Soost v. Merrill Lynch Canada Inc., (2009) 473 A.R. 254 (QB)

• Judge: Brooker, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: February 14, 2008
• Citations: (2009), 473 A.R. 254 (QB);2009 ABQB 591

Soost v. Merrill Lynch Can. Inc. (2009), 473 A.R. 254 (QB)

MLB headnote and full text

Temp. Cite: [2009] A.R. TBEd. OC.116

Kurt G.J. Soost (plaintiff) v. Merrill Lynch Canada Inc. (defendant)

(0101-19156; 2009 ABQB 591)

Indexed As: Soost v. Merrill Lynch Canada Inc.

Alberta Court of Queen's Bench

Judicial District of Calgary

Brooker, J.

October 13, 2009.

Summary:

The plaintiff financial advisor sued his employer for damages for wrongful dismissal. The employer pleaded cause for dismissal and counterclaimed for monies allegedly owing under a loan to the plaintiff.

The Alberta Court of Queen's Bench allowed the action and dismissed the counterclaim. The court awarded 12 months' pay ($600,000) in lieu of reasonable notice and $1,200,000 Wallace damages where the manner of dismissal had a significant detrimental effect on the plaintiff's industry reputation and his ability to keep old clients and attract new ones. The court dismissed the plaintiff's claims of defamation and interference with economic relations.

Damage Awards - Topic 1454

Contracts - Employment contracts - Wrongful dismissal - The 35 year old plaintiff financial advisor was a "star" employee who was recruited from another financial institution along with his $70-$80 million book of business - After three years' employment (treated administratively as seven years by the employer), he was dismissed without cause - The plaintiff was unable to find other employment in the industry, because the manner of his summary dismissal damaged his reputation, which was integral in the industry - Accordingly, he retained only $10 million of his $150 million book of business when he left and was forced to leave the industry - The employer could have given him some notice or have permitted him to resign - The Alberta Court of Queen's Bench awarded the plaintiff $600,000 in lieu of 12 months' reasonable notice - Additionally, the court awarded $1,600,000 Wallace damages (as modified by Keays v. Honda Canada Inc.) - The court stated that "the manner in which the plaintiff was terminated had a significant detrimental effect on his reputation in the industry and in his ability to keep his old clients and attract new clients. I am also satisfied that the [employer] knew at the time it hired the plaintiff that if it purported to terminate for cause and without notice, the plaintiff would suffer significant damages to his reputation and book of business or goodwill such as would not be compensated for simply by an award of damages in lieu of notice. Having regard to the foregoing figures and factors and taking a conservative approach, I would assess those damages $1,600,000" - See paragraphs 179 to 197.

Libel and Slander - Topic 644

The statement - What constitutes defamatory statements - General principles - Disparagement of reputation - The plaintiff financial advisor, summarily dismissed for cause, was found to have been wrongfully dismissed - The plaintiff alleged that the allegation of cause, where none existed, constituted defamation per se, because it maligned his reputation in an industry where reputation was integral - The Alberta Court of Queen's Bench held that the plaintiff was not defamed - Letters to clients advising that the plaintiff was no longer employed by the employer were not defamatory - The employer's silence, when asked why the plaintiff was no longer employed, could not constitute defamation - Confidential internal administrative e-mails to a small number of persons other than financial advisors, that the plaintiff was dismissed for cause, were not defamatory and were also protected by qualified privilege - The e-mails were sent only to those persons who, because of their duties, had an interest in the dismissal or needed to receive them - The plaintiff's vague claim of "vicious rumours flying around the office" was too nebulous to found an assertion of defamation - See paragraphs 118 to 133.

Libel and Slander - Topic 2987

Defences - Qualified privilege - Employment relationship - [See Libel and Slander - Topic 644 ].

Master and Servant - Topic 7527

Dismissal or discipline of employees - Grounds - General - Culminating incident doctrine - [See Master and Servant - Topic 7554 ].

Master and Servant - Topic 7554

Dismissal or discipline of employees - Grounds - Wilful disobedience or insubordination - The plaintiff was one of the employer's top-earning financial advisors - The plaintiff, and others, engaged in permitted private placements, but did not obtain the prior approval required by company policy - At that time, the policy was unclear and generally unenforced - Following a management change, the employer sought full disclosure of all private placements - The plaintiff provided a partial list of past placements - There were no new placements to disclose - The employer terminated the plaintiff for cause, alleging that he "was out of sync with the firm's policy and direction and he questioned his trustworthiness" (insubordination alleged) - The Alberta Court of Queen's Bench held that the employer failed to prove cause for dismissal - The past policy respecting private placements was unclear and unenforced - There was no failure to make full disclosure, as it applied to future placements, not past placements - Once disclosure of past placements was requested, the plaintiff did provide a partial list and was compiling the balance of the list when he was terminated - The failure to properly complete an Employee Activity Review System form was not sufficient to constitute cause for dismissal, as it was not a high priority for the employer and a number of employees never completed it - The plaintiff did engage in limited solicitation of trades in a stock that was expressly prohibited, but the penalty to be imposed by the employer was a reversal of commissions, not dismissal - Although the plaintiff acted unprofessionally in managing his margin account, that alone was insufficient to warrant dismissal - The court noted that the plaintiff always covered his margins and he, his clients and the employer always profited from his actions - The court rejected the allegation that the plaintiff inappropriately supervised unlicensed staff under his direction or engaged in prohibited discretionary trading - None of the proven defaults, individually or cumulatively, warranted dismissal without cause - Given the devastating consequences to reputation where there was a summary dismissal in the industry, there was no good reason why the employer did not give the plaintiff notice or let him resign - Respecting the defaults accepted as proved, the employer should have given the plaintiff a specific warning to fix the defaults or be terminated - No such warning was ever given - See paragraphs 36 to 117.

Master and Servant - Topic 7608

Dismissal or discipline of employees - Defences - Waiver, condonation or warning of misconduct - [See Master and Servant - Topic 7554 ].

Master and Servant - Topic 7708

Dismissal or discipline of employees - Damages for wrongful dismissal - Loss of reputation - [See Damage Awards - Topic 1454 ].

Master and Servant - Topic 8000

Dismissal without cause - Notice of dismissal - What constitutes reasonable notice - [See Damage Awards - Topic 1454 ].

Torts - Topic 5023

Interference with economic relations - Elements of liability - Use of unlawful means - [See Torts - Topic 5024 ].

Torts - Topic 5024

Interference with economic relations - Elements of liability - Malice or intent to injure - The plaintiff financial advisor was wrongfully dismissed - At dismissal, the size of his book of business was $145 million - Only $10 million of that business left with him - Apart from the wrongful dismissal, the plaintiff sought damages for intentional interference with economic relations - He claimed that the manner in which he was terminated was planned to deprive him of his book of business - The Alberta Court of Queen's Bench dismissed the claim - The three essential elements were (1) an intent to injure the plaintiff economically; (2) interference with the plaintiff's business by illegal or unlawful means and (3) a loss resulting from interference - The plaintiff established only that he suffered a loss from clients choosing to stay with the employer - There was no specific intention or desire to bring about economic injury to the plaintiff, even if that was the foreseeable result of the employer's actions - The employer was entitled to contact the clients and give them the option of staying with the employer - There was no interference by illegal or unlawful means - The wrongful dismissal could not be relied on to constitute unlawful means - The court rejected the plaintiff's allegation of an unlawful conspiracy to deprive him of his book of business - See paragraphs 134 to 175.

Torts - Topic 5242

Interference with economic relations - Interference with business relations - What constitutes - [See Torts - Topic 5024 ].

Cases Noticed:

Port Arthur Shipbuilding Co. v. Arthurs, [1967] 2 O.R. 49 (C.A.), revd. [1969] S.C.R. 85, refd to. [para. 36].

Lowery v. Calgary (City) (2002), 312 A.R. 393; 281 W.A.C. 393; 2002 ABCA 237, refd to. [para. 37].

McKinley v. BC Tel et al., [2001] 2 S.C.R. 161; 271 N.R. 16; 153 B.C.A.C. 161; 251 W.A.C. 161, refd to. [para. 38].

Lake Ontario Portland Cement Co. v. Groner, [1961] S.C.R. 553, refd to. [para. 45].

Lowery v. Calgary (City) (2002), 312 A.R. 393; 281 W.A.C. 393; 2002 ABCA 237, refd to. [para. 91].

Liboiron v. Majola, [2005] A.R. Uned. 986; 2005 ABQB 952, affd. (2007), 401 A.R. 257; 391 W.A.C. 257; 2007 ABCA 18, refd to. [para. 120].

Greyridge Investments Ltd. et al. v. T.C. Welding and Automotive Ltd. et al. (1994), 129 N.S.R.(2d) 23; 362 A.P.R. 23 (S.C.), refd to. [para. 122].

Hill v. Church of Scientology of Toronto and Manning, [1995] 2 S.C.R. 1130; 184 N.R. 1; 84 O.A.C. 1, refd to. [para. 128, footnote 45].

Reach M.D. Inc. v. Pharmaceutical Manufacturers Association of Canada et al. (2003), 172 O.A.C. 202; 65 O.R.(3d) 30 (C.A.), refd to. [para. 135, footnote 48].

Conway v. Zinkhofer, [2008] A.R. Uned. 306; 2008 ABCA 392, refd to. [para. 142].

Cheticamp Fisheries Co-Operative Ltd. et al. v. Canada (1995), 139 N.S.R.(2d) 224; 397 A.P.R. 224 (C.A.), refd to. [para. 145].

Drouillard v. Cogeco Cable Inc. (2007), 223 O.A.C. 350; 86 O.R.(3d) 431; 2007 ONCA 322, refd to. [para. 150].

King et al. v. Merrill Lynch Canada Inc., [2005] O.T.C. 994; 2005 CarswellOnt 6775 (Sup. Ct.), refd to. [para. 154].

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, refd to. [para. 159].

Bagby v. Gustavson International Drilling Co. et al. (1980), 24 A.R. 181 (C.A.), refd to. [para. 179].

Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R.(2d) 140 (Ont. H.C.), refd to. [para. 179, footnote 58].

Wallace v. United Grain Growers Ltd. (1997), 219 N.R. 161; 123 Man.R.(2d) 1; 159 W.A.C. 1 (S.C.C.), refd to. [para. 188].

Keays v. Honda Canada Inc. (2008), 376 N.R. 196; 239 O.A.C. 299 (S.C.C.), refd to. [para. 189].

Authors and Works Noticed:

Fleming, John G., The Law of Torts (9th Ed. 1998), p. 769 [para. 143].

Osborne, Philip H., The Law of Torts (3rd Ed. 2007), paras. 49, 50 [para. 149].

Counsel:

Kevin P. McGuigan and Byron Nelson, for the plaintiff;

Lillian Y. Pan, Brent Robinson and Brock Carscallen, for the defendant.

This action and counterclaim were heard on January 31 to February 14, 2008, before Brooker, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following judgment on October 13, 2009.