Monday, October 27, 2014

Consent or Not? An Analytical Viewpoint of the Ghomeshi Scandal

Perhaps it's something you can watch with friends
or something that inevitably lends
itself to shapely curves and bends
of exploited women and their friends.
-Moxy Fruvous, Video Bargainville, 1993

Nearly a year ago, I posted an analytical commentary on an article about a 'bad date' with a thinly-anonymized Jian Ghomeshi, which alleged that Ghomeshi (er "Keith"), out with a would-be entertainment writer who thought he was gay, behaved in a creepy way, making unwelcome advances, etc.  My assessment of the article was that there were clear credibility 'red flags' - artistic license, hyperbole, admitted dishonesty, with the whole thing coloured by a 'social climbing' narrative.  The high watermark of misconduct described in the article was that he allegedly grabbed her behind - of which, if true, I would disapprove, but I was not comfortable assuming its truth based on the article on the whole.

Now, there's a new - and much more serious - controversy involving Jian Ghomeshi.  For the uninitiated, he has for many years had a popular radio show on CBC, and on Sunday it was announced that he was no longer with CBC.  As these things tend to, the information on exactly why was sparse at first.  But, in an unusual twist, Ghomeshi released a detailed statement explaining his version of events.  Read the whole statement here.

Ghomeshi's Side

Here are the highlights:  According to Ghomeshi, he was fired from the CBC, in relation to a sex scandal.  He confesses that his sexual tastes are irregular, including roleplay and BDSM, but claims categorically that everything he has done with his sexual partners was consensual.  However, a jilted ex-girlfriend and a freelance writer allegedly sought out others to corroborate allegations of sexual assault - the takeaway is that he expected a number of allegations from a number of women to be made in the near future, and his claim is that the allegations are untrue, and the result of collusion.

(Collusion is a big deal.  We tend to look for patterns.  One accusation is easy to disbelieve, but two or three similar accusations from different people becomes a pattern of conduct, and if they're similar enough they become inherently credible.  Collusion involves having multiple people coordinate to get their stories straight before making the allegations in the first place, and if true completely undermines the corroborating impact of similar stories.)

Ghomeshi states that he showed the CBC materials that illustrate the consensual nature of the acts in question.  (This raised an obvious question as to what kind of proof he relied upon.)  He claims that the CBC admits that they're satisfied that there was consent, but that they're firing him nonetheless because the sexual behaviour was unbecoming of a prominent CBC host.

He acknowledges that his sexual tastes may not be palatable to some - I'll be the first to admit that I find them to be disturbing and distasteful - but argues that "no one, and certainly no employer, should have dominion over what people do consensually in their private life."

The Star Article

It wasn't long before we got another side of the story.  The Toronto Star had started investigating the allegations several months ago, but elected not to print the article.  In the Star Editor's words:
The reason the Star did not publish a story at that time was because there was no proof the women's allegations of non-consensual sex were true or false.  They were so explosive that to print them would have been irresponsible, and would have fallen far short of the Star's standards of accuracy and fairness.
In view of Mr. Ghomeshi's extraordinary statement on Facebook on Sunday evening, and his high profile in Canada, we now believe that it is in the public interest to detail those allegations, which appear to have led directly to his sudden firing from the CBC.
So they printed the article late last night.  Again, you should read it yourself if you haven't already.

Put briefly, the Star interviewed three women who anonymously allege that Mr. Ghomeshi engaged in violent non-consensual sex with them over the past two years.  They deny that there were any 'safe words' employed, and claim that Ghomeshi was initially charming, but then started "suggesting or hinting at violent sex acts."

"When they failed to respond or expressed displeasure, they recalled Ghomeshi dismissed his remarks as 'just fantasies'", and promised not to do anything they weren't comfortable with.

However, he then became sexually aggressive and forceful without consent.  There's some detail about the level of violence - it's pretty disturbing, and I'm not going to repeat it here, but it's not entirely incompatible with what Ghomeshi described in his own statement.

But we come to the real crux of the issue:  Why didn't they go to the police?  Why is this a matter of purely anonymous allegations?

The Star article explains a number of reasons for their reluctance to come forward:  Firstly, they all cited the reaction to the Ciccone article - that Ciccone received very significant internet criticism for her piece.

As well, they cited "worries that their consent or acceptance of fantasy role-play discussions in text or other messages with Ghomeshi would be used against them as evidence of consent to actual violence."

There was a further allegation - a claim by a former employee of CBC that Ghomeshi had made a vulgar sexual remark to her, and that she complained to CBC, but that their response was unsatisfactory and she subsequently quit.  (Ghomeshi claims that there were never any formal complaints made against him.)

General Observations on Credibility

It's very important to understand that these are unproven allegations, made anonymously.  It is inherently unsafe to convict Ghomeshi - whether in a court of law or in a court of public opinion - based on such allegations.  It is really quite impossible for us to know who is lying or telling the truth based on the existing materials, and particularly when we're talking about such egregious criminal misconduct, the presumption of innocence prevails in my mind.

As well, while it's not uncommon for victims of sexual assault to be unwilling to come forward, their explanations of why they didn't come forward (except anonymously to the press) raise more questions than they answer.  Firstly, while the article states that they all cited the response to the Ciccone article as a reason to not come forward, the Star's timeline on these events strongly suggests that at least some of these assaults occurred well prior to the publication of the Ciccone article.  (As well, I might observe that the Ciccone article was a very different creature, being an article by an admitted social climber disparaging a celebrity on some pretty questionable bases.  The conduct in question is different here, as would be the ostensible motivations for coming forward.)

Secondly, concerns about "text or other messages" that expressed consent should raise real questions in readers' minds:  If their responses to Ghomeshi's suggestions of sexual violence were met with silence or displeasure, as the Star story suggests, what was it that they did consent to, such that it might be interpreted as supporting a consent to actual violence?  There's a real disconnect there.  The Star's story completely omits any mention of such consent until raising it, towards the end of the article, in defence of their anonymity.

And that's really important here.  With Ghomeshi admitting to the kinds of sex acts alleged, the core question to be answered is about the scope of consent.

But the remark about those "text and other messages" does seem to answer a question that had been bugging me about Ghomeshi's own account, as to the nature of the materials he used to prove his own innocence.  Naturally, they wouldn't be a full answer to the question, as to whether or not the acts performed in the bedroom exceeded the scope of consent, but it does fill out the narrative a bit.

Finally, while it's not unusual for victims of sexual assault to be reluctant to come forward, and that's understandable, I'm less willing than some to give them a pass on the avenue they did decide to take.  You're not willing to talk to the police about it, but you're willing to talk to the press about it on condition of anonymity?  Nineteen times out of twenty, I'd sooner trust the police than the press to protect the identity of a victim, and in fact there are mechanisms to protect the identities of victims of sexual assault (typically, over the objections of the media).  Why talk to Kevin Donovan, to another freelance reporter, to others you're hoping will corroborate your story, etc., but still not want to tell your story to a judge with the power to order your identity protected?

And why go to the press?  What do you hope to accomplish through anonymous allegations?  That the country will know who Jian Ghomeshi really is?  That would raise the important question of how much stock we, as a society, are willing to put into anonymous allegations, and the simple reality is that there are very good reasons for the presumption of innocence, the right to face one's accuser, etc.  The bottom line:  We should never be prepared to assume that someone is guilty of a serious criminal offence simply on the basis of anonymous allegations.

Why Did the CBC Actually Fire Ghomeshi?

Here, I'm getting into 'best guess' territory.  Ghomeshi claims that the CBC was satisfied that there was consent.  I don't necessarily believe that's what anyone actually said (that's the sort of thing that can be easily misstated), but even if it was said, that doesn't mean it's entirely true.  I suspect that we're into a situation where they're acting on the assumption that Ghomeshi's version of events is true.

On Twitter, I've seen people post statements arguing that it's hard to believe that the CBC would terminate him if they believed there was consent, such as the following:
I mean, come on.  You honestly believe the CBC fired Jian because someone's trying to out him for being kinky in bed?
Yes, it seems pretty absurd.  But as a labour/employment lawyer, it's even harder to believe they would fire him over allegations of sexual assault unless they were satisfied not only that the allegations were true, but provably true.  When an employer alleges just cause for termination, the onus is upon the employer to prove those allegations on a balance of probabilities, and with the accusers unwilling to come forward, it would seem pretty much impossible for the employer to meet its onus.

So whether or not the CBC believes the allegations of non-consent is pretty much irrelevant.  Either way, they're going to be worried about the political firestorm that would follow such allegations, and either way, they're unable to jump on the bandwagon and fire him over the allegations.

Ordinarily, with allegations of this nature, an employer like CBC would be expected to place the employee on an administrative leave and make no comment until the matter is resolved - basically, a "The matter is before the courts" response.  But the trouble is that the matter isn't before the courts, and will not obviously have any judicial resolution, and so the CBC needed to find some other way to head off the oncoming scandal.

So they'd try to find something else - an allegation that the conduct he has admitted is somehow incompatible with continuation of his employment relationship.  So yes, I do believe Ghomeshi when he says that the CBC is taking the position that his termination was warranted because of his consensual bedroom conduct.

And from a legal perspective, I suspect it's an uphill battle for the CBC to satisfy an arbitrator that this amounts to just cause.  There are circumstances where an employer can fire an employee for misconduct outside of the workplace, but it's a high threshold, looking to factors such as the following:

  • Whether the misconduct harms the the company's reputation or product;
  • Whether the misconduct renders the employee unable to perform his duties;
  • Whether the behaviour leads to the refusal, reluctance, or inability of other employees to work with him;
  • Whether the behaviour is a serious breach of the Criminal Code; and
  • Whether the behaviour places difficulty in the way of the company properly carrying out its function of efficiently managing its works and directing its workforce.
There's no question that Ghomeshi was tied to the CBC's brand.  But the rest of the factors are harder to get to here, absent serious criminal behaviour.  While it's true that BDSM can fall into a legal grey area, ultimately, I suspect that Ghomeshi is right, that it's going to be very difficult for an employer to discipline based on what happens behind closed doors between two consenting adults, even where one of their major celebrities is involved.

(Ghomeshi does go further, calling sexual preference a human right.  While sexual orientation is certainly a human right, sadomasochism is probably not.  It certainly doesn't stand as a prohibited ground under the Human Rights Code, and probably not as an analogous ground under s.15 of the Charter.)

Choice of Process

There's another interesting quirk here:  Ghomeshi's lawyers have indicated that they will both grieve the dismissal under the collective agreement and file a $50 million law suit.

This is bizarre.  Typically, where a grievance process under a collective agreement is available, you can't sue your employer in court.  The courts just don't have jurisdiction over matters under a collective agreement.  And lots of people have tried to circumvent that by casting a claim as falling outside the scope of the collective agreement, but the courts have taken a very expansive interpretation of the collective agreement, and such efforts generally fail.

However, it's unlikely that Ghomeshi's lawyers would be making a civil claim without at least an arguable basis for jurisdiction, and thus (unlike others such as Howard Levitt, who assert that the suit is just a baseless publicity stunt) I have to assume that there's something there - perhaps some contractual relationship outside of his employment under the collective agreement, maybe something to do with the fact that he co-created the Q program?

It will be interesting to see how that issue plays out.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

Wednesday, October 15, 2014

Costs awards when represented by a lawyer in the family

I noticed an interesting decision a few weeks back, Watkins v. Toronto Terminals Railway, involving a motion in an ongoing wrongful dismissal case where the plaintiff is represented by her husband.  The costs decision was just released, which has some interesting discussion.

Background

The case is a wrongful dismissal case, involving allegations that the plaintiff was harassed.  She's being represented by her husband, Ryan Watkins.

Firstly, I should highlight that, unlike doctors, we lawyers aren't prohibited from rendering professional assistance to family members.  There are professionalism 'red flags' raised by such things in some contexts, but it's something that's not inherently improper.  In a wrongful dismissal context, for a lawyer to represent a spouse can certainly make sense.

However, there's another concern in such a context:  It isn't at all uncommon for a spouse to be a part of workplace interactions, particularly workplace social events, and there is a pretty strict prohibition on lawyers acting as witnesses.  That's what the motion in issue comes up:  The defendant alleged that Mr. Watkins is a potential witness, in part because he attended at least one social event with his wife and the alleged harasser.  Master Muir rejected this argument, however, on the basis that there are no controversial facts arising from that social event, and no "significant likelihood" of Mr. Watkins being called as a witness.

That seems a fair assessment.  It's likely that the defendant made the motion as a tactical matter:  If they could have Mr. Watkins removed from the case, Ms. Watkins would have to start incurring legal fees, and this would lead to pressure to settle.

But the costs decision is far more interesting.

Costs

Mr. Watkins does not appear to be charging his wife for work on the file.  This complicates a costs decision, as the primary purpose of a costs award is 'indemnity' - i.e. to compensate a party for the costs being incurred.

However, there are other purposes to costs awards - to deter frivolous litigation, and to discourage unnecessary steps that prolong litigation.

There's a growing body of 'pro bono' case law where a costs award is made even where the client isn't getting charged.  Presumably, this money will go to the lawyer, compensating him or her directly for the time incurred.

Watkins argued that this falls into the same framework.  Master Muir disagreed to some extent:  "the lawyer for the plaintiff is not handling this matter as part of the profession's commitment to ensuring access to justice.  It would appear that he is handling this matter in order to reduce his spouse's legal expenses."

That being said, it remains true that the opposing party should still have to consider, when evaluating what steps to take in the litigation, the risk of having to contribute to the plaintiff's costs if they're unsuccessful.  Therefore, the plaintiff was awarded costs of 25% of what she was seeking - $2,774.10 instead of $11,096.39.

Commentary

I'm not sure how I feel about this.  I do agree that some costs are warranted, but I'm not sure about the arbitrary reduction.

It does bear noting that self-represented litigants, even lawyers, have a hard time obtaining costs awards at all.  The system does not particularly value the time and energy that self-represented litigants have to spend preparing their own case.

But Mr. Watkins is not the litigant.  He is a professional, rendering professional services for which he is licensed, to a client.  Unlike a self-represented litigant (for whom a license to practice is strictly irrelevant), his assistance to his client in this context requires a licence.  True that he is not charging that client, but I'm not sure I see a basis for devaluing his time on that basis:  The defendant forced him to incur dozens of hours of time to respond to this motion; the internal retainer arrangement between himself and his client would seem to be immaterial to the reasonable amount of costs that the defendant should have to bear for that.  Certainly, as a busy lawyer, he could be turning that time around into billable hours that would line his own pocket (or, rather, his firm's pocket, such that he would be in a better position to negotiate raises and bonuses).

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

Tuesday, October 14, 2014

Stranger than Fiction: Litigating a Junior Soccer Tournament

The sports fans among us are very aware of the 'human element' in the officiation and regulation of sports.  Sometimes, there are controversial calls - bad calls on the field, or discipline off the field.  And, for the most part, sports fans (and players) recognize that this is just a reality of the game.  We gripe, then we move on.

So the recent case of West Toronto United Football Club v. Ontario Soccer Association is quite striking.

The Facts

The dispute involves an Under 16 Boys Tier 1 Division soccer team, the West Toronto Cobras 98 (the "Cobras").  On August 23, 2014, they played the semi-final game of the Ontario Cup tournament, against the Woodbridge Strikers.  The Cobras won, though the Strikers had raised some issue about the Cobras allegedly using six players as 'call-ups' improperly.

On August 27, the Strikers made a formal protest in relation to the alleged call-ups.  The OSA's Protest Committee gave the Cobras until noon the next day to respond, and they did, denying the use of any call-ups.

On August 29, the OSA - of its own initiative - raised a new issue, alleging that one of the Cobras players had only been added to the roster on August 12, too late to allow him to play in the Ontario Cup.  This took the Cobras completely by surprise - they were able to speculate that there may have been an administrative error at the Toronto Soccer Association (which couldn't be contacted until after the long weekend), and asserted that the player in question, Tristen, had been on their roster for the entire season.  On September 3, the TSA confirmed to the Ontario Soccer Association that, in fact, there was an administrative error on their end, that Tristen had been accidentally removed from the roster (and placed back on it) on August 12, and had been playing for the Cobras for the whole season.  It was an issue that hadn't come to anybody's attention until the OSA looked at the roster during the process of the Protest.

The Protest Committee, after receiving that information, essentially disregarded the TSA's advice.  They concluded that there was 'no evidence' that his removal from the roster had been accidental, and that therefore he was ineligible and shouldn't have played in the semi-final game.  As a result, it awarded the semi-final game to the Strikers, and they advanced to the final.

On September 5, the Cobras advised all parties that it would dispute the finding of the Protest Committee, but the final match was played (and won) by the Strikers on September 6, and they would advance to the National Club Championships.  The Cobras attempted to file an appeal with the OSA, but the OSA returned the appeal materials, asserting that there was no appeal available from the decision of the Protest Committee.

Therefore, the Cobras brought an application for judicial review to the Superior Court of Justice.

Jurisdiction

Historically, judicial review was generally regarded as being available to challenge exercises of statutory power:  If I'm empowered by a statute to make a certain decision, I'm obligated to exercise that power in a rational and fair-minded manner, and if I don't, then my discretion can be subjected to a judicial override.

However, there's some case law expanding judicial review beyond exercises of statutory discretion, in appropriate circumstances, and these circumstances called for it:  The OSA controls the playing of competitive soccer in Ontario.  "Put simply, you cannot play competitive soccer in this Province without subjecting yourself to the authority of the OSA."  Justice Nordheimer was satisfied that there must be some fair process available for officials to be able to deprive teenage athletes of their hard-fought win.

Result

On the face of the facts, the Protest Committee's decision was unsustainable.  They'd raised an issue on their own initiative, and were completely unreceptive to reasonable explanations by both the Cobras and TSA confirming the inadvertent nature of the administrative error.  (In fact, even before receiving the information from the TSA and making their decision, they'd already published a schedule for the finals, showing the Strikers playing in it.)

In the absence of some incontrovertible proof, the OSA concluded that there was 'no evidence' supporting the Cobras' position.  Quite the contrary, there was no significant evidence supporting the Cobras' position, no evidence to the contrary, and no apparent reason to doubt the veracity of the Cobras' and TSA's evidence.

From a lawyer's perspective, the Protest Committee's decision was clearly unreasonable.  (Bear in mind, of course, that athletic committees don't typically have lawyers in them.)

But here's the rub:  The Strikers have already moved on, already played a final match on the basis of having won the earlier one.

Justice Nordheimer crafted an unusually flexible remedy, ordering that, unless it's impractical to do so, the Final should be replayed between the Cobras and the other finalist, the Panthers.  If that's not practical, then the Cobras should replace the Strikers as winners of the Ontario Cup, and should proceed to Nationals.  Justice Nordheimer concluded that this result would do "no disservice" to the Panthers who already played and lost the Final match.

As it turns out, the OSA proposed a date for a replay, in the tight timeframes, but the Cobras unsurprisingly claimed to be unavailable that date - keeper injuries, and a top player overseas.  Suffice it to say that the Panthers aren't exactly on the same page as Justice Nordheimer's "no disservice" conclusion.

Accordingly, the Cobras were given the title, and advanced to the Nationals, where they won Silver this past weekend, losing 2-1 to Coquitlam.

Commentary

Firstly, I should say that it's downright lucky that the Strikers won the Ontario Cup final match.  Despite their objections, Justice Nordheimer is right that that fact put the Panthers into a position of having nothing to really complain about.  They played the loser of the Cobra/Striker match, and still lost.  Yes, it's possible that it would have turned out differently against the Cobras, but there's no real reason to think it would have or should have.

Had they beaten the Strikers, that would have been a much more difficult scenario to resolve.  It would be impossible to fairly resolve without a Cobra/Panther match, and even then there would invariably be 'fairness' complaints from the losing side because the short notice wouldn't leave either team at its best.

One might well argue that the Panthers should have been a party to the proceeding, given the potential impact on them of the order sought.  (Incidentally, they were given notice of the proceeding, and didn't appear.  Should they have paid a lawyer to try to secure a rematch?)

This decision is definitely fact-driven to a certain extent.  The OSA's decision-making process was deeply flawed and deeply unfair to the Cobras, and that definitely pushed towards Justice Nordheimer taking jurisdiction:  There has to be some place to go for a remedy, and where if not here?  And, as strange as it is in some ways, I think it's probably the right call.  And, to Justice Nordheimer's credit, he did remark a couple of times that courts should be very reluctant to interfere in sporting results.

Still, I'm a little concerned about floodgates:  Sports organizations have to make decisions about eligibility, disqualifications, or team selections all the time.  And, truthfully, they aren't necessarily very good about making sure that such decisions are fair.  I've seen athletic tournaments - at the high-performance national level - where the person who created the 'draw' (i.e. the schedule of who plays whom) was a competitor in the tournament.  Surprise, surprise - all the stiff competition ended up on the other side of the draw from his team, and he ended up progressing to a level that got him a cash prize.  In my experience, I've seen a number of such issues - people being disqualified from events because of administrative errors without a fair review process, coaches selecting their own juniors for regional rep teams without an objective tryout process, etc.  And they often do have difficult ethical or legal decisions to make, with real consequences:  How to apply the criteria for funding grants to athletes; how to apply eligibility criteria for national representation in international tournaments, etc.

And it's never just about the individual athletes about whom the decision is being made - there are always other athletes affected.  If an athletic organization allows a person with questionable eligibility to represent Canada at the Olympics, for example, that's likely to push somebody else off the Olympic team.  If you waive a requirement for funding eligibility in recognition of somebody's extraordinary circumstances, that will mean that a different athlete doesn't get funded.  It's easy to be sympathetic to somebody asking for special treatment, but it's always sum-zero, with another person being negatively affected by the decision.

I definitely see the need for fair decision-making processes, and I definitely see how certain athletic organizations are lacking in that area, but the prospect of significant athletic litigation worries me.  Every time a decision is made, will the athletes play subsequent matches under threat of judicial intervention?  Will athletes and athletic organizations - already significantly underfunded in most sports - need to start budgeting for substantial legal fees on a regular basis?

But the worst part is that it undermines the finality of games:  Losing is an important part of athletic development.  Losing gives you an opportunity to grow.  Nobody likes to lose, but the ability to accept a loss, learn from the loss, and let it motivate you to train harder and play better next time, is pretty fundamental for a high performance athlete.

If we ever come to the point that a lost athletic match becomes like a lost trial - "Yeah, we lost the match, but we're reviewing our options for an appeal" - then I think we'll have forgotten what sport is really about.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

Monday, October 6, 2014

Must Lawyers Be Nice To Their Clients?

There's an interesting recent case out of the Superior Court of Justice - it's only peripherally related to employment law, but it interests me for a number of reasons, including that it's the first reported decision citing the case of Morland-Jones v. Taerk - you might recall the case where Justice Morgan indicated that litigants required a "rather stern kindergarten teacher", rather than a judge.  And it cites Taerk in context of determining whether or not clients are entitled to be compensated when their lawyers aren't nice to them.

The case is Stewart v. Hosack, and the essential facts aren't particularly complicated:  The defendants are lawyers.  Stewart, her husband (Tank) and their company (JS) were long-time clients of the firm, and in particular of Bob Nightingale (now Justice Nightingale).  On August 12, 2012, a former employee of JS was charged with uttering a death threat to Ms. Reece, and Mr. Hosack, assisted by the firm's criminal lawyer Mike McArthur, accepted a retainer to defend Ms. Reece in the criminal proceedings.

Suffice it to say that Ms. Stewart was not thrilled to discover that her own lawyers were defending the woman who allegedly threatened her life.

More Background

It's a little more complicated than that, of course:  There's some issue as to whether she had any active files into 2012.  There were a couple of real estate files, but the lawyers claim that Stewart's husband was the sole client on those matters.  And then there are some question about the circumstances in which those retainers were terminated.  (It almost sounds like an employment law file:  Why did you fire us as clients?")  The judge ultimately concluded that Stewart was a client on the real estate files, and that the matters were terminated as a result of the Reece file.

And the facts get delightfully convoluted indeed when you bear in mind the 'small town' factor - it all took place in Norfolk County, where I practiced for a time, earlier in my career.  (So yes, I personally know most of the lawyers involved here.  There really aren't many lawyers in town, and very few firms, so conflicts of interest can get a bit tricky.  The reality is that if Hosack and McArthur didn't defend Reece, there were only a few other lawyers in the community to whom she could have gone.)

By way of 'small town' factor elements, the death threat in question was allegedly made at the Norfolk Tavern in Port Dover, of which Hosack is a part owner.  (As an unrelated piece of trivia, I understand that McArthur is a partial owner of a local winery.  Lawyers and alcohol, eh?)  There was an allegation that Hosack "withheld for a time" video evidence of the incident giving rise to the charge(s) against Ms. Reece, on the basis that he had immediate access to the Norfolk Tavern's video surveillance system.  (This appears to me to be likely a frivolous allegation, but I won't go into detail on that at the moment.)

After the Crown threatened to bring a motion to disqualify the firm because of the supposed conflict of interest, the firm helped Reece obtain new counsel.  Later, the charges were withdrawn by the Crown, for "no reasonable prospect of conviction".

Ms. Stewart, for her part, sued the firm, alleging a breach of fiduciary duty.

The Court's Findings

As I noted above, the Court concluded that Stewart was, in fact, an ongoing client of the firm when the firm took on the Reece retainer.  However, on the question of whether or not that generated a conflict of interest, the Court concluded that it did not:  Ms. Stewart was not actually a party adverse in interest: though an alleged 'victim' in the criminal proceedings, victims are not parties, and do not typically have an interest in the outcome of the proceedings.  As well, none of Stewart's confidential information, coming out of the solicitor-client relationship, was relevant in the criminal proceedings.

However, "there is still no doubt that Ms. Stewart has been badly treated by the firm", primarily because they unexpectedly terminated her retainers as a means of circumventing conflict of interest rules, and thus they breached their duty of loyalty, and their duty of candour by "failing to disclose their intention to represent Ms. Reece and allow Ms. Stewart to make her own decisions about continuing her retainer with the firm or going elsewhere."  Justice Lemon concluded that the refusal to act for her, on those circumstances, constituted a breach of fiduciary duty.

However, no damages flowed.  On the facts, she established no damages, and no entitlement to punitive damages:  "If there were a conflict, it was one upon which reasonable people might disagree."  The breach of fiduciary duty was not based on profit, but simply an error of judgment.  In finding that Stewart's emotional consequences were not compensable, the Court quoted the following passage from Taerk:
As I explained to Plaintiffs' counsel at the hearing, a court cannot order the Defendants to be nice to the Plaintiffs.  Litigation must focus on legal wrongs and legal rights - commodities which are in very short supply in this action.  As my colleague Perrell J. put it in High Parklane Consulting Inc. v. Royal Group Technologies Ltd., "[i]t is trite to say that living is a stressful activity and that much of life can be nasty and brutish.  Tort law does not provide compensation for all stress-causing and nasty conduct that individuals may suffer at the hands of another..."
Accordingly, the action was dismissed.  (However, there may be LSUC proceedings ongoing.)

Commentary

The judge's reasoning on the conflict of interest issue, on the facts as set out, appears to be sound.  I can certainly imagine cases where the issue might fall the other way, though.  It's not hard for me to imagine a scenario where an employer might actually have an interest in the resolution of criminal charges against a former employee, though I'm not sure it's really legitimate to allow that to make the employer an interested party.  In this case, it would be particularly strained, as the employer is discrete from the victim, and the alleged criminal conduct arose post-employment.  Likewise, it isn't hard to imagine a case where a criminal defence might be able to make use of confidential solicitor-client communications involving the victim, but that doesn't appear to have been the case here.

Thus, on these facts, I think the judge is right that there's no conflict.

That being said, I find it difficult to reconcile that finding with the conclusion that there was a breach of fiduciary duty, and in particular of the duty of candour.

Accepting, for a moment, that they were not prohibited by the Rules of Professional Conduct's conflict of interest rules from taking on the Reece retainer, it's hard to see how taking it on would have generated additional duties on the lawyers in connection with Stewart.  If the Reece retainer does not generate a conflict, then no consent is required by Stewart for them to take it on...and as for the finding that Stewart should have had an opportunity to decide whether to stay with the firm in light of the Reece retainer, that can't be right:  The implication would be that a client is entitled to know what new retainers an existing firm is taking on - entitled to know the identities of the firm's other clients.  For the non-lawyers in the audience, the very existence of a solicitor-client relationship is confidential and subject to solicitor-client privilege.  For the firm to tell Stewart, as Justice Lemon seems to think they should have, "We're taking on Reece's defence" would have straightforwardly violated their professional obligations to Reece.

"How do you obtain consent without telling clients about each other?" is an age-old catch-22 for lawyers trying to resolve a conflict of interest.  If I have two clients adverse in interest, then even if I think that they might consent to me acting for both, how do I even approach the subject without breaching the other's confidentiality?  The answer is often "I can't", and therefore I have to stop acting for one or both while telling them nothing beyond "a conflict of interest has arisen".  However, in this case, if there's no conflict of interest, then there's actually no legitimate reason to decline the Reece retainer, and no good faith reason for them to turn Reece down.

The finding that the firm treated their client unfairly is, perhaps, entitled to deference as being mostly a finding of fact (i.e. that they fired a client suddenly and unexpectedly because they took on a different client), but the extension of that to a finding of breach of fiduciary duty is based on the premise that "a law firm should not summarily and unexpectedly terminate a retainer as a means of circumventing the conflict of interest rules".

That premise is sound, but the conclusion does not necessarily follow:  If there was no conflict of interest, then why would the firm need to circumvent conflict of interest rules?  Moreover, that principle seems more apt to a scenario of a new (better?) client walking in the door, and the lawyer firing an existing client with an adverse interest in order to be able to take on the new retainer.  That's kind of different from what appears to have happened here, even on Stewart's theory of the case.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

Friday, October 3, 2014

Divisional Court Upholds Reinstatement Remedy - A Decade Later

There's a new decision out of the Divisional Court, Hamilton-Wentworth District School Board v. Fair, on a judicial review application from the Human Rights Tribunal of Ontario.

The upheld a decision by the HRTO reinstating Ms. Fair, with back pay retroactive to her termination date...in 2004.

This has gotten some media attention in the last few days, because it's so unusual and such a significant sum of money.

Background

This is a case with a long history.  Ms. Fair was employed as a Supervisor, Regulated Substances, Asbestos.  In 2001, she developed generalized anxiety disorder (and later depression and PTSD), in connection with job stress.  She received LTD benefits for a time, which terminated in April 2004.  On July 8, 2004, the school board determined that it could not accommodate her disability, and terminated her employment.

In November of 2004, Ms. Fair made a complaint to the Ontario Human Rights Commission.

As a sidebar, it's important to understand that this was prior to important amendments to the Human Rights Code.  At that time, the process meant that you first complained to the OHRC, which would investigate the complaint and determine whether it warranted a referral to the Tribunal.  There were a number of problems - perceived and real - with that process, and the Commission developed a backlog inconsistent with the purposes of the Code.  So the legislature amended the Code and created what we call a "direct access" model - as of July 2008, if you think your human rights have been violated, you file an application directly with the Tribunal.

However, the question remained as to what to do with the Commission's backlog, and the answer was to create a couple of transitional streams for these issues:  Basically, if you had a live complaint before the Commission, you had until June 2009 to convert it to a transitional application to the Tribunal.  The Tribunal assigned a lot of resources, and created an entirely different set of procedural rules, just to get through this backlog.

Therefore, in 2009, Ms. Fair turned her complaint into a transitional application.  The application form asked her what she wanted, and she sought reinstatement.  This is apparently the first time she indicated that she wanted reinstatement, but the complaint form to the commission apparently didn't require her to specify the remedy being sought.  (It's been a very long time since I've seen one of those forms; I'm unable to independently verify that.  It's also not entirely clear to me whether she would have used the 'self-draft' complaints the Commission started using in October 2004, or an older questionnaire.)

So there's the employer, five years after dismissing her, and suddenly she's seeking a reinstatement remedy.  The important thing to know about reinstatement is that, in the human rights context, it's almost certain to come with full back pay.  In a moment, the school board's monetary exposure expanded exponentially, not to mention the difficulty it might expect to have placing her.

It still took until February 2012 to get a decision on liability - i.e. whether or not the board had discriminated against Ms. Fair - and until March 2013 to get a decision on remedy.  Not particularly ridiculous in terms of legal proceedings generally, but rather slower than the HRTO should be moving.

The HRTO's Decision

The decision on liability is here, and the decision on remedy is here.  In essence, the adjudicator determined that there would have been work positions into which Ms. Fair could have been placed without causing undue hardship, but the employer had failed to make the requisite effort to accommodate her.

On remedy, the Tribunal ordered the school board to reinstate her to "a suitable position", at or equivalent to the level she was at before her dismissal.  The board argued that the passage of time made the reinstatement remedy unfair, but the Tribunal noted that most of the delay wasn't the applicant's fault.  (Not really the board's fault, either - it was a failure of the system itself.)

In terms of back pay, she had made some casual and part-time earnings, but not much, so as of the liability decision date (March 2013), the retroactive back pay was calculated at nearly $420,000(!!!), plus pension and CPP adjustments and compensation for lost medical benefits, and a gross-up for tax, which again is an absolutely huge sum - basically it means that she needs to get the after-tax income she would have received over all those years, despite the fact that she'll be at the very highest marginal tax rate for the year in which she receives the lump sum.

The Judicial Review Application

I received a copy of the Divisional Court's reasons earlier this week, but they were just posted today on CanLII.

The Divisional Court does not hold hearings de novo for such matters.  They aren't going to listen to much, if any, evidence, nor decide which side they believe.  Their job is to decide whether or not the adjudicator made a mistake, and adjudicators are entitled to a lot of deference.

The school board made arguments about sufficiency of reasons, and that the adjudicator's findings were unreasonable in the circumstances.  That's a tough sell to make, most of the time, and the Divisional Court didn't accept it.

The board also argued that the adjudicator shouldn't have allowed her to seek a new remedy of reinstatement - but the fact that she wasn't required to specify the remedy sought in the old process was a full answer to that.

The other argument by the board is, perhaps, the most interesting:  That there was a reasonable apprehension of bias.  The HRTO's hearings are not generally recorded (a fact for which the Ontario Court of Appeal has already chastised them), and there was a disagreement as to something the adjudicator said.  The employer alleged that, at the start of the hearing on remedy, the adjudicator asked if the Board would place Ms. Fair in a senior labour relations role; the Board answered no, and the adjudicator allegedly responded to the effect that she "would write a decision and that the lack of a position would be no excuse for no reinstatement".  (That quotation is from the Divisional Court's description of how the employer's counsel paraphrased it.)

However, in her decision, the adjudicator made it very clear that her caution had been to the effect of what the case would be if (not when) she decided reinstatement was appropriate.  This does not suggest a closed mind.  (Likewise, there was another case recently where a Deputy Judge was accused, unsuccessfully, of bias after encouraging parties to engage in settlement discussions because he was prepared to decide the issue but they may or may not like his decision.  It is a well-recognized reality that adjudication is a hammer that doesn't really allow for the kinds of creative and mutually beneficial settlements parties might be able to craft on their own.)

Commentary

This is an interesting case.  There aren't many cases dealing with reinstatement at the HRTO, and the transitional applications aren't really supposed to have much precedent value, but a Divisional Court decision upholding the reasonableness of such a decision...will be harder to ignore.

Of course, with stakes this high, it would be really surprising if the school board didn't seek to appeal this further, which will take more time.  In that time, they're still presumably not reinstating Ms. Fair, and their liabilities continue to grow - assuming that they aren't ultimately successful.  Of course, now that they're into the civil courts, there are possible cost consequences, too - whichever party is ultimately successful will likely be entitled to a contribution to their legal fees through the judicial review application and appeals therefrom.

Ultimately, however, while this case does illustrate how badly the system needed to be changed, I'm not sure it's a particularly flattering reflection of the new system, either.  Justice delayed is justice denied - let's assume that she's ultimately successful in another year and a half or so (could be less, could be more), and gets reinstated some 12 years after the termination.  Because of systemic delay, that's 12 years she's been without steady employment, 12 years of wages that the employer has to pay her, plus probably hundreds of thousands more dollars for the tax gross-up...and as nice as it will be for her to get that lump sum, consider that she'll also be returned to work having been out of the workplace for 12 years.  Her skills will be rusty and probably out-of-date.  People will have changed, systems will have changed, the requirements of the job will have changed.  And her best case scenario is being put back into an equivalent position; that's 12 years of career progress she's lost.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

Tuesday, September 30, 2014

Trinity Western v. LSUC: Interveners

Trinity Western is, unsurprisingly, seeking judicial review of the Law Society of Upper Canada's decision not to accredit their law school - a decision with the result that Trinity Western law grads would not be eligible to practice in Ontario.  I previously explained why Trinity Western shouldn't have a law school, and then explained my view on the consequences of LSUC having rejected them.

LSUC is not the only one to reject them.  Other Law Societies that hold their own votes in such matters have, as well - New Brunswick rejected them, and Nova Scotia granted only a 'conditional acceptance' if they don't make their law students agree to their 'community covenant'.  Which is as good as a rejection.  The BC Law Society, after initially voting to accredit them, reviewed the decision, held a binding referendum, and voted down Trinity Western.

TWU's been known to litigate this sort of thing in the past, so nobody's surprised that they're litigating.

First order of business:  Who gets to participate?  In this kind of public interest litigation, lots of folks pop up on both sides wanting to support their cause.

In TWU's corner, we have:
  • The Canadian Council of Christian Charities
  • The Christian Legal Fellowship
  • Justice Centre for Constitutional Freedoms
  • The Association for Reformed Political Action Canada
  • The Evangelical Fellowship of Canada
  • Christian Higher Education Canada
  • Catholic Civil Rights League
  • Faith and Freedom Alliance
  • Gerard P. Charette
In LSUC's corner, we have:
  • Canadian Association of Labour Lawyers
  • Criminal Lawyers' Association
  • Out On Bay Street
  • OUTLaws
  • The Advocates' Society
(It's not 100% clear on the face of the decision which group CALL falls into, but I'm drawing some reasonable inferences here.)

Notice the themes?  Aside from the "Justice Centre for Constitutional Reforms", all the other pro-TWU interveners are religiously affiliated.  (Mr. Charette, the only individual seeking leave to intervene, is a lawyer and a deacon.)  All those on LSUC's side are lawyer associations.

Justice Nordheimer had to decide who gets to participate, and who gets sidelined.  There's no bright-line way of doing this, and he acknowledged that all the parties bring something to the litigation, but there's a lot of overlap between their respective positions and perspectives.

Ultimately, intervener status was granted to Christian Legal Fellowship, jointly to the Evangelical Fellowship of Canada and the Christian Higher Education Canada, and to the Judicial Centre for Constitutional Freedoms...and on the other side of the coin, jointly to Out On Bay Street and OUTLaws, to the Advocates' Society, and to the Criminal Lawyers Association.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

Tuesday, September 23, 2014

Ford v. Keegan: Dependent Contractors, Fiduciary Duties, Restrictive Covenants, and More

The Superior Court of Justice released a decision last month in the case of Ford v. Keegan:  Ford is a safety consulting firm, and had retained Mr. Keegan to provide safety training to its customers.  After Ford terminated the relationship, Mr. Keegan continued to provide such services to Ford's customers and former customers, and Ford sued Keegan to enforce the terms of a non-competition clause.

Keegan counterclaimed in wrongful dismissal.

It's an interesting case, if a lengthy read, covering a number of the more nuanced issues in employment law:  Was Mr. Keegan an employee or an independent contractor?  Is the termination language in the agreement enforceable?  Are the restrictive covenants enforceable?  Was he a fiduciary of Ford?  What is the impact of Keegan's subsequent bankruptcy?

Ultimately, the court determined that Mr. Keegan was not an employee, but rather fell within the 'intermediate category' of a dependent contractor.  The agreement entitled Keegan to 30 days notice of termination, which Ford had provided - the agreement was enforceable and the wrongful dismissal counterclaim was dismissed.  As for the restrictive covenants, they were found to be void, but Keegan was nonetheless found to have breached fiduciary duties owed to Ford, and his resulting liabilities survived the bankruptcy.

So yes, a lot of ground to cover, and I'm going to deal with them in an unusual order, because I think some of the court's conclusions have more impact than others - in particular, I'm struck by the court's assessment of the written contract, because Justice Price expressly declined to follow a persuasive line of cases on the point, dealing with what I call 'formulaic non-compliance'.

The Contractual Termination Clause

The contract contained a term entitling either party to terminate the contract on 30 days' notice.  In an employment contract, this would be problematic, because the Employment Standards Act, 2000 guarantees employees with more than 5 years of service more notice than that.  The established wisdom, up until now, was that such a clause, in an employment contract, would be void ab initio - i.e. it would constitute an unlawful attempt to contract out of the terms of the ESA, and thus be voided, regardless of whether or not it satisfied the employee's actual statutory entitlements at the eventual point of termination.  This conclusion was first reached by the BC Court of Appeal 1998 in Shore v. Ladner Downs, and followed by the Ontario Superior Court in 2011 in Wright v. The Young & Rubicam Group of Companies.  (See my discussion of Wright here.)

Thus, Keegan took the position that the termination clause did not comply with the Employment Standards Act, 2000, even though he did receive more than the minimum notice under the ESA (he'd only been in the job for a little over three years, entitling him to three weeks).

I must remark that I consider the judge's finding that Keegan was not an employee to be a full answer to this submission:  The ESA simply does not apply to independent contractors, and probably not to dependent contractors either.  However, Justice Price instead found that the termination clause "did not violate" the ESA under the circumstances.

The judge referenced Shore v. Ladner Downs, then the Wright case, but declined to follow them:
I respectfully disagree with Low J.’s reasoning in Wright. An employer who prescribes a notice period in a contract of employment must conform to provincial employment standards legislation for the particular employee, in the particular circumstances.  The employer who drafts an agreement prescribing a fixed notice period, rather than one that increases with the employee’s years of service, and who does not negotiate a new employment agreement when the employee’s years of service entitles him/her to a longer period of notice, assumes the risk that the clause will become invalid at that point and that the common law will prevail to determine the period of notice required. It is only invalid at that point and not invalidated from when the contract was initially executed.
I would like to be able to call this obiter, to say that the issue was disposed of by the finding that Keegan was a contractor, but the reality is that I can find no support for that proposition within the text of the decision itself.  As a result, the decision stands both for the highly dubious proposition that dependent contractor relationships are governed by the Employment Standards Act, and also directly creates a schism in the law as to the impact of the ESA on non-compliant formulas.  Until the question is resolved by an appellate court, this will result in significant uncertainty in the law.

(I also have to say that the Shore v. Ladner Downs approach simply made sense to me, as well:  Section 5 of the ESA expressly provides that any attempt to contract out of an employment standard is void - it really is a question of contractual interpretation, of whether or not the language itself is compliant with the ESA.)

Employee versus Independent Contractor

This is an issue I see arise with surprising frequency.  Many parties choose to characterize their relationship as that of an independent contractor.  For the payor, it relieves them of obligations under various employment statutes, including employer contributions to EI and CPP.  For the payee (i.e. the worker), it can have tax advantages - you get to write off expenses.

That said, I've seen a good many cases where workers were sold on the 'you get to deduct your expenses' pitch where there are no legitimate expenses to deduct from your taxes - at least, none the CRA would accept.  This is often the case for the particularly superficial 'independent contractor' designations.

This case was not a superficial attempt to mask an obvious employment relationship with an independent contractor designation.  Keegan had a lot of autonomy in terms of his work, and while he had to comply with Ford's pricing guidelines, the compensation was all a function of his billing.  Keegan was not 'controlled' in the sense that would normally indicate an employer/employee relationship.  While Ford had its own promotional material, Keegan directed where to promote his services.

The strongest indicator of an employment relationship, in this case, was the exclusivity of Keegan's relationship with Ford - not only did he not have business or clients outside of that relationship, but he was unable to do so as a term of the contract.  Justice Price identifies this factor as not being determinative, however - that's probably correct (though I would consider contractual exclusivity deserving of a great deal of weight).  In light of all the other factors, it was not enough to make Keegan an employee.  However, it also created a degree of economic dependence inconsistent with an independent contractor relationship, with the impact that Keegan was deemed to be a 'dependent contractor'.

Restrictive Covenants

The contract included a sweeping restrictive covenant preventing Keegan from providing training to any of Ford's customers for two years, in a territory that covered almost all urban areas in Ontario and Quebec, among others.

The problem with this, the court found, is that Keegan did not have access to a list of Ford's customers.  This made the agreement ambiguous and overbroad, effectively preventing Keegan from offering services to any company which could possibly have been Ford's customer.  That rendered the restrictive covenant unenforceable.

And a court can't generally fix a restrictive covenant.  You can't just interpret it down to something that would be acceptable.

That's pretty well-grounded in the case law.  What's less grounded in the established jurisprudence, however, is where the court went from there.

Fiduciary Duties

"Key employees" can owe fiduciary obligations to their employers - i.e. an obligation to put the employer's needs ahead of their own, including an obligation not to compete unfairly after the end of the employment relationship.

Most often, fiduciary duties are reserved to senior management - people in a position to know and direct the company's activities at a high level.  However, there are cases where more junior individuals who act as the 'face of the company' are found to have fiduciary duties, as a result of the exclusive relationships they develop with clients of the business.  It's a complex area of law, and Justice Price includes a good summary of it from paragraphs 168-179.

Going into the application to the case, however, there are some problems in the analysis.  Not only does Justice Price allow a lot of 'restrictive covenant' cases to influence the analysis of whether or not a fiduciary duty exists, but he misstates the conclusions of a number of cases he relies upon - for example, in at least two of the cases where he states that employees were found to owe fiduciary duties, the contexts were of motions for interlocutory injunctions:  The courts in those cases were not called upon to provide an answer to whether or not a fiduciary duty exists, and did not do so, but rather found (at best) that there was a legitimate argument to be made on the point.

There has been a movement in some quarters (including the New Brunswick Court of Appeal) to scale back the application of fiduciary duties owed by lower-level employees; Justice Price rejected that approach, however, and concluded that, when Ford provided Keegan with a list of customers, it put itself in a position of vulnerability - thus, Keegan owed a fiduciary duty not to unfairly compete using the customer list provided by Ford, and breached that duty.

Respectfully, I think we're looking at two distinct issues here:  A fiduciary duty doesn't arise by virtue of possession of the list.  A fiduciary duty, in this context, can only arise as a result of the nature of the relationship between the customers and the employee.  The list can come tied to other obligations of a non-fiduciary nature - if it's confidential and proprietary (and it probably is), then using the list may amount to a misappropriation of Ford's data.

But there's even more strangeness when looking at the nature of the fiduciary duty, because Justice Price looks to the restrictive covenant, which "while ambiguous and over-broad, and therefore unenforceable as such, is evidence from which I infer that the parties agreed that prohibiting Mr. Keegan from providing training to his customers at Training Services for a period of two years after the termination of the Agreement was reasonable and necessary to protect Training Services from the vulnerable position which it created for itself when it entered into the Agreement."

Justice Price therefore concluded that Keegan was restricted, for a period of two years, from providing services to customers on Ford's list within the geographical zone set out in the restrictive covenant.

In other words, having found that the restrictive covenant was unenforceable because it was ambiguous and overbroad, a defect which the court could not cure, Justice Price used the fiduciary doctrine to resurrect and repair it.

Further Commentary

I'm fairly troubled by the overall conclusions here.  It seems entirely plausible that Keegan violated proprietary interests of Ford, and can be held liable for that...but the finding of a fiduciary duty seems very strained, as do the conclusions regarding the contents of the fiduciary duty.

Indeed, it's not clear to me at all that it's appropriate to hold a dependent contractor to post-employment fiduciary duties in the first place.  He wasn't an employee at all, and yet he satisfies the test for a 'key employee'?  Definitely an element of having your cake and eating it too.

What's particularly alarming, though, is that there's nothing particularly unusual about the case, as 'unenforceable restrictive covenant' cases go - the employee goes off and competes, employer tries to enforce the restrictive covenant, fails because the restrictive covenant was framed too broadly.  It happens all the time, and in all of these cases there's a vulnerability of the employer to the employee (or else the restrictive covenant would have failed for other reasons, too).  If Justice Price's approach - cure the vulnerability with a fiduciary duty, and read the contents of the unenforceable restrictive covenant into that duty - were correct, that would be the resolution of all such cases, with the result that employers don't need to worry about ambiguity and overbreadth of their restrictive covenants.  It's hard to reconcile with the established jurisprudence from the Supreme Court of Canada.  Not to mention that looking to unenforceable terms as evidence of the intentions of the parties is pretty close to the exact reasoning the SCC rejected in the Machtinger case.

I'll let the bankruptcy lawyers weigh in on whether or not the finding that Keegan's liabilities survive bankruptcy is consistent with the objectives of the BIA.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.