2018 QCCQ 2259, 2018 QCCQ 2259

Taylor c. Investors Group Securities Inc. 2018 QCCQ 2259 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-32-154022-166 DATE: April 11, 2018 ______________________________________________________________________ BEFORE THE HONOURABLE ENRICO FORLINI, J.C.Q. ______________________________________________________________________ MARTIN TAYLOR Plaintiff v. INVESTORS GROUP SECURITIES INC.

Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Martin Taylor claims from Investors Group Securities Inc. (“Investors Group”) the payment of a bonus which he alleges he earned while he was a consultant at the firm. [ 2 ] Investors Group contests Mr. Taylor’s claim and argues that he is not entitled to the payment of the bonus since he was not an active consultant at the time it was payable. In addition, it claims that Mr.

Taylor forfeited his right to the bonus when he violated a non- solicitation clause contained in the agreement governing the parties. Finally, Invertors Group makes a cross-claim against Mr. Taylor and seeks payment of $3,402.73 for money owed by Mr. Taylor. Mr. Taylor does not contest the cross-claim. Questions in Dispute

a) Did Mr. Taylor have to be an active consultant of Investors Group at the time the Asset Retention Bonus was payable in order to be entitled to it?

b) Did Mr. Taylor violate the non-solicitation provision of the Consultant’s Agreement? Context [ 3 ] From 1996 to March 3, 2016, Mr. Taylor was a financial adviser and planner with Investors Group or its predecessor companies. [ 4 ] Between 1996 and 2015, Mr. Taylor sold mutual funds to Investors Group clients which he serviced. Beginning in 2015, Mr. Taylor also was authorized to sell securities to these clients, in addition to mutual funds and other financial products and services offered or sponsored by Investors Group and/or its affiliated corporations. [ 5 ] In 2015, Mr.

Taylor and Investors Group entered into an agreement entitled “Consultant’s Agreement” which purported to outline the terms and conditions of their contractual relationship. [1] [ 6 ] Throughout his years as a consultant with Investors Group, Mr.

Taylor was remunerated notably on the basis of commissions earned on the sales of financial products, as well as through the payment of a monthly bonus referred to as an Asset Retention Bonus (“Bonus”). [ 7 ] According to the evidence adduced at trial, the Bonus is paid to a consultant on the 15 th day of each month following the monthly period for which the bonus is earned.

The Bonus is calculated on the monthly value of the assets invested through Investors Group in the preceding month by clients serviced by each consultant. [ 8 ] For example, according to the February 15, 2016 Investors Group Commission Statement, Mr. Taylor received a Bonus of $14,681 for the month of January 2016. [2] [ 9 ] On March 3, 2016, Mr. Taylor terminated his Consultant’s Agreement with Investors Group and joined a rival financial services firm shortly thereafter. [3]

[ 10 ] In mid-March, Mr. Taylor sent approximately 300 letters to Investors Group clients that he had serviced while a consultant with this company, informing them that he had left the firm and joined a new financial services firm. [4] [ 11 ] Mr. Taylor claims that he earned a Bonus of $14,681.92 for the month of February 2016 and seeks payment of this amount. [ 12 ] Investors Group does not contest the amount of the Bonus. However, it argues that it is not payable to Mr. Taylor because to receive payment of the Bonus, Mr. Taylor had to be an active consultant with the company at the time the bonus is paid.

Since the Bonus for February 2016 was payable on March 15, 2016 and considering that Mr. Taylor was no longer an active consultant with Investors group on that date, having terminated the Consultant’s Agreement on March 3, 2016, Investors Group argues that Mr. Taylor forfeited his right to receive the Bonus for the month of February 2016. [ 13 ] In addition, Investor Groups argues that Mr.

Taylor violated the non-solicitation provision of the Consultant’s Agreement when he sent letters to Investor Group clients shortly after his departure from the firm, thereby waiving his right to collect the Bonus. [ 14 ] Finally, Investors Group claims that Mr. Taylor owes it $3,402.73 for services which it rendered to Mr. Taylor while he was a consultant. Mr. Taylor does not contest this cross-claim and ask the Court to deduct the amount of the cross-claim from the Bonus payment which he believes he is owed, and therefore seeks payment of $11,279.19 ($14,681.92 - $3,402.73). Analysis and Decision

a) Did Mr. Taylor have to an active consultant of Investors Group at the time the Asset Retention Bonus was payable in order to be entitled to it? [ 15 ] The first issue in this case is rather straightforward. Is the payment of the Bonus contingent on Mr. Taylor being an active consultant with Investors Group when the bonus was to be paid on March 15, 2016, or rather, is the Bonus payable so long as Mr. Taylor was an active consultant at the end of the month for which the Bonus was calculated and earned, i.e., February 2016? [ 16 ] The Court’s decision on this issue comes down to the burden of proof applicable to each parties’ respective claims. Indeed,

article 2803 of the Civil Code of Québec (“C.C.Q.”) sets out the respective burdens of proof of Mr. Taylor and Investors Group in the present litigation. The

article reads as follows: 2803. A person seeking to assert a right shall prove the facts on which his claim is based. A person who claims that a right is null, has been modified or is extinguished shall prove the facts on which he bases his claim. [ 17 ] Based on

article 2803 C.C.Q., Mr. Taylor has the burden of proving that he earned the Bonus based on the assets under management in February 2016 by Investors Group for clients serviced by Mr. Taylor. [ 18 ] Mr. Taylor fulfilled this burden. In any event, Investors Group does not really contest that by February 28, 2016, Mr. Taylor had earned his asset retention bonus for that month. [ 19 ] As it appears from the second paragraph of

article 2803 C.C.Q, Investors Group has the burden of proving the facts which support its claim that the Mr. Taylor is not entitled to the Bonus. In other words, it has the onus of proving that the contract between the parties provides that the Bonus is paid only if a consultant is still active with the firm on the date the Bonus is paid out. [ 20 ] What does the evidence reveal? [ 21 ] It is true that the parties entered into a Consultant’s Agreement in November 2015. [5] The Agreement notably sets forth Mr.

Taylor’s responsibilities in connection with the distribution of financial products and services offered or sponsored by Investors Group (section 2 of the Agreement). [ 22 ] Compensation of consultants is addressed in

section 4 of the Agreement.

Section 4 stipulates as follows: 4. IGSI’s [Investors Group] Responsibilities IGSI agrees to compensate the Consultant in accordance with IGSI’s current policies and fee schedules , as may be amended or supplemented from time to time, less any applicable set-offs as provided in paragraphs 5 and 6 of this Agreement and, to provide the Consultant with a minimum of a semi-monthly accounting of his/her compensation and deductions therefrom.

IGSI shall also provide the Consultant with Head Office support services as deemed necessary by IGSI. (Underlining added by the Court) [ 23 ] Investors Group argues that its “current policies and fee schedules” refers to the compensation policies which are found on the firm’s intranet web site and which all consultants have access to. According to the Compensation

section of AdvantagePlus, found on the firm’s intranet (hereinafter the “Bonus Policy”), the Bonus is paid as follows: [6] Asset Retention Bonus (ARB) The Asset Retention Bonus is paid monthly in the first commission cycle of each month. It is calculated on the average monthly Investors Group DSC and No-load fund qualified assets and third party fund qualified assets in the preceding month. Qualified Assets

…. To receive the bonus payment, you must be an active Consultant at the time the bonus is paid . (Underlining added by the Court) [ 24 ] Investors Group argues that Bonus Policy found on the firm’s intranet forms part of the Consultant’s Agreement which binds the parties. Since the Bonus Policy clearly states that to receive the bonus payment, a consultant must be an active consultant at the time the bonus is paid, Mr.

Taylor is not entitled to the Bonus because he was no longer an active consultant with the firm on March 15, 2016. [ 25 ] Does the Bonus Policy form part of the parties’ contractual agreement? [ 26 ] For Investors Group to prevail on its argument that the Bonus is not payable under the terms of the Bonus Policy, it has the burden of proving that Mr. Taylor had knowledge of and consented to this policy found on Investors Group’s intranet site. [ 27 ] Mr. Taylor affirms that he had no knowledge of this condition and only saw the Bonus Policy for the first time at the trial when the document was remitted to him.

He explains that since he was receiving his monthly Bonus on a regular basis, he had no reason to consult the company’s intranet site to take cognizance of the Bonus Policy during the years he was a consultant with Investors Group. [ 28 ] He adds that if had he known that the Bonus was only payable so long as the person remain an active consultant on the 15 th of the month, he would not have terminated the Consultant’s Agreement on March 3, 2016, but rather would have waited until March 16.

He did not do this because he never was told of and ignored the rule that Investors Group is relying on to justify its refusal to pay the Bonus. [ 29 ] Investors Group admits it has no direct proof that it ever told Mr. Taylor of the Bonus Policy or that he knew about it. None of the two Investors Group witnesses who testified at the trial were able to adduce direct proof of this. Both claim that they would find it extremely surprising that Mr.

Taylor never took cognizance of the Bonus Policy while he navigated through the company’s intranet site. [ 30 ] Investors Group is relying on proof by presumption and invites the Court to conclude that Mr. Taylor was aware of the Bonus Policy. However, proof by presumption is left to the court’s discretion and is only proof of a fact where the proof is serious, precise and concordant. [7] [ 31 ] Other than Investors Group’s witnesses stating that they would think Mr.

Taylor consulted the Bonus Policy on the firm’s intranet and would find it very surprising that he did not, Investors Group did not adduce other evidence of Mr. Taylor’s use of the firm’s intranet that could bolster the proof by presumption. It did not adduce evidence that showed that he actually visited the firm’s intranet site. The presumptions that Mr. Taylor was told of or had knowledge of the Bonus Policy are not serious, precise and concordant [ 32 ] As stated above, Mr. Taylor categorically denies that he was ever told of or had knowledge of the Bonus Policy.

He testified clearly, without any hesitation and was very forthright. His testimony is credible and reliable. The Court believes him when he states that he had no knowledge of the Bonus Policy. [ 33 ] Accordingly, the preponderance of the evidence establishes that Mr. Taylor did not have knowledge of nor was ever told of the Bonus Policy.

Investors Group had the burden of proving that the Bonus Policy formed part of the contract between the parties, yet failed to discharge this burden. [ 34 ] The Court therefore concludes that, subject to the issue of whether or not he violated the non-solicitation provision of the Consultant’s Agreement, Mr. Taylor is entitled to the payment of the Bonus of $14,681.92 for February 2016. The Court’s decision is based strictly on the facts of the present case and should not be read or interpreted as setting a general precedent for all the consultants of Investors Group

c) Did Mr. Taylor violate the non-solicitation provision of the Consultant’s Agreement? [ 35 ] Investors Group also argues that Mr. Taylor forfeited his right to the Bonus because he violated the non-solicitation clause of the Consultant’s Agreement. [8] This clause reads as follows: 9. Non-Solicitation

i) For a period of one (1) year after termination of this Agreement, the Consultant shall not, directly or indirectly, solicit any investment business from any client of IGSI or Investors Group Inc. and its subsidiaries in the territory served by the Region Office or Offices with which the Consultant was associated during the year prior to such termination. ii) Notwithstanding the provisions of paragraph (

i) above, for a period of two (2) years after termination of this Agreement, the Consultant shall not, directly or indirectly solicit any investment business from any client of IGSI or Investors Group Inc. and its subsidiaries with whom the Consultant has dealt during the term of this Agreement. For the purpose of this Agreement, clients of IGSI or Investors Group Inc. and its subsidiaries are holders of mutual fund shares or units, investment contracts, securities and other financial products and services offered or sponsored by IGSI and/or its affiliated corporations from time to time. (Underling added by the Court)

[ 36 ] Does the preponderance of the evidence establish that Mr. Taylor, directly or indirectly, solicited any investment business from any client of Investors Group following his departure from the firm? [ 37 ] Investors Group refers to a letter dated March 14, 2016 [9] that Mr. Taylor wrote to an Investors Group client as proof of the breach of the non-solicitation clause. This letter reads in part as follows: l am writing to let you know that I am no longer at Investors Group. After a long and rewarding career with the firm, I decided that it was time to move on.

I am pleased and excited to also share with you that l have joined […] Wealth Management. … If you wish to contact me, I can be reached at … [ 38 ] Mr. Taylor admits that he sent a letter identical to the one cited above to the more than 300 or so Investors Group clients that he used to service while he was a consultant with this firm. [ 39 ] However, Mr.

Taylor argues that in sending these letters, he did not contravene the non-solicitation clause. [ 40 ] He claims that all the Investors Group clients who transferred their business to him at the new financial services firm he joined did so voluntarily and without any indirect or direct solicitation from him. [ 41 ] He adds that each of these clients signed a document confirming that they took the initiative to seek out the services of Mr.

Taylor. [10] This document states in part: “I confirm that Martin Taylor has never solicited any investment business from us since the termination of his relationship with Investors Group on or about March 7, 2016. In this regard, Martin Taylor has never requested, encouraged, enticed or advised us to seek out his investment advisory services at […] Capital Management Ltd., but rather I have decided to transfer my investment business of my own accord…” [11] [ 42 ] In Frayne v.

Shefteshy [12] , Justice Jean-François Michaud of the Superior Court reviewed the case law addressing breaches of a non-solicitation covenant. Based on his review of the case law, he concludes that solicitation means that the person must adopt a conduct that goes much beyond a simple communication with a specific or potential client. Indeed he writes as follows: [19] Comme on peut le constater, la sollicitation va bien au-delà de la simple communication avec un client, spécifique ou potentiel.

Il faut que le geste posé ait pour but d’amener ce client à faire affaire avec le sollicitant en raison de gestes répétés et insistants. [ 43 ] Justice Michaud ruled that the distribution of business cards and a pamphlet inviting people to an open house was not conduct that constitutes solicitation. [13] He concluded that actions which aim to inform potential clients of a move from one firm to another and which are more in the nature of an advertisement or a general invitation to meet do not amount to indirect or direct solicitation of a client. [ 44 ] Applying the rule summarized in Frayne v.

Shefteshy to the facts of the present case, the Court concludes that Mr. Taylor did not violate the non-solicitation clause contained in the Consultant’s Agreement when he sent the letters he did. The letters are merely informative and do not contain language which constitutes solicitation, whether direct or indirect, of an Investors Group client. Moreover, the non-solicitation confirmation documents signed by the former Investors Group clients are further proof that Mr. Taylor never solicited any investment business from these clients. Conclusion [ 45 ] Mr.

Taylor is entitled to the payment of the Bonus of $14,681.92 for February 2016. However, considering that Mr. Taylor also admits owing $3,402.73 to Investors Group, the Court will effect compensation between the respective debts owned between the parties and will condemn Investors Group to pay Mr. Taylor $11,279.19.

FOR THESE REASONS, THE COURT: [ 46 ] GRANTS Martin Taylor’s claim for $14,681.92; [ 47 ] GRANTS Investors Group Securities Inc.’s cross-claim for $3,402.73; [ 48 ] EFFECTS COMPENSATION between the debts owed as between the parties and therefore, CONDEMNS Investors Group Securities Inc. to pay to Martin Taylor $11,279.19 with interest at the legal rate and the additional indemnity provided for in

article 1619 of the Civil Code of Québec , from August 10, 2016; [ 49 ] WITH COSTS of $200 representing the court fee paid by Martin Taylor on the Application. __________________________________ ENRICO FORLINI, J.C.Q.

Date of hearing: December 12, 2017