Straus Estate v. Decaire et al.

• Jurisdiction: Ontario
• Judge: Goudge, Simmons and Gillese, JJ.A.
• Court: Court of Appeal (Ontario)
• Citation: 2012 ONCA 918,(2012), 300 O.A.C. 171 (CA)
• Date: 19 September 2012

Straus Estate v. Decaire (2012), 300 O.A.C. 171 (CA)

MLB headnote and full text

Temp. Cite: [2012] O.A.C. TBEd. DE.066

Estate of Joseph Straus by its Executor, Angela Straus and Angela Straus (plaintiffs/respondents) v. Roy Decaire, RCB Investors Choice Inc., IPC Investment Corporation, FundEX Investments Inc., Pacific International Securities Inc., Orion Securities Inc., Spectrum Meditech Inc., IRG Services Ltd., Cyclone Investments Inc., Northgate Holdings Inc., Millenium Medical Supply Inc., Millenium Medical Supply Corp., Kelly Fielder, Richard Savage and Nicola More (defendants/appellant)

(C53471; 2012 ONCA 918)

Indexed As: Straus Estate v. Decaire et al.

Ontario Court of Appeal

Goudge, Simmons and Gillese, JJ.A.

December 24, 2012.

Summary:

The plaintiffs invested over $277,471 with the defendant Decaire, a financial advisor. The investment was lost. The plaintiffs sued Decaire, the various financial firms with which Decaire was associated during the relevant times, and others alleging negligence, breach of contract and breach of fiduciary duty.

The Ontario Superior Court, in a decision reported at [2011] O.T.C. Uned. 1157, allowed the action against several defendants. One defendant, FundEX Investments Inc. (FundEX), was found liable to pay damages of $100,000 (the amount the plaintiffs invested while Decaire was its representative). The parties made submissions respecting costs.

The Ontario Superior Court, in a decision reported at [2011] O.T.C. Uned. 3059, awarded the plaintiffs costs totalling $236,000 in fees and $49,484.50 for disbursements. FundEX appealed, arguing that it was not liable for Decaire's actions.

The Ontario Court of Appeal dismissed the appeal.

Torts - Topic 38

Negligence - Standard of care - Particular persons and relationships - Employers - The plaintiffs invested with Decaire, a financial advisor - The investment was lost - The plaintiffs sued Decaire and the various financial firms with which Decaire was associated during the relevant times, including FundEX Investments Inc. (FundEX) - The trial judge allowed the action - The trial judge found that Decaire acted unlawfully in his "off the books activity" respecting the sale of certain shares (Millenium shares) and that he violated the fundamental obligation of honest dealing in his promotion and misrepresentation of Millenium to FundEX mutual fund customers - In so doing, Decaire acted in an open and readily discoverable manner - The trial judge found FundEX negligent in that it failed in its duty to protect the plaintiffs from Decaire's off the books activity - It enabled Decaire to hold himself out as a registered financial advisor working with a registered mutual fund dealer, it failed to adequately (or at all) train, monitor or supervise Decaire while he worked for it, contrary to its regulatory and industry obligations - The Ontario Court of Appeal dismissed FundEX's appeal - Decaire did not promote Millenium completely independently of FundEX - Rather, he did so openly and vigorously while at his FundEX office and to anyone who would listen, including FundEX colleagues - The trial judge held FundEX liable in negligence based on extensive findings of fact - Those findings were fully available to him - There was no basis for appellate intervention - See paragraphs 44 to 49.

Torts - Topic 48.9

Negligence - Standard of care - Particular persons and relationships - Financial advisors - [See Torts - Topic 38 ].

Torts - Topic 77

Negligence - Duty of care - Relationship required to raise duty of care - [See Torts - Topic 38 ].

Torts - Topic 2530

Vicarious liability - Master and servant - Employer - Liability for acts of employees - The plaintiffs invested with Decaire, a financial advisor - The investment was lost - The plaintiffs sued Decaire and the various financial firms with which Decaire was associated during the relevant times, including FundEX Investments Inc. (FundEX) - The trial judge allowed the action - The trial judge found that Decaire acted unlawfully in his "off the books activity" respecting the sale of certain shares (Millenium shares) and that he violated the fundamental obligation of honest dealing in his promotion and misrepresentation of Millenium to FundEX mutual fund customers - The trial judge found FundEX vicariously liable for Decaire's off the books activity - FundEX appealed - It argued that the relationship it had with Decaire was that of employer and independent contractor, not employee - Therefore, the trial judge erred in fixing it with vicarious liability for the plaintiffs' losses - The Ontario Court of Appeal rejected the argument - The trial judge was fully alive to the distinction between an employee and an independent contractor and the implications of such a determination when determining whether vicarious liability was to be imposed - The written contract between Decaire and FundEX provided that Decaire was an independent contractor - However, the trial judge found that Decaire was not performing as if he were a person in business on his own accord - He did not hire employees, worked from an office at FundEX, and was not free to choose his method of marketing - Rather, he followed FundEX's business model - There was no basis for appellate intervention with the trial judge's determination of the character of the employment relationship - As he did not err in finding that an employer-employee relationship existed, there was no error in holding FundEX vicariously liable for Decaire's wrongdoing - See paragraphs 50 to 56.

Torts - Topic 2560

Vicarious liability - For independent contractors - What constitutes an independent contractor - [See Torts - Topic 2530 ].

Cases Noticed:

Doiron v. Manufacturers Life Insurance Co. et al. (2002), 319 A.R. 387; 2002 ABQB 664 (Q.B.), dist. [para. 46].

671122 Ontario Ltd. v. Sagaz Industries Canada Inc. et al., [2001] 2 S.C.R. 983; 274 N.R. 366; 150 O.A.C. 12; 2001 SCC 59, refd to. [para. 51].

Bazley v. Curry - see P.A.B. v. Children's Foundation et al.

P.A.B. v. Children's Foundation et al., [1999] 2 S.C.R. 534; 241 N.R. 266; 124 B.C.A.C. 119; 203 W.A.C. 119, refd to. [para. 54].

Counsel:

Ross F. Earnshaw, for the appellant, FundEX Investments Inc.;

Gary L. Petker, for the respondents.

This appeal was heard on September 19, 2012, before Goudge, Simmons and Gillese, JJ.A., of the Ontario Court of Appeal. Gillese, J.A., released the following decision for the court on December 24, 2012.