Price v. Don Wotherspoon & Associates Date:, 2017 BCPC 89

Citation: Price v. Don Wotherspoon & Associates Date: 20170310 (Van.) Ltd. File No: S78544 2017 BCPC 89 Registry: Surrey IN THE PROVINCIAL COURT OF BRITISH COLUMBIA Small Claims BETWEEN: SANDYLEE PRICE CLAIMANT AND: DON WOTHERSPOON & ASSOCIATES (VANCOUVER) LTD. DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE K.J. FERRISS Counsel for the Claimant: P. Roxburgh Appearing for the Defendant: Troy Wotherspoon Place of Hearing: Surrey , B.C. Date of Hearing: February 14, 2017 Date of Judgment: March 10, 2017 [ 1 ] The Defendant, Don Wotherspoon & Associates (Vancouver) Ltd. (“Wotherspoon Ltd.”) is a corporation that sells various

[ 1 ] The Defendant, Don Wotherspoon & Associates (Vancouver) Ltd. (“Wotherspoon Ltd.”) is a corporation that sells various types of insurance to the public. Sandylee Price is an insurance broker that has her own client list or book of business, but has a contract to sell the insurance policies through an agency such as Wotherspoon Ltd. An insurance broker that operates under this type of contract is known as a producer. [ 2 ] Prior to working with Wotherspoon Ltd. in approximately March 2010, Ms. Price met with Troy Wotherspoon, Wotherspoon Ltd.’s sole director.

They agreed that she would receive 60% of the commission that was paid on each general insurance policy she sold and 65% of the commission that was paid for the policies covered by the Insurance Corporation of British Columbia (“I.C.B.C.”). Under her contract with Wotherspoon Ltd., Ms. Price was to pay all of her own expenses such as promotions and lunches, office supplies, and internet connection. She did not have an expense account with Wotherspoon Ltd. There is no written agreement between Wotherspoon Ltd. and Ms.

Price. [ 3 ] While some producers have a contract under which they are paid salary and commission, Ms. Price was only paid commission. On average, 20% of each policy is paid to Wotherspoon Ltd. as commission. It is that 20% commission that was to be divided between Ms. Price and Wotherspoon Ltd. It is Wotherspoon Ltd.’s policy to pay the commission to the producer two months after it is received. [ 4 ] It is common ground that that commission on a general insurance policy is not fully earned until that policy expires because a purchaser of the policy may cancel or modify the policy before it expires.

If the policy is cancelled or modified during its term, the commission owing will be cancelled or modified accordingly. These are called plus or minus endorsements and it can take up to a year for a producer to be paid on some policies. [ 5 ] On August 4, 2015, Ms. Price gave Wotherspoon Ltd. notice that she was moving to another agency. She commenced this action on September 4, 2015, claiming unpaid commissions/wages/earnings in the sum of $15,000.00 plus costs. All of the commissions claimed by Ms.

Price are for general insurance policies and not I.C.B.C. policies. [ 6 ] Wotherspoon Ltd. counterclaimed for $25,000.00 for unearned commissions paid between September 17, 2014 and September 17, 2015. In its Reply, Wotherspoon Ltd. acknowledged there was outstanding commission in the approximate amount of $7,000.00. [ 7 ] At trial, Ms. Price set out three different sums that are owed to her by Wotherspoon Ltd., being: 1. Unpaid commissions in the sum of $8,925.00. 2. The purchase price of $5,887.75 for twelve clients which remained with Wotherspoon Ltd. after August 4, 2014.

The claim is based on a 2.5% purchase rate which Ms. Price says is the industry standard. 3. The sum of $4,520.99 which was deducted from her commission between May 2010 and August 2015 as monies for transaction fees and credit card fees paid by Wotherspoon Ltd. when accepting payment from her clients. She said they had no agreement for Wotherspoon Ltd. to deduct those fees. [ 8 ] There is no dispute between the parties that the policies produced in evidence at trial were policies for Ms. Price’s clients and that Ms. Price was therefore at liberty to take her book of business when she left.

Issues [ 9 ] The following issues arise out of this case: 1. If a producer leaves an insurance agency before a policy is purchased or renewed by one of the producer’s clients, does the insurance agency still owe the producer the commission on that policy? 2. Is there an industry standard in the insurance field such that, if a producer leaves an agency and some clients do not leave with the producer, the insurance agency is required to purchase those clients? If so, how much should the agency pay the producer for each client? 3. Was there an agreement between the parties that Ms.

Price, as a commission only producer, was required to pay a percentage of the transaction and credit card fees incurred in the purchase of the insurance policies? Unpaid Commission [ 10 ] As Wotherspoon Ltd. paid commission owing two months after the policy was complete, the July 31, 2015 Cheque Voucher paid to Ms. Price was for the month ending May 31, 2015. The August 31, 2015 Cheque Voucher would have been for the month ending June 30, 2015, but it did not pay any commission to Ms. Price except for her commission from I.C.B.C. policies. The August 31, 2015 Cheque Voucher was the last payment Ms.

Price received from Wotherspoon Ltd. Accordingly, Ms. Price testified that she is owed commission for policies sold or renewed as follows: DESCRIPTION AMOUNT OF COMMISSION GIVEN June 2015 Commissions $3,893.70 (60% of $6,489.50) July 2015 Commissions $3,354.90 (60% of $5,591.50) August 2015 Commissions $737.40 (60% of $1,229.00) Miscellaneous Outstanding Policy’s Unpaid $472.53 Policy Changes Mid Term and Appraisal Increases $465.48 [ 11 ] Wotherspoon Ltd. admits that it does owe Ms.

Price for the commission owing for June and July 2015 and says it did not pay her that amount because things were put on hold when she commenced this action. However, it says that it only owes the sum of

$6,993.75, being $3,883.86 for June and $3,109.89 for July 2015. Ms. Price’s calculated total for those two months is $7,248.60. [ 12 ] Wotherspoon Ltd. says it does not owe her any commission for policies taken out or renewed after she left on August 4, 2015 because Wotherspoon Ltd. had to do additional work for the clients that normally Ms. Price would have had to do. Wotherspoon Ltd., as an insurance agency, continues to have responsibilities to the client such as notifying the client of the date the policy must be renewed and providing renewal services. Accordingly, Wotherspoon Ltd. says it only owes Ms.

Price $282.84 for the month of August, 2015, which again it has not paid. [ 13 ] With respect to the unpaid miscellaneous outstanding policies totalling $472.53, Wotherspoon Ltd. says it has “no problem” paying that amount to Ms. Price, although it has not. However, Wotherspoon Ltd. says it does not owe Ms. Price for policy changes that occurred mid-term and appraisal increases as they occurred after August 4, 2015. [ 14 ] With respect to the documentation for June and July 2015, Ms. Price did her best to provide the figures as she knew them.

She did not have access to Wotherspoon Ltd.’s accounting records and would not have known if there were plus or minus endorsements. Accordingly, I find that the accounting records provided by Wotherspoon Ltd. are the most accurate for that time period and that Wotherspoon Ltd. owes the sum of $6,993.75 to Ms. Price as commission payable up to July 30, 2015. Wotherspoon Ltd. also owes $472.53 for unpaid miscellaneous outstanding policies. [ 15 ] With respect to the monies Ms.

Price says are owing on policies renewed or taken out after August 4, 2015 and the policy changes that occurred mid-term and any appraisal increases, I find that Ms. Price is owed the amount she claims. Even if she did not terminate her contract with Wotherspoon Ltd., Wotherspoon Ltd. would have had at least some administrative functions in renewing or issuing those policies and, for that reason, Wotherspoon Ltd. received 40% of the commission. The fact that Wotherspoon Ltd. had to send out additional notices to those clients when Ms.

Price left is not enough for Wotherspoon to be able to claim 100% of the commission, nor is the fact that errors and omissions insurance is expensive as claimed by Wotherspoon Ltd. Ms. Price brought those clients to Wotherspoon Ltd. as part of their agreement and that is why she was to receive 60% of the commission. As she testified, in some cases, she would have made contact with those clients in June or July 2015 regarding their renewal in August, which was not disputed by Wotherspoon Ltd. [ 16 ] Accordingly, Ms.

Price is owed the sum of $1,202.88 for the renewals and policies taken out after August 4, 2015 as claimed. Purchase of the Twelve Policies Remaining at Wotherspoon Ltd. [ 17 ] Ms. Price called an expert witness, Ms. Karmjit Lidder, who is a comptroller with InsureBC. She has a Bachelor’s of Business Administration and part of her job at InsureBC is paying producers. I admitted her as an expert witness, but with the caution that she has only worked for one insurance agency and, while fully familiar with InsureBC’s practices, may not be aware of all industry standards. [ 18 ] Ms.

Lidder testified that where a producer’s client stays with the agency after the producer leaves the agency, InsureBC pays a purchase price for that client. The purchase price is 2.5 times the amount of the producer’s commission from that client. She said the client is always the producer’s client unless there is a written agreement to the contrary. Therefore the agency must buy that client from the producer. [ 19 ] Ms. Price asserts that the purchase price of the twelve files remaining with Wotherspoon is $5,887.75, if calculated as Ms. Lidder states. She agrees that the industry standard is as stated by Ms.

Lidder and that she owns the clients in her book of business. She says that on at least one policy she asked Intact Insurance to transfer the file to her new agency, but Intact told her they needed Wotherspoon Ltd.’s approval and that was refused. [ 20 ] Troy Wotherspoon took the position that neither party owned those clients, nor was there was an agreement to purchase any portion of Ms. Price’s book of business. Troy Wotherspoon says he could find out if the clients renewed their policies through Wotherspoon Ltd., but he has not done so.

He says there are no guarantees they would stay with Wotherspoon Ltd. and that Ms. Price could have taken the clients. [ 21 ] It appears to me that the parties treated the clients in Ms. Price’s book of business as belonging to her. It is inconsistent for Wotherspoon Ltd. to now maintain its position that the clients in her book of business do not belong to anyone. Accordingly, I find that the clients who stayed with Wotherspoon Ltd. belonged to Ms. Price. They would not have been at Wotherspoon Ltd.’s but for her.

I further find that the industry standard is that the insurance agency is responsible for purchasing those files at 2.5 times the commission payable to Ms. Price, unless other arrangements are made between the parties. Therefore, Wotherspoon Ltd. owes Ms. Price the sum of $5,887.75 as the purchase price of those clients. Credit Card and Transaction Fees [ 22 ] Ms. Price says that she only discovered that Wotherspoon Ltd. had been deducting the transaction and credit card fees from her commission while she was preparing for this trial.

She says there was no agreement between Wotherspoon Ltd. and her that any portion of those fees were her responsibility. She said there was no reconciliation statements provided to her and she was not told in writing there were credit card charges. [ 23 ] Troy Wotherspoon says that Ms. Price agreed to pay her portion of the credit card and transaction fees in the meeting they had in or about March 2010. He says the agreement was they were to be split in the same proportion as the commission: 60% to Ms. Price and 40% to Wotherspoon Ltd.

He said all of the producers who worked for Wotherspoon Ltd. paid those fees and there was only one associate at Wotherspoon who had a different agreement. Troy Wotherspoon also points out that Ms. Price never disputed those charges for the entire time she worked with Wotherspoon Ltd. [ 24 ] The amount of the transaction or credit card charged to Ms. Price was an average fee based on an aggregate of the fees over six months. Troy Wotherspoon said this is the industry standard.

[ 25 ] Unfortunately Ms. Lidder was not asked whether sharing credit card and transaction fees is an industry standard or what InsureBC’s standard practice with producers. [ 26 ] On one hand, I have the testimony of Troy Wotherspoon who has admitted Wotherspoon Ltd. owed Ms. Price over $7,000.00 since at least August of 2016 and did not pay her. On the other hand, I have the testimony of Ms. Price who apparently did not look into the amount she was receiving from Wotherspoon Ltd. since May 2010. It was not in her pleadings, as she says she just recently became aware of those deductions.

Her Claim was for a total of $15,000.00. Unfortunately, the onus was on Ms. Price as Claimant to prove that those fees were wrongly deducted and I cannot find she has proven that portion of her case on the balance of probabilities.

Summary [ 27 ] I find that Wotherspoon owes Ms. Price the sum of $14,556.91. There will be pre-judgment interest calculated from October 1, 2015. [ 28 ] Wotherspoon will also owe Ms. Price the cost of filing fees of $156.00 and service fees of $80.00, for a total of $14,792.91. In addition to that Wotherspoon will owe Ms. Price reasonable photocopying fees. The Honourable Judge K.J. Ferriss Provincial Court of British Columbia