On October 9, 2008, the Supreme Court of Canada, in the case of RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc. et al., reaffirmed an award of damages to RBC against a group of its former investment advisors.
An RBC branch manager organized a mass departure of virtually all of RBC’s investment advisors and support staff at its branch in Cranbrook, B.C. These employees left, without notice, to work for RBC’s direct competitor Merrill Lynch. In the weeks preceding their departure, RBC’s client records had been surreptitiously copied and transferred to Merrill Lynch. These employees were not bound to a non-competition or non-solicitation agreement with RBC.
The trial judge awarded damages against the former employees for breaching the implied terms of their employment contract requiring reasonable notice and prohibiting unfair competition. The judge found that Merrill Lynch was also liable for damages arising from unfair competition, as well as punitive damages for the copying of RBC’s client records. The judge also assessed damages against the bank manager personally for breaching his duty of good faith. The BC Court of Appeal lowered some of these damages on appeal.
At the final level of appeal, the Supreme Court partially reinstated the trial judge’s decision. The Supreme Court found that in organizing the mass exodus, the branch manager breached his contractual duty of good faith, because an implied term of his employment was the retention of the RBC employees who he supervised. The damages awarded against the branch manager were therefore restored.
On the other hand, the Supreme Court found that no damages should have been awarded with respect to unfair damages against the former employees since there is no general duty in law not to compete with a former employer. The Supreme Court, however, reinstated the full amount of damages against the employees for not providing reasonable notice of their departure.
For the full text of the Supreme Court’s Decision, please visit the link below.