Isaacson et al v Credential Insurance Date:, 2020 MBCA 103

Citation: Isaacson et al v Credential Insurance Date: 20201020 Services Inc, 2020 MBCA 103 Docket: AI20-30-09437 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Holly C. Beard Madam Justice Jennifer A. Pfuetzner Madam Justice Lori T. Spivak BETWEEN : ) K. D. Toyne ALAN ISAACSON and 4838921 ) for the Appellants MANITOBA LTD. ) ) K. T. Williams and (Plaintiffs) Appellants ) J. M.

Nordlund ) for the Respondent - and - ) ) Appeal heard and CREDENTIAL INSURANCE SERVICES ) Decision pronounced: INC. ) October 7, 2020 ) (Defendant) Respondent ) Written reasons: ) October 20, 2020 On appeal from 2020 MBQB 15 PFUETZNER JA (for the Court): [ 1 ] The plaintiffs appeal the trial judge’s dismissal of their claim for payment, post-termination, of commissions they say vested during the course of the plaintiff, Alan Isaacson’s (Isaacson), sale of insurance products to clients of the defendant’s affiliated credit unions. At the hearing, we dismissed the appeal with brief reasons to follow.

These are those reasons. [ 2 ] The defendant is one of several affiliated corporations that operate under the umbrella of Credential Financial Inc. (the Credential group) to provide financial services to credit unions and their clients across Canada. As part of those services, the Credential group has contracts with several insurance companies to provide their insurance products, including life insurance, to credit union clients through the credit unions.

To promote and support the sale of those services and products, the Credential group hires its own employees with financial services experience (advisors) to work with credit union staff and to assist with sales. [ 3 ] As the trial judge noted, Isaacson had been in the insurance business for 30 years, during which time he had been an advisor and manager in a few different businesses. In 2004, he became employed as an advisor with the Credential group to assist with the sale of insurance products through its network of credit unions.

Between 2004 and 2013, Isaacson entered into a series of employment contracts with the Credential group. Initially, Isaacson’s employment compensation was a base salary and participation in the employer’s variable compensation plan. By 2008, Isaacson’s employment compensation was entirely comprised of commissions on sales of insurance products to clients of the credit unions. [ 4 ] In 2004, when Isaacson joined the Credential group, he had his own private insurance clients (the book of business) that he wished to retain and grow.

As a result, in 2005, the plaintiffs entered into an Agency Distribution Agreement (the ADA) with the defendant to allow the book of business to be maintained separate from Isaacson’s employment activities for the Credential group. [ 5 ] In 2014, Isaacson’s employment was terminated. He was paid the amounts to which he was entitled under his last employment contract. The ADA was also terminated in 2014. The ADA provided, in

Article 9.2, that the commissions earned from the sale of life insurance “shall be deemed vested with the [plaintiffs] upon being earned” and that the defendant would continue to pay commission “on the same basis after as before the termination” of the ADA. [ 6 ] At trial, the plaintiffs asserted that the portion of the commissions that Isaacson earned on the renewal of the insurance policies that he had sold to clients of the credit unions had vested pursuant to

Article 9.2 of the ADA. Accordingly, the plaintiffs claimed that they have a continuing right under the ADA to payment of these commissions. [ 7 ] In careful reasons, the trial judge instructed himself on the applicable principles of contractual

interpretation with which the plaintiffs take no issue. He considered the ADA and the employment contracts, as well as the factual matrices of these

agreements. He found that the objective intentions of the parties were clearly established in the agreements and that, “When [Isaacson] sold for the credit unions, he did so as an employee of [the defendant]. Only sales related to his book of business were within the scope of [the ADA]. Sales in the latter category were subject to vesting under 9.2 of the ADA. Sales in the former were not” (at para 52). [ 8 ] The plaintiffs’ primary argument on appeal is that the trial judge made an extricable error of law in how he construed the ADA.

They argue that the trial judge should have first attempted to construe the ADA taking into account the wording of the ADA and the surrounding circumstances in existence when the ADA was entered into, including the first employment contract. The plaintiffs submit that this would have led to a finding that the ADA was ambiguous, at which point the trial judge could have considered extrinsic evidence, such as the subsequent conduct of the parties entering into the later employment contracts and the manner in which the renewal commissions were processed for payment by the Credential group’s back office.

The plaintiffs assert that this evidence supports the position that the renewal commissions had vested under the ADA. The plaintiffs maintain that the trial judge erred by considering the subsequent employment contracts in construing the ADA and in determining that the ADA was not ambiguous. [ 9 ] In our view, there is no extricable question of law raised by this appeal. The plaintiffs urged us to focus almost exclusively on the way in which the trial judge construed the ADA.

However, this approach loses sight of what the trial judge was actually required to do in this case. [ 10 ] On reviewing the pleadings, the evidence and the arguments made at trial, the essential question that the trial judge had to determine is clear—whether the commissions in respect of renewals of insurance policies sold to credit union clients were paid to the plaintiffs under the ADA or under the employment contracts.

In order to answer that question, the trial judge was required to construe both the ADA and the entire series of employment contracts to determine the scope of both Isaacson’s employment and the arrangements he made with the defendant regarding the book of business. [ 11 ] In the course of construing these agreements, the trial judge made findings of fact and findings of mixed fact and law.

All of these findings were open to him and we are not persuaded that he made any palpable and overriding error (see Housen v Nikolaisen , 2002 SCC 33 at paras 22 , 24-25; and Sattva Capital Corp v Creston Moly Corp , 2014 SCC 53 at para 50 ). Moreover, we agree with the trial judge’s findings. [ 12 ] For these reasons, we dismissed the appeal with costs. JA JA JA