Date: Tue, 28 Oct 2008 15:46

From: Kelvin Low

Subject: New SCC decision

Hi Jason,

Whilst the $225,000 was losses suffered after the notice period, they were held by the trial judge to be the result of competition during the notice period. By my reading, according to the trial judge, if the defendants had not engaged in unfair competition during the notice period, this loss would not have been suffered by the plaintiff. So it is plausible that the loss stemmed from the breach of contract, i.e. in failing to respect the reasonable notice period. Certainly this is my reading of the reasoning. They didn't seem to suggest that the cause of the loss was unfair competition after the notice period. If that is indeed the correct reading, then I would agree with you.

The scope of duty argument would fare better, I suppose. But there was no raising of either SAAMCO or Achilleas by the SCC.

Cheers,
Kelvin

2008/10/28 Jason Neyers

Kelvin:

My reading was that the $225,000 was for losses that were suffered after the notice period:

[15] In addition, the trial judge awarded a total of $225,000 against the investment advisors for unfair competition. The trial judge held that during the 2.5 week notice period, the departing employees remained subject to their contractual duties and specifically their general duty of fidelity to RBC, which prevented them from competing with RBC during this period. She found that by competing against RBC during this period, the investment advisors, including Delamont, caused RBC losses that continued after the notice period. Specifically, she found that in the absence of this “unfair” competition, RBC would have retained 25 percent rather than 13.5 percent of its clients. Hence the trial judge made an award against all the investment advisors for 11.5 percent of RBC’s profits over a five-year period.

If that is the right view then the denial of the $225,000 makes some sense since after the notice period the employees are allowed to compete whether or not they have given notice. The SCC seems to be saying that all competition is fair unless it is illegal, a position consistent with the economic torts cases.

I am no expert in employment law but perhaps another way to view it is that the damages suffered are too remote, given that the scope of the employers’ right is only to protect them from the loss of profits that each employee would bring in during the notice period not for any other losses even if they are somehow foreseeable. This seems to dovetail with the employee's right which is limited to the loss of salary for the notice period. Just a thought.

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