors, Ratz would still be prohibited from providing services. In short, the agreement seeks to exclude Ratz from entering into the promotional product business in Saskatoon without regard for whether his activity involves clients over which Paso can legitimately claim a proprietary interest" - Paso sought to bar all competition - Consequently, the covenant, and the agreement into which it was incorporated, were contrary to public policy and unenforceable - See paragraphs 7 to 23.

Master and Servant - Topic 7502

Dismissal or discipline or employees - General principles - What constitutes dismissal or discharge - Constructive dismissal - Paso Services Ltd. (Paso) and Impact Marketing Services Ltd. (Impact) were competitors engaged in the sale of promotional products in the Saskatoon area - Ratz was employed by Paso until August 27, 2004 - He commenced employment with Impact on September 1, 2004 - Ratz claimed that changes to his terms of commission in 2003 unilaterally changed his terms of compensation and that constituted a constructive dismissal - The Saskatchewan Court of Queen's Bench dismissed Ratz's claim - Ratz remained with Paso after the commission change - He apparently accepted the change and continued to work without complaint - To so act gave rise to the conclusion that, after an initial trial period, Ratz decided to accept the change and thereby could not now allege that his conduct did not create an estoppel or that he did not condone the change - He could not at such a late date elect to treat the contract as repudiated - See paragraph 31.

Torts - Topic 3165

Trespass - Trespass to person - Harassment - Paso Services Ltd. (Paso) and Impact Marketing Services Ltd. (Impact) were competitors engaged in the sale of promotional products in the Saskatoon area - Ratz was employed by Paso until August 27, 2004 - He commenced employment with Impact on September 1, 2004 - Paso sued Ratz, alleging that by taking employment with Impact, Ratz was in breach of a two-year non-competition provision - Ratz brought a counterclaim and a third party claim against Collyer (Paso's president) alleging the commission of various torts by Paso and Collyer framed as, inter alia, harassment - The allegations were founded on alleged post-employment conduct - Ratz asserted that after he accepted employment with Impact, Collyer initiated a vindictive campaign against Ratz via communication with Ratz's wife, Impact and others - The Saskatchewan Court of Queen's Bench held that Canadian courts had not been inclined to elevate harassment to the status of an independent tort - The conduct alleged might constitute part of the factual matrix of such torts as defamation, wrongful dismissal, the intentional infliction of mental suffering or unlawful interference with economic relationships - Each of these legal wrongs had a well recognized set of criteria which could be applied against the particular circumstances - Such accepted criteria were absent with respect to a supposed tort of "harassment" - The court declined to characterize "harassment" as a distinct actionable tort and dismissed this particular aspect of Ratz's claim - See paragraphs 49 to 57.

Torts - Topic 5043

Interference with economic relations - Master and servant - What constitutes interference - Paso Services Ltd. (Paso) and Impact Marketing Services Ltd. (Impact) were competitors engaged in the sale of promotional products in the Saskatoon area - Ratz was employed by Paso until August 27, 2004 - He commenced employment with Impact on September 1, 2004 - Paso sued Ratz, alleging that by taking employment with Impact, Ratz was in breach of a two-year non-competition provision - Ratz brought a counterclaim and a third party claim against Collyer (Paso's president) alleging the commission of various torts by Paso and Collyer framed as, inter alia, unlawful interference with contractual relationships - The allegations were founded on alleged post-employment conduct - Ratz asserted that after he accepted employment with Impact, Collyer initiated a vindictive campaign against Ratz via communication with Ratz's wife, Impact and others - The Saskatchewan Court of Queen's Bench dismissed Ratz's counterclaim and third party claim - The evidence adduced by Ratz at trial did not demonstrate an adoption or use by Paso or Collyer of illegal or unlawful means - Collyer published his personal opinion of Ratz's work habits and his merit as an employee, circulated a copy from a page of a discovery and asserted the existence of an agreement restraining Ratz from being so employed - None of these matters were clearly illegal or unlawful - See paragraphs 78 to 81.

Cases Noticed:

Direct Integrated Transportation Inc. v. Haryett et al. (2005), 260 Sask.R. 293; 2005 SKQB 55, refd to. [para. 10].

Paso Services Ltd. v. Campbell (1993), 51 C.P.R.(3d) 453 (Sask. Q.B.), refd to. [para. 20].

Sunsweet Fundraisers Inc. v. Moldenhauer and Theissing (1991), 98 Sask.R. 81 (Q.B.), refd to. [para. 21].

Staebler (H.L.) Co. v. Allan et al. (2008), 239 O.A.C. 230; 2008 ONCA 576, refd to. [para. 23].

Alberts v. Mountjoy (1977), 79 D.L.R.(3d) 108 (Ont. H.C.), refd to. [para. 24].

Provincial Plating Ltd. v. Steinkey et al. (1997), 162 Sask.R. 241 (Q.B.), refd to. [para. 26].

Prinzo v. Baycrest Centre for Geriatric Care (2002), 161 O.A.C. 302; 215 D.L.R.(4th) 31 (C.A.), refd to. [para. 50].

Daishowa Inc. v. Friends of the Lubicon et al. (1996), 88 O.A.C. 1; 33 C.R.R.(2d) 322 (Div. Ct.), refd to. [para. 50].

Total Credit Recovery (B.C.) Ltd. v. Roach, [2007] B.C.T.C. Uned. C60; 2007 BCSC 530, refd to. [para. 51].

Metz v. Tremblay-Hall et al., [2006]  O.T.C. 929 (Sup. Ct.), refd to. [para. 51].

Dechant v. Law Society of Alberta (2006), 406 A.R. 4; 70 Alta. L.R.(4th) 284; 2006 ABQB 908, refd to. [para. 52].

Mainland Sawmills Ltd. et al. v. IWA-Canada, Local 1-3567 Society et al., [2006] B.C.T.C. 1195; 2006 BCSC 1195, refd to. [para. 53].

McCaslin v. Biden (2002), 228 Sask.R. 63; 2002 SKQB 525, refd to. [para. 58].

Lysko v. Braley et al. (2006), 212 O.A.C. 159; 79 O.R.(3d) 721 (C.A.), refd to. [para. 59].

Swift Current (City) v. Saskatchewan Power Corp. et al. (2007), 293 Sask.R. 6; 397 W.A.C. 6 (C.A.), reving. in part (2005), 272 Sask.R. 160 (Q.B.), refd to. [para. 78].

Duke et al. v. Puts, [2004] 6 W.W.R. 208; 241 Sask.R. 187; 313 W.A.C. 187; 2004 SKCA 12, refd to. [para. 79].

Authors and Works Noticed:

Brown, Raymond E., The Law of Defamation in Canada (2nd Ed. 1994) (1999 Looseleaf Supp.), § 19.3(2)(a)(i) [para. 59].

Fridman, Gerald Henry Louis, The Law of Contract in Canada (2nd Ed. 1986), pp. 376, 377 [para. 14].

Counsel:

Patrick A. Kelly, Q.C., for the plaintiff and the third party;

Stephen J. Nicholson, for the defendant.

This action, counterclaim and third party claim were heard by Foley, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Saskatoon, who delivered the following judgment on September 9, 2008.