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Date:
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20010622
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Docket:
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C960400 & S005210
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Registry:
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Vancouver
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IN
THE SUPREME COURT OF BRITISH COLUMBIA
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| BETWEEN:
No. C960400
Vancouver Registry
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RESTAURONICS SERVICES LTD.,
FORSTER FOOD SERVICES (1992) LTD. AND
TOWN SQUARE FOOD SERVICES LTD.
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PLAINTIFFS
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| AND: |
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ARTHUR FORSTER, ERLINDA V. NICOLAS,
NATHAN KUSHNIR AND WESTCANA SERVICES INC.
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DEFENDANTS
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| AND:
No. S005210
Vancouver Registry
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ARTHUR FORSTER
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PLAINTIFF
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| AND: |
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RESTAURONICS SERVICES LTD.,
FORSTER FOOD SERVICES (1992) LTD. AND
TOWN SQUARE FOOD SERVICES LTD.
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DEFENDANTS
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REASONS FOR JUDGMENT
OF THE
HONOURABLE MR JUSTICE RALPH
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| Counsel
for Restauronics Services Ltd. et al. |
Joseph C. McArthur and
Michael Howcroft
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Counsel
for the defendant
Arthur Forster
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Jacy Wingson and Alex Kask
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| Counsel
for Erlinda v. Nicolas and Westcana Services Inc. |
Nazeer T. Mitha and
Nicole Howell
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| Date
and Place of Hearing/Trial: |
November 14-16, and
November 20-24, 2000 and
January 24, 25 and 29, 2001
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Vancouver, B.C.
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[1] On February 24, 1995, Restauronics Services Ltd. ("Restauronics")
purchased the shares of Mr. William Forster and his three sons in
Forster Food Services (1992) Ltd. Arthur Forster, the defendant in the
first action and plaintiff in the second, is one of William Forster's
sons. Restauronics also purchased the shares of Town Square Food
Services Ltd. and Forster Food Services (Calgary) Ltd., all of which
were owned by Mr. William Forster.
[2] At the time of the sale of shares, both Restauronics and the
Forster companies were engaged in the business of providing food
services in institutional settings. Acquisition of the Forster companies
offered Restauronics an opportunity to expand its business more
substantially into British Columbia. Restauronics carries on business in
most parts of Canada and has its head office in Toronto. In 1995 it was
the fourth largest institutional food business in Canada but did not
have extensive business in British Columbia.
[3] These actions arise out of circumstances connected to the sale
and purchase of the Forster shares and were joined for the purposes of
trial. The defendant, Mr. Kushnir, passed away in 1996. No steps have
been taken in respect of the claim against him or his counterclaim and
the action did not proceed as against him. Subsequent to the purchase of
shares, Forster Food Services (1992) Ltd. was amalgamated with
Restauronics. Throughout this decision I will refer to the plaintiffs
collectively as "Restauronics".
[4] At the time of the share purchase agreement Mr. Arthur Forster,
held a 15% interest in Forster Food Services (1992) Ltd., and was also
employed as the Vice-President of Operations for the Forster companies.
One of the district managers of Forster Food Services (1992) Ltd. was
the defendant, Ms. Nicolas, who reported to Arthur Forster. Ms. Nicolas
is the sole shareholder and director of Westcana Services Inc. ("Westcana")
and she was dismissed from her employment with Restauronics in July
1995.
[5] Restauronics' claims against Mr. Forster, Ms. Nicolas and
Westcana, are that they breached duties not to use confidential or
proprietary information belonging to Restauronics. In particular, the
allegations relate to the provision of food services to the Burnaby
Correctional Centre for Women ("BCCW"), one of the
institutions served by Restauronics. In October 1995, however, the
contract to provide food services to BCCW was awarded to Westcana.
[6] Mr. Forster's and Ms. Nicolas' claims against Restauronics are
that they were wrongfully dismissed from their employment.
[7] The share purchase agreement provided that Arthur Forster would
be paid $381,000 for his shares. The agreement also contained a
restrictive covenant set out in eight paragraphs. Each vendor of shares
covenanted that for a period of five years he would not be engaged in
the business of providing food services "within British Columbia,
Alberta and within a 100 mile radius of any regional or branch
operations of the Purchaser".
Mr. Arthur Forster's employment with Restauronics
[8] Prior to the purchase and sale of the Forster companies on
February 24, 1995, Mr. Manfred Doblinger, the chairman of Restauronics,
proposed to Mr. Forster that he become an employee of Restauronics after
the sale. It was Mr. Forster's evidence that, while he did not so advise
Mr. Doblinger, he did not wish to accept a position because of
indications that in the proposed position he may be required to
terminate two employees of Forster Foods (1992) Ltd. He informed his
father of his concern. In a subsequent telephone discussion with Mr.
Doblinger, Mr. Forster was told that his continued association with the
company was an integral part of the purchase and sale and that his role
after the sale would be an important one. Mr. Forster testified that he
was informed a number of times by Mr. Doblinger that it would be
"business as usual" after the sale. Mr. Forster said that this
gave him a level of comfort sufficient to accept employment with
Restauronics. He assumed that he was "going to be running the
show". In his evidence at trial, Restauronics' Vice-President,
Finance, Mr. Kelley, stated that his company "saw that Art's
position was critical to the transition" and made it a condition of
the sale that he stay on with the company.
[9] On February 22, 1995, Mr. Doblinger wrote Mr. Forster providing
him with an offer of employment as Vice President, Operations - Western
Canada at an annual salary of $90,000. The salary was approximately
$30,000 more than Mr. Forster had been earning. While the offer did not
contain a job description, it did contain a condition that Mr. Forster
would be required to give two months notice of any resignation and that
Restauronics could terminate his employment on two months notice. It
also required Mr. Forster to agree to a "Non-competition and
non-solicitation agreement" that would be in force for 12 months
following termination of his employment. Mr. Forster accepted the
position and agreed to both requirements.
[10] It was Mr. Forster's evidence that following the completion of
the sale on February 24, 1995, a series of events occurred in his
employment which placed him in the position of "putting out
fires". He said that he was required to present to the district
managers who reported to him employment contracts containing a two-month
termination clause and the same non-competition and non-solicitation
provision which he had signed. This was highly upsetting to the district
managers who had not been bound by such provisions before and had a
chilling effect on his working relationship with them. When Mr.
Doblinger agreed to pull back from that requirement, Mr. Forster said
that the company then introduced psychological testing to the district
managers which they refused to take.
[11] Mr. Forster said that further upset was created with district
managers and others by the introduction of detailed reporting
requirements which were more extensive and more frequent than those
required of district managers by the Forster companies. He stated that
there were also complaints from some clients that required him to meet
with them and seek to accommodate their concerns.
[12] It was Mr. Forster's evidence that when he made recommendations
to meet the concerns that were arising, his advice was not accepted. He
also expected to receive training on the systems of Restauronics but did
not receive it. In his view the philosophy of the new owners was
entirely different from the pre-sale philosophy of the Forster companies
and he no longer had a "family-type relationship" with the
district managers. He characterized the post-sale structure as anything
but "business as usual" and said that he felt betrayed.
[13] On March 14, 1995, Mr. Forster tendered his resignation to Mr.
Gourley, Restauronics' Vice-President for Western Canada. He confirmed
his resignation in a letter dated April 10, 1995, with his last day of
employment to be May 12. Mr. Gourley acknowledged the resignation in a
letter dated April 19, 1995, in which he reminded Mr. Forster of his
obligations under the purchase and sale agreement and the employment
agreement. Mr. Forster was offered an option of working on special
projects until May 15 or taking paid leave. He chose paid leave. On May
9 Mr. Forster wrote to Mr. Gourley and stated that he considered himself
to have been constructively dismissed by Restauronics and, under the
circumstances, not bound by the restrictive covenant or the
non-competition obligation.
[14] On June 15, 1995, Mr. William Forster wrote to his son with
respect to any intent that Mr. Arthur Forster might have to bid on
projects that former clients might ask him to bid on. Mr. William
Forster feared that Restauronics might think that he was involved in
such efforts and would decline to pay him the balance of the proceeds
for the sale of his shares. As a result, William Forster warned Arthur
Forster that should Restauronics take such action, he would seek
indemnification from his son.
[15] After Mr. Forster left Restauronics he worked part time in his
father's restaurant in 1995 and applied for work in occupations
unrelated to the institutional food services business. In October 1995
he (and Ms. Nicolas) was offered a position as a sales representative to
sell rethermalization equipment for Grand Cuisine Systems Inc. It was
Mr. Forster's evidence that he made two sales and earned a commission
from that work but the work did not develop further.
[16] In February 1997 Mr. Forster was offered a position as district
sales manager for a company whose business included food services.
Because Mr. Forster was concerned that the work might be considered a
breach of his restrictive covenant, his solicitor wrote to the
solicitors for Restauronics seeking their approval. It appears that no
reply was received by his solicitor and Mr. Forster did not undertake
the position.
[17] In April 1997 Mr. Forster was finding it difficult to get
employment and Ms. Nicolas offered him employment with Westcana. He
accepted the offer and worked on a part-time basis for Westcana through
to March 1999. He denied, however, that he had participated in any way
in Ms. Nicolas' and Westcana's successful bid on the BCCW contract in
1995. It was Mr. Forster's evidence that he had no contact with Ms.
Nicolas between May 1995 when he left Restauronics and October 1995 when
Westcana obtained the BCCW contract.
[18] In September 1997, Mr. Forster assisted Ms. Nicolas in preparing
a proposal on behalf Westcana to provide food services to the British
Columbia Institute of Technology (BCIT). In the proposal Mr. Forster was
referred to as a "principal" of Westcana. It was his evidence
that he did not contact anyone at BCIT about the proposal. The bid was
not successful and the contract was awarded to Restauronics.
Ms. Nicolas' employment with Restauronics
[19] Ms. Nicolas is a dietitian and obtained a Bachelor of Science
degree in foods and nutrition in 1962. She commenced employment at
Forster Food Services in 1986, starting as a consulting dietitian and
then becoming a district manager responsible for a number of units. Ms.
Nicolas left for a one-year period in 1991 and returned in 1992.
Throughout the time of her employment with Forster Foods, Ms. Nicolas
also carried on a dietetic consulting business. Some of the consulting
was done by her and some by dietitians sub-contracted by her. The gross
revenue from the consulting business in 1995 was approximately $40,000.
Forster Foods was aware of Ms. Nicolas' consulting business as, in time,
was Restauronics.
[20] In early 1995 Ms. Nicolas' primary duties as district manager
entailed overseeing a number of units including hiring unit managers,
carrying out performance evaluations of staff and supervising the
performance of the units. BCCW was one of the units overseen by Ms.
Nicolas. Ms. Nicolas was not directly involved in the preparation of
bids on food services contracts but she did take part in the development
of menus, scheduling plans and other information which might form part
of a proposal. Her salary was $52,000 and she reported to Arthur
Forster.
[21] After the purchase of the Forster shares by Restauronics Ms.
Nicolas continued to report to Mr. Arthur Forster. When Mr. Forster
left, Ms. Nicolas reported to Mr. Gourley. On July 18, 1995, Ms. Nicolas
was given a letter signed by Mr. Gourley. Ms. Nicolas was informed that
the number of units for which she would be responsible was being
increased from nine to sixteen. She was also advised that she would be
required to sign a "non-competition and non-solicitation
Agreement" and an "Employment Terms Agreement". Included
in the Employment Terms Agreement was a provision that Ms. Nicolas would
"work exclusively on behalf of the company" and a provision
that the company could terminate her employment without cause on two
months' notice. Included in the non-competition agreement was a
provision that she could not be engaged in institutional food employment
for a period of 12 months after termination of her employment.
[22] Ms. Nicolas was concerned that none of these provisions had been
part of her employment contract to that point. The next day she informed
Mr. Knox, the president of Restauronics, that she would not sign either
agreement.
[23] Two days later it was necessary for Ms. Nicolas to take a
two-week medical leave which was approved by Mr. Gourley. On August 3,
1995, Ms. Nicolas received a letter at home dated July 26, 1995,
advising her that, because she had not accepted "the offer"
presented July 18, her employment would be terminated October 7. Ms.
Nicolas was instructed that she would be expected to carry out all of
her duties to the end of her notice period. The unit managers who
reported to her, however, were instructed by Restauronics to report to
another manager.
[24] Ms. Nicolas' medical condition continued and on August 10 her
orthopedic surgeon advised that she would require a further two months
away from work. Ms. Nicolas offered to make herself available to assist
her employer and on a date in the first half of August Mr. Gourley asked
her to attend a meeting at BCCW with him. The purpose of the meeting was
to discuss the renewal of the BCCW contract for the next year. The
contract was for a three-year term but could be cancelled on 60 days'
notice.
[25] Prior to the meeting Ms. Nicolas advised Mr. Gourley that the
price would be a critical element in the meeting and recommended that he
offer to hold the price at its current year level rather than seek the
increased renewal price provided for in the contract. The BCCW
representatives sought the reduced price and Mr. Gourley advised them
that he would need to consider the matter.
[26] A second meeting was held about ten days later at which Mr.
Gourley advised the BCCW representatives that the contract renewal price
was fair and a price concession would not be made. As provided for in
the contract, BCCW then gave Restauronics 60 days notice of cancellation
of the contract and a formal Request for Proposal to provide the
catering service was issued by the British Columbia Purchasing
Commission.
[27] Ms. Nicolas made a decision to submit a proposal on behalf of
Westcana and submitted it on September 25, 1995. Restauronics also
submitted a proposal. Of the four proposals submitted, only the
proposals of Restauronics and Westcana met the Purchasing Commission's
mandatory requirements. The cost per meal in each designated category
was lower in the Restauronics proposal than in the proposal made by
Westcana.
[28] The Request for Proposal was a lengthy and detailed document
calling for lengthy and detailed information from proponents. The
proposals were required to be presented in a prescribed format. The
evaluation process used a weighted scoring to assess proposals.
Restauronics weighted score was 69.05%. Westcana's weighted score was
80.23%. A contract was awarded to Westcana and it began providing its
service to BCCW in November 1995.
[29] Ms. Nicolas gave detailed evidence and was extensively
cross-examined on the manner in which she developed her BCCW proposal.
The evidence covered the steps she took to contact suppliers, to
determine menus and quantities and to determine labour costs from other
dietitians. She testified that she contacted an insurer to determine
benefit costs and an accountant to determine labour costs per meal. She
added 5% to her costs as an allowance for profit and management
remuneration.
[30] Ms. Nicolas said that she did not have any Restauronics material
before her in preparing the proposal and she did not consult with or
discuss the proposal with Mr. Arthur Forster. She denied that the
letters "A", "D" and "L" in the margins of
her working copy of the BCCW Request for Proposal indicated the persons
responsible to develop the noted items and, in particular, that
"A" stood for Arthur Forster and "L" for Linda
Nicolas. In cross-examination she agreed that she had been unable to
produce any working papers she had used in the preparation of the BCCW
proposal.
[31] Ms. Nicolas was asked a series of questions about the costs per
meal she proposed compared with the costs per meal contained in
Restauronics contract with BCCW made in September 1994. Westcana's
proposed contract price of $3.89 per meal for the secure unit using
inmate assistance for year one of the three-year proposal beginning in
October 1995 was identical with Restauronics' first year price in the
1994 contract. Westcana's proposed price of $6.54 per meal for the open
living unit without inmate assistance for year one of the proposal was
also identical with Restauronics' first year price in the 1994 contract.
Ms. Nicolas said that this occurrence was a coincidence and that the
calculation to arrive at these costs per meal was based upon a different
assumption of the average number of meals per day from those used in the
1994 contract costs per meal.
[32] Ms. Nicolas did not deny that she relied on her knowledge and
experience with Forster's to estimate the number of staff that would be
needed to provide service to BCCW. She said that "price per
meal" is a system that can be applied to a food service operation
generally and it does not draw upon a fixed formula that is akin to a
scientific formula. Ms. Nicolas acknowledged that she also relied on
both her background knowledge on how to address the issues in the
Request for Proposal and on her experience gained in the provision of
food services to BCCW.
[33] Ms. Spick, Restauronics' unit manager at BCCW in 1995, testified
that at some point in September 1995 Ms. Nicolas informed her of her
intention to submit a proposal for the catering service at BCCW. Ms.
Spick said that in August she had provided Ms. Nicolas with a document
setting out the staffing needs and scheduling for the BCCW unit.
[34] On October 30, 1995, Ms. Spick signed a memorandum prepared by
Mr. Keith Kerr of Restauronics. In the memorancum Ms. Spick advised Mr.
Kerr that she had been informed by Ms. Nicolas in a telephone
conversation that Art Forster would be helping Ms. Nicolas with her
plans, menus, and food and labour costs in the proposal to be made by
Westcana. While the memorandum also states that in the same call Mr.
Forster came on the telephone and asked if she would work for Ms.
Nicolas, Ms. Spick denied that she had spoken to Mr. Forster. She said
that she had advised Mr. Kerr that the memorandum was incorrect in this
respect and was told that it was not important. The memorandum was not
changed.
Issues
[35] The following issues must be decided:
1. Was Mr. Arthur Forster constructively dismissed from his
employment?
2. Was Ms. Nicolas wrongfully dismissed from her employment?
3. Did Ms. Nicolas
a) breach duties of good faith, fidelity and confidence owed to
Restauronics,
b) breach a fiduciary duty owed to Restauronics,
c) unlawfully interfere with Restauronics' economic and
contractual relations,
d) conspire to injure Restauronics,
e) act as an accomplice to Mr. Forster's breach of fiduciary
duties?
4. Did Mr. Forster
a) breach his obligations under the restrictive covenant in the
share purchase agreement,
b) breach his employment agreement with Restauronics,
c) breach a fiduciary duty owed to Restauronics,
d) conspire to injure Restauronics?
5. Is Westcana vicariously liable?
6. What is the measure of damages if liability is found on any of
the above?
Was Mr. Forster constructively dismissed?
[36] In Farquhar v. Butler Bros. Supplies Ltd., [1988]
3 W.W.R. 347, (B.C.C.A.) defined constructive dismissal at pp. 349-350:
A constructive dismissal occurs when the employer commits either
a present breach or an anticipatory breach of a fundamental term of
a contract of employment, thereby giving the employee a right, but
not an obligation, to treat the employment contract at an end.
[37] It is Mr. Forster's position that Restauronics had given him a
number of job expectations and assurances that were captured under the
phrase "business as usual". In spite of the assurances, he
says that Restauronics proceeded to make a number of changes to the
operation of the business in which he had no part or of which he had no
prior knowledge. The changes included the presentation of new employment
contracts to employees of which he was advised just prior to their
presentation. He was also not advised of Restauronics' efforts to
administer psychological tests to employees, a move that was highly
upsetting to district managers who reported to him.
[38] In addition Mr. Forster says he was not consulted about a number
of changes to existing operating systems and was not provided with
training related to his position although he had been advised that he
would receive training at the Restauronics' head office in Toronto. In
his view this treatment stripped him of his responsibilities and
diminished his dignity and the respect of colleagues and clients. It is
argued on his behalf that all of these factors amounted to a fundamental
change in Mr. Forster's employment and constituted a constructive
dismissal. It is this treatment that Mr. Forster says was the reason he
submitted his resignation on March 14, 1995.
[39] Counsel for Mr. Forster submitted that the treatment of Mr.
Forster was similar to that of the plaintiffs in Park v. Parsons
Brown & Co. (1989), 27 C.C.E.L. 224 (B.C.C.A.) and Ally
v. Institute of Chartered Accountants (Ontario) (1998), 37
C.C.E.L. (2d) 212 (Ont. C.A.) in which constructive dismissal was found
to have taken place. Both of those cases, however, deal with the
alteration of long-standing positions and conduct which constituted a
fundamental change to them, a situation which did not exist in the case
of Mr. Forster.
[40] In analyzing Mr. Forster's submission it must first be
recognized that his employment contract of February 22, 1995, did not
specify any of the duties or responsibilities of the position of
Vice-President, Operations, Western Canada. Neither Mr. Forster nor
Restauronics, in my view, had a detailed understanding of what Mr.
Forster's duties or responsibilities would be. Mr. Forster appears to
have placed considerable confidence in Mr. Doblinger's statements that
after the completion of the share purchase there would be "business
as usual" and that Mr. Forster was to be "an integral part of
the company". Mr. Forster was, in my view, content to have a senior
position in the company that would have the attributes of drawing upon
his experience and, in particular, his strengths "in the
field".
[41] The sale of shares occurred February 24, 1995. Mr. Forster
tendered his resignation March 14, 1995, a very short time after the
commencement of his employment. At the time Mr. Forster recognized that
there were going to be changes to the systems and controls formerly
employed by the Forster companies. He understood that training would be
provided to him. He also acknowledged that he knew there would be a
transition period.
[42] Mr. Forster continued to have a supervisory role with the
district managers and was called upon to meet with clients, some of whom
were upset by the changes occurring with the service being provided.
There is little doubt that the carrying out of the role had become
unpleasant and it was not what Mr. Forster anticipated, but Mr. Forster
met with these groups as a managerial representative of the company and
the company recognized that his assistance in that role was important.
[43] Viewed objectively, it is my conclusion that Mr. Forster was
offered a senior managerial position in Restauronics at a salary of
$90,000 per year. It was recognized that his duties and responsibilities
would not be identical to those in his former position and that there
would be a transition period. The phrase "business as usual"
does not, in my view, contain sufficient content to identify or
represent fundamental terms of the employment contract that were
breached by Restauronics. In the brief time Mr. Forster was employed by
Restauronics there was a period of transitional turmoil. Mr. Forster
bore the brunt of some of that turmoil. In the face of that turmoil Mr.
Forster made a decision to resign. While the transition state
undoubtedly made his employment situation quite unpleasant, I am not
satisfied that Mr. Forster has proven that there was conduct by
Restauronics that amounted to a fundamental breach of the terms of his
employment. As a result I must dismiss Mr. Forster's claim that he was
constructively dismissed.
Was Ms. Nicolas wrongfully dismissed?
[44] The determination of this issue calls for an assessment of a
number of sub-issues:
1. Is Ms. Nicolas length of employment to be determined by
including or excluding her pre-1992 employment?
2. What is the appropriate notice period for terminating Ms.
Nicolas' employment?
3. If working notice is given but the length of notice is
unreasonable is the contract terminated by Restauronics on the date
when notice is given?
4. Did Ms. Nicolas' activity in submitting a proposal for the BCCW
contract before her notice period had expired constitute cause for her
dismissal?
[45] Ms. Nicolas was first employed by Forster Food Services in 1986.
She worked as a regional manager until the fall of 1991 and left to work
at her consulting business. She returned to Forster Food Services in a
similar role in October 1992 and remained until her termination in 1995.
Counsel referred to a number of cases that have considered the treatment
of a "gap" in employment. I have considered those cases and in
particular Roscoe v. McGavin Foods Ltd. (1983), 2 C.C.E.L.
287 (B.C.S.C), Krewenchuk v. Lewis Construction Ltd. (1985),
8 C.C.E.L. 206 (B.C.S.C.) and Koren v. White Spot (1988),
29 B.C.L.R. (2d) 121 (S.C.). Each of those cases concluded that the
total length of employment with the employer should be taken into
account notwithstanding an interruption in employment with the employer.
In each case, however, the court looked to the presence of some
additional factor as a reason for including the earlier employment in
the calculation of the employee's length of service. For example, in Roscoe
the court looked to the fact that the defendant had actively
pursued the plaintiff to return and that the holiday time given to him
by the company on his return was based upon a seniority level which
ignored the interruption of employment.
[46] There is no evidence of this nature before me and I conclude
that Ms. Nicolas' length of employment ran from October 1992.
[47] Counsel for Ms. Nicolas submits that even if the court considers
Ms. Nicolas' length of employment to be the approximately 2 1/2 years
dating from October 1991, the 2 months notice she was given is not
appropriate in her circumstances. Ms. Nicolas was 53 years old when she
was dismissed from her employment. She held a middle-management position
which also drew upon her professional training and experience as a
dietitian. She had responsibilities involving both the supervision and
direction of a number of staff and dealing with a number of clients to
whom the company's services were provided.
[48] Counsel for Ms. Nicolas and Restauronics referred to a number of
decisions which they submitted as providing a guide to the appropriate
period of reasonable notice to Ms. Nicolas. Counsel for Ms. Nicolas
referred to cases where the employees' length of service ranged from 1
to 3 1/2 years and reasonable notice ranged from 4 to 12 months. Counsel
for Restauronics referred to a number of cases which in his submission
supported a determination that a rough estimate of reasonable notice is
in the range of one month of notice for each year of service. He
submitted that the notice given to Ms. Nicolas was reasonable.
[49] In my view the cases referred to by counsel for Restauronics do
reflect a rough formula of one month's notice for each year of service,
but those cases largely considered the position of longer service
employees. It is necessary to recognize, however, that reasonable notice
must permit a reasonable length of time to seek new employment. The
application of such a "rough rule of thumb" in cases involving
short-term employees may not provide a reasonable time to seek new
employment (see Mutch v. Norman Wade Co. (1987), 17
B.C.L.R. (2d) 185 (S.C.)). On my review of the cases and the
circumstances of Ms. Nicolas and subject to the discussion below, I
conclude that a reasonable period of notice to Ms. Nicolas is four
months.
[50] Because it is argued that Ms. Nicolas competed with her employer
while still employed, it is also necessary to determine the date of Ms.
Nicolas' termination from Restauronics. Counsel for Ms. Nicolas submit
that the date was August 3, 1995, the date on which Ms. Nicolas received
the letter notifying her of the termination of her employment. Counsel
for Restauronics submit it was October 7, 1995, the date on which Ms.
Nicolas was advised her employment was to end.
[51] The argument turns on how an employment contract is to be
interpreted when an employer gives notice of termination but the notice
period is inadequate and, therefore, unreasonable. In the instant case
Ms. Nicolas was given slightly over 2 months notice and reasonable
notice has been found to be 4 months.
[52] Counsel referred to a number of cases including Cooper v.
MacMillan Bloedel Ltd. (1991), 37 C.C.E.L. (2d) 205 (B.C.S.C.)
and Suleman v. B.C. Research Council (1990), 52 B.C.L.R.
(2d) 138 (C.A.). Although in Cooper the court found the
termination date to be the date when notice was given, that finding
turned on the fact of that the plaintiff was told by his employer that
he "was terminated as of right now". He was then provided with
what amounted to two options for payment in lieu of notice.
[53] In Suleman, Hutcheon J.A. considered the
"correct position" to be that described by Lord Denning in Hill
v. C. A. Parsons & Co. [1971] 2 Ch. 305 (C.A.). At p. 313 of
Hill Lord Denning stated:
Suppose the master gives the servant only one month's notice when
he is entitled to six? What is the consequence in law? It seems to
me that if a master serves on his servant a notice to terminate his
service, and that notice is too short because it is not in
accordance with the contract, then it is not in law effective to
terminate the contract unless, of course, the servant accepts it.
Just as a notice to quit which is too short does not terminate a
tenancy, so a notice which is too short does not terminate a
contract of employment.
[54] In essence, the giving of an inadequate notice period by an
employer may constitute a fundamental breach of the contract and, as
with other fundamental breaches, an employee may choose to accept the
repudiation and elect to treat the contract at an end. If that election
is not made within a reasonable time the contract does not end and, it
follows, that the repudiation date and the termination date are two
different events. The employee may, nevertheless seek damages if the
notice period is inadequate. I conclude that as Ms. Nicolas did not
elect to treat the contract as at an end when the dismissal notice was
given, the contract did not terminate until the end of the notice
period, October 7, 1995.
[55] Did Ms. Nicolas' activity in submitting to the Purchasing
Commission a proposal for the BCCW contract before her notice period had
expired constitute cause for her dismissal even though her actions were
not known to Restauronics at the time? It is the position of
Restauronics that it did. The answer to the question turns on whether
between August 3 and October 7, 1995, Ms. Nicolas breached either a
fiduciary duty owed to Restauronics or a duty of good faith, fidelity or
confidence owed to Restauronics.
[56] The principles for determining the existence and scope of a
fiduciary duty in an employment situation were set down in Canadian
Aero Service Ltd. v. O'Malley et al (1973), 40 D.L.R. (3d) 371 (S.C.C.).
This decision and others recognize that directors, senior officers and
"key employees" owe such a duty. In Barton Insurance
Brokers Ltd. v Irwin, (1999), 170 D.L.R. (4th) 69 (B.C.C.A.)
Hall J.A. stated at para 40:
In certain circumstances, which I think would be relatively rare,
a former employee of less than senior management or directorial
status might be found subject to a fiduciary duty for instance a
"key employee" finding might serve to found such a duty.
But I do not believe that courts should be easily persuaded to find
that ordinary employees would be subject to such continuing duties.
[57] Ms. Nicolas was one of six district managers each of whom was
responsible to manage a number of units. At the time of the share
purchase by Restauronics Ms. Nicolas was the district manager for seven
units. In its letter of July 18, 1995, to Ms. Nicolas Restauronics
sought to increase the number of units to a "full portfolio"
of 16 units. Each unit had its own director and some staff. Ms. Nicolas
reported to the Vice-President, Operations, who, in turn, reported to
more senior managers.
[58] In its own submission concerning Ms. Nicolas' claim for wrongful
dismissal, counsel for Restauronics described Ms. Nicolas as a
"mid-level management employee". In addition counsel stated
that, "While she was responsible for fostering close relations with
customers on behalf of the company, she was not an executive-level
employee."
[59] While Restauronics would have an understandable concern about
the knowledge of the company and its operations possessed by Ms.
Nicolas, she was not by any means "the whole show" or a
"key employee" in the sense in which the cases describe that
position. I conclude that Ms. Nicolas was not a "key employee"
and that her position was not one that imposed upon her a fiduciary duty
to her employer. Ms. Nicolas nevertheless owed a common-law duty of good
faith to her employer and occupied a position in which she was party to
confidential information.
[60] It is clear that Ms. Nicolas had been asked in July 1995 to sign
an agreement which would have obliged her to work exclusively for
Restauronics, to agree that her employment could be terminated on 2
months notice, and to agree to a 12-month non-competition clause. When
she refused to sign the agreement she was dismissed from her employment
with approximately 2 months notice.
[61] During the two-month notice period Ms. Nicolas was on sick leave
but attended two meetings at BCCW with Mr. Gourley to discuss the
renewal of Restauronics' existing contract. The contract was not renewed
and the British Columbia Purchasing Commission issued a Request for
Proposal on August 3 with a deadline for submission on September 28. Ms.
Nicolas submitted a proposal on behalf of Westcana on September 25.
Restauronics submitted a proposal on September 28. Ms. Nicolas did not
see the Restauronics proposal. In a letter of October 19 the Purchasing
Commission advised Ms. Nicolas that Westcana's proposal was successful
subject to final contract negotiations. Westcana commenced providing
services to BCCW on November 1.
[62] It is Ms. Nicolas' evidence that in preparing her proposal she
did not have in her possession a copy of the cancelled Restauronics'/BCCW
contract or other related material. She agreed that she drew on her
knowledge and experience as a dietitian, and her experience at
Restauronics including her position as district manager having
responsibilities in relation to the BCCW contract. It is clearly
suspicious that in carrying out her cost per meal calculations for the
proposal Ms. Nicolas arrived at cost amounts in two categories that were
identical to two 1994 cost amounts contained in the then existing
Restauronics/BCCW contract.
[63] I conclude, however, that Ms. Nicolas did not have the contract
or other relevant documents of her employer before her in preparing her
proposal but, as a district manager and a person who attended meetings
at BCCW with Mr. Gourley, she was aware of at least some of the cost per
meal amounts and other information in the contract. Even if she arrived
at her cost per meal amounts by an independent calculation, I recognize
that her knowledge of the contract prices gave her a checkpoint against
which she could assess her calculation.
[64] A more difficult issue is whether Ms. Nicolas' knowledge of
pricing and other information concerning BCCW should have precluded her
from submitting a proposal. In my view, in spite of the pricing
information known to Ms. Nicolas about the BCCW contract, she would not
have breached a duty to Restauronics if she had prepared and submitted
Westcana's proposal after her employment had ended. She essentially drew
upon her knowledge and experience gained before and during her
employment to prepare her proposal. She did not have with her her
employer's documents and the information she possessed was not of a type
that could characterized as trade secrets.
[65] There are a number of factors that must be considered in
determining whether Ms. Nicolas breached a duty of good faith to her
employer in submitting a proposal to the Purchasing Commission before
the end of her notice period. Ms. Nicolas' situation was unlike that in
most reported cases where an employee resigned his or her position to
begin immediate competition with the former employer. Ms. Nicolas had
already been given a dismissal notice by her employer. The employer did
not have cause for dismissing her. Restauronics' contract with BCCW had
been cancelled. The Request for Proposal issued by the Purchasing
Commission was open to a wide number of proponents and the evaluation of
proposals used a weighting system administered by the Purchasing
Commission itself. Ms. Nicolas' success was not the result of a direct
solicitation of BCCW by her but rather of a proposal which was found to
be superior to that of Restauronics.
[66] Counsel for Restauronics referred to three decisions dealing
with the duty of an employee while still employed. In 57134 Man.
Ltd. v Palmer (1989), 37 B.C.L.R. (2d) 50 (C.A.) it is to be
noted that the defendant resigned his position and during his notice
period commenced employment with the defendant company. While still
employed he did a number of other things which were seen to be a
systematic attack on the employer's business.
[67] In Woodrow Log Scaling Ltd. v. Halls, [1997] B.C.J.
No. 140 (Q.L.)(B.C.S.C.) the court found two employees of a log scaling
company to be in breach of their general duty of good faith to their
employer. Over a lengthy period of time while still employed they
prepared bids on log scaling contracts and succeeded in their second
effort at competing with their employer. In doing so they secured a
substantial portion of their employer's business.
[68] In Cariboo Press (1969) Ltd. v. O'Connor, [1996]
B.C.J. No. 275 (Q.L.)(B.C.C.A.) the court found that the defendant
breached his employment duty to the plaintiff company when he continued
his employment with the plaintiff after acquiring a secret interest in a
competitor.
[69] On my reading of the cases referred to by counsel, a deciding
factor in determining whether there has been a breach of an employees
duty of good faith both during and after employment is whether, in all
the circumstances, there is conduct that can be characterized as unfair
to the employer. In addition, the courts have recognized that conduct
that amounts only to planning carried out by an employee to establish a
competing business while still employed may not constitute a breach of
the duty of good faith.
[70] Given the fact that Ms. Nicolas had already been given notice of
her dismissal, the fact that Restauronics' contract with BCCW had been
cancelled, and the fact that Ms. Nicolas "competition" with
her employer consisted of submitting a proposal through a formal a
request for proposal process approximately 2 weeks before the end of the
notice period, I conclude that she did not breach a duty of good faith
to her employer. It follows that Ms. Nicolas' conduct in submitting the
proposal did not constitute cause for dismissal that the employer can
rely on in this action and that Ms. Nicholas was therefore entitled to
four months notice of the termination of her employment.
Did Ms. Nicolas conspire with Mr. Forster to injure Restauronics?
[71] It is the position of Restauronics that Ms. Nicolas and Mr.
Forster conspired to injure Restauronics. It says that evidence of the
conspiracy is comprised of the following:
1. the initial "A" is noted at some points in the margins
of Ms. Nicolas' working copy of the BCCW proposal, it being argued
that "A" stood for Art Forster and that Mr. Forster would be
responsible for developing the noted sections of the proposal;
2. the statement of Ms. Spick that she was told by Ms. Nicolas on
September 19, 1995 that Mr. Forster would be helping her with her
plans, menus and food and labour costs;
3. prior to Westcana submitting its proposal for BCCW catering, Mr.
Forster had informed Restauronics that he did not consider himself to
be legally bound by the restrictive covenant or the non-competition
clause in his employment agreement;
4. preparing proposals had been part of Mr. Forster's duties when
he worked for the Forster companies;
5. Mr. Forster and Ms. Nicolas appear to have had some contact
during the summer of 1995 and they had each been in discussions with a
representative of Grand Cuisine Systems.
[72] As noted above, Mr. Forster denied any contact with Ms. Nicolas
between May and October 1995. He denied that he played any part in the
preparation of the BCCW proposal. The proposal to Mr. Forster and Ms.
Nicolas from Grande Cuisine Systems is dated October 24, 1999.
[73] As one of the elements of the tort of conspiracy the plaintiff
in this case must prove an agreement between Ms. Nicolas and Mr.
Forster. A conspiracy may be found either where the predominant purpose
of the defendants' conduct is to injure the plaintiff or where the
defendants use unlawful means to achieve an end knowing that the
plaintiff may be injured. As stated by McLachlin J.(as she then was) in Nicholls
v. Richmond (Township) (1984), 52 B.C.L.R. 302 (S.C.) at page
312:
The requirements of the second type of conspiracy, conspiracy by
unlawful means, are an agreement between two or more persons which
is effected by unlawful conduct where the defendants should know in
the circumstances that damage to the plaintiff is likely to ensue
and such damage does in fact ensue.
[74] An agreement may be inferred. The test to determine if an
inference is justified was set out at page 313 in Nicholls by
reference the words of the Lord Chancellor in Sweeney v. Coote, [1907]
A.C. 221 at 222 (H.L.):
In such a proceeding [i.e. where civil conspiracy is alleged] it
is necessary for the plaintiff to prove a design, common to the
defendant and to others, to damage the plaintiff, without just cause
or excuse. That, at all events, it is necessary to prove. Now,
a conclusion of that kind is not be arrived at by a light
conjecture; it must be plainly established. It may, like
other conclusions, be established as a matter of inference from
proved facts, but the point it is not whether you can draw that
particular inference, but whether the facts are such that they
cannot fairly admit of any other inference being drawn from them.
(Emphasis added.)
[75] The strongest evidence suggesting an agreement is the evidence
of Ms. Spick that Ms. Nicolas told her that Mr. Forster would be
assisting Ms. Nicolas. Although Ms. Nicolas denied such a statement, I
prefer Ms. Spick's evidence that some comment about Mr. Forster was made
by Ms. Nicolas. It constitutes some evidence of an arrangement between
Ms. Nicolas and Mr. Forster.
[76] In my view, however, no adverse inference can be drawn from the
evidence that Mr. Forster had advised Restauronics that he did not
consider himself bound by the restrictive covenant and non-competition
agreement or that he had work experience of the type that would have
been assistance to Ms. Nicolas in the preparation of her proposal. It is
to be noted that, subsequent to Mr. Arthur Forster stating that he did
not consider himself bound by the agreements, his father, Mr. William
Forster expressed his concern. Mr. William Forster feared that he might
be implicated should his son compete with Restauronics. He, therefore,
warned his son that he would take legal action against him should
Restauronics consider Arthur Forster's activity to be a reason to refuse
to pay William Forster the balance of funds owing under the share
purchase agreement.
[77] In considering all of the evidence relating to the alleged
conspiracy, I am not satisfied that there is sufficient evidence to
conclude that Ms. Nicolas and Mr. Forster conspired to injure
Restauronics in relation to the BCCW contract.
Did Ms. Nicolas commit the tort of interference with economic
relations?
[78] Restauronics says that Ms. Nicolas interfered with its economic
relations in two ways. The first is that Ms. Nicolas intentionally
interfered with the restrictive covenant provisions of Restauronics'
share purchase agreement with Mr. Forster and with the non-competition
provisions of its employment agreement with Mr. Forster. The second is
that by submitting a proposal for the BCCW contract Ms. Nicolas
interfered with Restauronics' expectation that it would have been the
successful bidder and would have obtained a three-year contract with
BCCW.
[79] The elements of this tort are:
1. the existence of a valid business relationship or expectancy;
2. knowledge by the defendant of the relationship or expectancy;
3. intentional interference inducing or causing a termination of
the relationship or expectancy by unfair or unlawful means;
4. proximate cause; and
5. resultant damages (see Braunfel Engineering &
Construction Ltd. v. Sanger, [1997]B.C.J. No. 886 (Q.L.)(S.C.)
[80] Much of Restauronics' submission on this part of its claim was
based on its position that Ms. Nicholas' conduct in submitting the
proposal constituted cause for dismissal. I have found to the contrary.
As a result, I have concluded that this ground of Restauronics' claim
cannot succeed.
[81] On the issue of whether Ms. Nicolas intentionally interfered
with Mr. Forster's agreements with Restauronics, I have concluded above
that the evidence does not support an inference that Mr. Forster
assisted Ms. Nicolas in the preparation of the BCCW request for
proposal. As to Westcana's hiring of Mr. Forster in 1997 there is very
little evidence on how this came about. I am not satisfied that in the
hiring of Mr. Forster Ms. Nicolas intentionally interfered with the
restrictive covenant then in place.
[82] On the issue of Restauronics' loss of the BCCW contract, two
matters must be considered. First, the existing contract with BCCW had
been lawfully ended by BCCW. Second, the evidence does not support an
inference that Restauronics would have been successful on its proposal
had Ms. Nicolas not caused Westcana to submit a proposal. In my view,
Restauronics cannot succeed on this ground.
Did Ms. Nicolas act as an accomplice in any breach of fiduciary duty
by Mr. Forster?
[83] Restauronics raised this issue in the context of Ms. Nicolas'
potential liability as an accomplice should Mr. Forster be found to have
breached a fiduciary duty to Restauronics. It was referred to but not
extensively argued. In my view, even if it is found that Mr. Forster was
in breach of a fiduciary duty to Restauronics, it cannot be said that
Ms. Nicolas was sufficiently "caught up in a web of duties"
owed by him that she could be held jointly and severally liable for such
breaches (see Canadian Industrial Distributors Inc. v. Dargue (1994),
7 C.C.E.L. (2d) 60 (Ont. G.D.).
Did Mr. Forster breach his employment agreement with Restauronics?
[84] The non-competition agreement between Mr. Forster and
Restauronics was made February 24, 1995. It prohibited competition with
Restauronics by Mr. Forster for a period of 12 months following
termination of his employment. Mr. Forster's employment with
Restauronics ended May 15, 1995.
[85] I have found above that Restauronics has not proven that Mr.
Forster assisted Ms. Nicolas in the obtaining of the BCCW contract in
1995. Mr. Forster's employment with Westcana which began in 1997
occurred after the non-competition period of 12 months had expired.
There is no evidence of any other alleged breach of the non-competition
agreement. In the result I conclude that no breach of the agreement has
been proven.
Did Mr. Forster breach his obligations under the restrictive covenant
in the share purchase agreement?
[86] The restrictive covenant is set out in Article 6 of the share
purchase agreement. It is an extensive provision containing eight
enumerated paragraphs occupying almost three pages of the agreement. It
seeks to prohibit the vendors from participating in any manner in the
business of providing food services to institutional and similar
clients. The duration of the covenant is five years. The geographic area
described is "within British Columbia, Alberta and within a 100
mile radius of any regional or branch operations of the Purchaser".
[87] Article 6.4 is headed "Separate Covenants" and
includes the statement, "Each provision of this Article 6 is
declared to constitute a separate and distinct covenant and to be
severable from all other such separate and distinct covenants."
[88] Mr. Forster says that the covenant is unreasonable and
unenforceable. It is submitted that the unreasonableness is to be found
in the circumstances in which the covenant was entered into, its
geographic scope, the duration of the covenant, the scope of the trade
restrained, and the inappropriateness of severing the offending
provisions.
[89] Restauronics says that the principal assets of the company were
the client accounts and the goodwill of the Forster companies with the
clients. It submits that the scope of the trade restrained is reasonable
or parts of it can be severed and that the geographic scope can be
severed.
[90] The courts have recognized a distinction between restrictive
covenants forming part of agreements involving the sale of a business
and those contained in employment agreements. In Elsley et al v.
J.G. Collins Insurance Agencies Ltd., [1978] 2 S.C.R. 916 at
p.924 Dickson J. stated:
The distinction made in the cases between a restrictive covenant
contained in an agreement for the sale of a business and one
contained in a contract of employment is well-conceived and
responsive to practical considerations. A person seeking to sell his
business might find himself with an unsaleable commodity if denied
the right to assure the purchase that he, the vendor, would not
later enter into competition. Difficulty lies in definition of the
time during which, and the area within which, the non-competitive
covenant is to operate, but if these are reasonable, the courts will
normally give effect to the covenant.
[91] The agreed price for the sale was $2,574,000 and the vendors
intended to be bound by the contract were not only Mr. Arthur Forster,
but also his father and two brothers. The vendors were represented by
counsel. The sale was, therefore, a relatively large transaction of
importance to both the purchasers and the vendors. The Forster name was
well known in British Columbia in this segment of the food services
business. The contracts with clients were frequently renewed thus
providing for long term relationships with clients and a restrictive
covenant to protect the value of those assets was agreed to by all of
the parties to the agreement. In light of this I conclude that the broad
scope of trade restrictions with clients set out in Article 6.1 of the
agreement was reasonable. For the same reasons, I conclude that the five
year duration of the covenant was reasonable.
[92] At the time of the share purchase agreement the Forster
companies provided food services to a large number of units in British
Columbia. While the units were concentrated in the lower mainland, they
were also located on Vancouver Island, the Okanagan, the Kootenays and
Prince George. For that reason I am satisfied that a covenant with
geographical scope extending throughout British Columbia was reasonable.
Its extension to Alberta and within a 100-mile radius of any regional or
branch operations of the Purchaser was not. For that reason it is
necessary to consider whether the extended geographical scope is
severable.
[93] The severability of a geographic boundary for a restrictive
covenant was considered in Sterling Fence Co. v. Steelguard Fence
Ltd. [1992] B.C.J. No. 2302 (Q.L. (B.C.S.C.). In that case the
geographic area in the covenant extended to British Columbia, Alberta,
Saskatchewan, Manitoba and the State of Washington. In addition the
covenant contained a clause providing the each provision of the
restrictive covenant was declared to constitute separate and distinct
covenants. In concluding that the geographical scope could be severed to
make the covenant applicable only to British Columbia and Washington,
Skipp J. considered the Court of Appeal decision in Can. Amer.
Fin. Corp. (Can.) Ltd. v King (1989), 36 B.C.L.R. (2d) 257.
[94] In Can. Amer. Fin. Corp. the court considered a
contract of service which restricted the defendant from engaging in
business "within Canada or Bermuda". The court held that the
covenant was unreasonable and declined to substitute a smaller
geographical area, such as British Columbia, in its place. It
distinguished between severing a contract and rewriting a contract.
[95] The instant case is similar to the provision in Sterling
Fence where the court severed from the covenant the geographical
areas which made the covenant unreasonable and retained those that were
reasonable. I therefore conclude that in Article 6.1 of the share
purchase agreement the words "Alberta and within a 100 mile radius
of any regional or branch operation of the Purchaser" can be
severed so that the geographical scope of the covenant is limited to
British Columbia alone.
[96] As a result, I find the restrictive covenant, as severed, to be
reasonable.
[97] Mr. Forster was employed by Westcana on a part-time basis
beginning in April 1997 and ending about March 31, 1999. His duties
included representing Ms. Nicolas with clients on occasion and office
functions such as the payment of accounts. In September 1997 in response
to a Request for Proposal Westcana submitted a proposal to provide food
services to BCIT. In the proposal Mr. Forster was described as a
"principal" of Westcana and its Director of Operations. He did
not make any personal submissions or representations to BCIT nor did
Westcana succeed in its proposal.
[98] As distinct from the restrictive covenant in Mr. Forster's
contract of employment, I am satisfied that in accepting employment with
Westcana and participating in its provision of institutional food
services that he breached the restrictive covenant in the share purchase
agreement.
Damages
[99] Damages must be assessed in relation to:
1. Restauronics' wrongful dismissal of Ms. Nicolas;
2. Mr. Forster's breach of the restrictive covenant;
3. Westcana's vicarious liability for Mr. Forster's breach of the
restrictive covenant.
[100] As I have determined above, Ms. Nicolas was entitled to four
months notice of her termination from Restauronics. She was given
approximately two months notice. She is entitled to the equivalent of
four months salary less the amount paid to her by Restauronics for the
two months notice given to her and less the amount she earned from her
subsequent employment with Westcana during the remainder of the notice
period. The notice period ended on December 3, 1995. Ms. Nicolas' work
with Westcana on the BCCW contract began November 1. The evidence on Ms.
Nicolas' income from Westcana for this period is not entirely certain
but I find that her income from Westcana for the first 12 months after
November 1 was $28,000. One month's portion of that is approximately
$2300. There will therefore be deducted from the amount payable by
Restauronics to Ms. Nicolas the sum of $2300.
[101] Before assessing the damages payable by Mr. Forster to
Restauronics for his breach of the restrictive covenant, it is necessary
to determine on what basis the calculation must be made. It is submitted
by Restauronics that the claim rests on equitable principles and that
damages should be assessed on the basis of the benefit or gain to Mr.
Forster. In support of this proposition counsel cites Jostens
Canada Ltd. v. Gibsons Studios Ltd. (1999), 174 D.L.R. (4th)
351 (B.C.C.A.).
[102] In Jostens, however, the court was considering an
assessment of damages where there had been a breach by the defendant of
a duty of good faith and fidelity. The court recognized a distinction
between a loss at law and a loss in equity. At law damages are to be
measured by assessing the plaintiff's loss. In equity damages are to be
assessed by assessing the defendant's gain.
[103] In the instant case Mr. Forster's duty to Restauronics arises
out of the purchase and sale agreement. In my view the evidence does not
support a finding that in working as an employee of Westcana Mr. Forster
breached a duty of good faith or a fiduciary duty to Restauronics. I
conclude that damages for Mr. Forster's breach of the restrictive
covenant must be measured by assessing Restauronics' loss attributable
to his breach.
[104] In April 1997 the Westcana contract with BCCW had already been
in place for approximately 17 months. The loss of that contract by
Restauronics is not causally connected to Mr. Forster having become
employed by Westcana. Mr. Forster's participation in the proposal made
by Westcana to BCIT in September 1997 was not successful. Restauronics
was awarded the contract.
[105] Restauronics claim for damages against Mr. Forster was
essentially based on its submission that Mr. Forster assisted Ms.
Nicolas in seeking and obtaining the BCCW contract in 1995. It was out
of that alleged breach of the restrictive covenant that substantial
damages may have been awarded against Mr. Forster. Mr. Forster's breach
of the covenant in taking part-time employment with Westcana in 1997 and
in assisting Westcana to submit a proposal to BCIT makes him liable to
pay damages under the share purchase agreement but Restauronics has not
shown any substantial loss resulting. On the evidence before me,
therefore, those damages can only be nominal and they are not damages
for which Westcana is vicariously liable.
[106] In Cariboo Press (1969) Ltd. v. O'Connor, supra,
the court considered an award of nominal damages in favour of the
plaintiff. Chief Justice McEachern sought to award nominal damages that
would not be seen to be "contemptuous damages" amounting to
"the court's expression of disapprobation of a plaintiff". To
accomplish this he awarded the plaintiff nominal damages of $500. The
award of nominal damages to Restauronics on this ground of the case is
not an expression of disapprobation. For that reason, I would award
Restauronics damages of $500 against Mr. Forster.
[107] In summary:
1. Restauronics' claims against Ms. Nicolas are dismissed;
2. Restauronics' claim against Westcana Services Inc. is dismissed;
3. Ms. Nicolas was not given reasonable notice of her dismissal by
Restauronics and was wrongfully dismissed from her employment;
4. Mr. Forster breached the restrictive covenant set out in the
Share Purchase Agreement in favour of Restauronics and is liable for
nominal damages in the amount of $500;
5. Restauronics' other claims against Mr. Forster are dismissed;
6. Mr. Forster's claim for wrongful dismissal against Restauronics
is dismissed.
[108] The parties have requested an opportunity to speak to costs
following judgment. They may arrange to do so through the Registry.
"Bryan F. Ralph, J."
The Honourable Mr. Justice Bryan F. Ralph
