2005 BCSC 145 Axiom Services Ltd. v. Weigert

Before: The Honourable Mr. Justice Groberman

Reasons for Judgment

Counsel for Plaintiffs	David J. Taylor
Counsel for Ms. Weigert	Stephen J. Berezowskyj
Counsel for Ms. Pelletreau	Mark R. Epstein
Date and Place of Trial/Hearing:	April 13–16, 19-21, July 14, October 7, 2004
	Vancouver, B.C.

[1] In October 2001, Ms. Weigert and Ms. Pelletreau, who were hairstylists at Axiom Hair Design, left that salon and began to work at Catz Hair Lair. The plaintiffs – the company that operates Axiom Hair Design, and its principals – allege that the Ms. Weigert and Ms. Pelletreau acted improperly in taking and using customer information when they left. They also allege that Ms. Weigert’s association with Catz Hair Lair violated the terms of a non-competition agreement.

Axiom Services Ltd.

[2] Up until 1999, Axiom Hair Design was Ms. Weigert’s shop. She had worked as a hairstylist in Vancouver beginning in 1966, and bought her first salon in 1969. Over the ensuing years, she operated a number of salons until, in 1989, along with two others, she formed Axiom Services Ltd. That company opened Axiom Hair Design, across from Vancouver City Hall, in the City Square Shopping Mall. In the early 1990s, Ms. Weigert bought out the interests of her two partners, and became the sole shareholder. Under her management, the company prospered. Eventually, Axiom Hair Design grew to eighteen hairstyling stations (with a total of 24 or 25 chairs). The company also acquired a separate aesthetics studio in the same mall.

[3] Ms. Le is a hairstylist and aesthetician, and has worked in the industry for over twenty years. She has also run several salons. By 1999, she and Mr. McCaulley were in the business of purchasing small salons for a few thousand dollars, and turning them into successful operations. All of their acquisitions had been simple asset purchases – the salons they purchased did not, apparently, have any substantial goodwill at the time they acquired them.

[4] In May of 1999, Ms. Le was considering opening a hairstyling school. She attended at Axiom Hair Design to get advice from one of the senior stylists there about how to go about doing so. While at Axiom, she commented that the salon was nice. In the course of the conversation, perhaps in jest, Ms. Le asked if the shop was for sale. She was referred to Ms. Weigert, who told her that “anything is for sale if the price is right.” Some time later – the parties differ on whether it was days or minutes – Ms. Le approached Ms. Weigert, this time more seriously, and asked if she was interested in selling the shop. Ms. Weigert had not been contemplating selling it, but was intrigued enough to say that she would talk to her accountant to see what the shop was worth. After a few days, she contacted Ms. Le, and advised that the accountant considered the shop to be worth $550,000.

[5] Ms. Le had never before purchased a thriving salon with valuable goodwill, and considered that price to be “out of her league.” For a period of time, she abandoned the idea of acquiring the salon. Some time later, however, she and Mr. McCaulley decided that if the income stream from Axiom Services Ltd. was as high as Ms. Weigert had indicated, it might be worth further consideration. Ms. Weigert said she would be prepared to sell for $350,000, and the parties entered into serious negotiations. Ms. Le and Mr. McCaulley were given full access to the financial statements. Eventually, Ms. Le and Mr. McCaulley agreed to purchase the shares in Axiom Services Ltd. for $320,000. A detailed share purchase agreement dated October 28, 1999 was entered into.

[6] It is evident that the bulk of the value of the shares lay in the goodwill of Axiom Hair Design (and, to a lesser extent, the associated aesthetics studio). The agreement valued the stock in trade alone at $78,000, but that number appears to represent a retail value. I accept that the market value of the tangible assets of the business at the time of the sale was a small portion of the purchase price, perhaps less than $70,000. The real value of the business lay in its ability to produce revenue, and this was dependent on its ability to maintain its clientele.

[7] The purchasers recognized that keeping the core group of stylists was essential to maintaining clientele, and they felt that they would be able to hold onto most of the staff after they bought the salon. They were particularly concerned about the possibility that Ms. Weigert would open another shop, and they obtained, as part of the deal, a “Non Competition Agreement” from Ms. Weigert. The agreement includes the following terms:

Theresia Weigert agrees that she will not without the consent in writing of Khanh Le and George McCaulley, which consent may be denied without reason, directly or indirectly for a period of five (5) years, within the geographical area of the lower mainland of British Columbia from West Vancouver to and including Hope, British Columbia own, manage, operate, join control or participate in the ownership, management, operation, consultation or control of or be connected in any manner in any business which is engaged in the supply, sale and delivery of hair care and beauty services for sale to the public, or which in any manner conducts business similar to that conducted by Axiom Services Ltd. prior to the sale by Theresia Weigert of her shares in Axiom Services Ltd. to Khanh Le and George McCaulley.

…

The parties have agreed that Axiom Services Ltd. will provide a chair for Theresia Weigert. Theresia Weigert will have the option to stay and work however she will set her own hours, she will deal with her own clients and she will help with overflow if necessary. If the arrangement between Theresia Weigert and Axiom Services Ltd. is not satisfactory to either the vendor or Axiom Services Ltd. then Theresia Weigert shall be able to cut hair and provide services at another salon however she shall not participate in the operation and control or consultation of such salon.

[8] As the agreement suggests, the parties expected Ms. Weigert to stay on at the salon as a part-time hairstylist without management responsibilities. Ms. Weigert anticipated limiting her workload, providing services only to her existing customers. It had, however, been thirty years since Ms. Weigert worked in a salon that she did not own, and she wanted to ensure that if things did not work out, she would not be completely foreclosed from cutting hair. The apparent conflict between the terms of the first and last paragraphs of the Agreement reflects an attempt to balance the interests of Ms. Le and Mr. McCaulley on the one hand, and those of Ms. Weigert on the other.

[9] Following the transfer of ownership in October 1999, things went smoothly for the new owners and for Axiom Services Ltd. Revenues and profits were largely in line with expectations. While the salon experienced staff turnover consistent with the nature of the industry, it was largely successful in keeping its core group of hairstylists.

[10] Within months of selling the salon, Ms. Weigert found herself unhappy working there as a mere stylist. She had managed her own salons for thirty years, including Axiom for over ten years. While the new owners did not make any drastic changes, Ms. Weigert did not find such changes as were made to her liking. Nonetheless, she continued to work at the salon approximately three days a week until the fall of 2001.

Events of October 2001

[11] Catherine Pelletreau joined Axiom as an experienced stylist in 1995, and was one of its most successful stylists at the time of the sale in 1999. She had always wanted to open her own salon, and talked openly about the idea with her employers, clients, and co-workers. In the Spring of 2001, she had discussions with Francesco (Franco) Fazio, who owned a salon known as “Ripples”. Although she was interested in the salon, but she did not pursue acquiring it at that time.

[12] In September 2001, Ms. Weigert ran into Mr. Fazio at a trade show, and he mentioned that a stylist who worked at her salon had been interested in purchasing his business, but that he had lost her number. Ms. Weigert surmised that it was Ms. Pelletreau, and put her back in contact with Mr. Fazio.

[13] In October, Ms. Pelletreau reached agreement with Mr. Fazio to purchase Ripples. On Friday, October 19, 2001, she met with Mr. McCaulley during work hours at Axiom, and told him of her plans. She gave him one week’s notice that she would be leaving, and advised him that she would not attempt to contact clients until after she left. Mr. McCaulley was not surprised to hear that Ms. Pelletreau was leaving; he had been aware from the time that he purchased Axiom that Ms. Pelletreau wanted to open her own salon. The discussion on October 19 was amicable, with both Ms. Pelletreau and Mr. McCaulley wishing each other well. Ms. Pelletreau continued to work at Axiom until October 26. She took over Ripples, and renamed it “Catz Hair Lair” on November 1, 2001.

[14] On October 19, Mr. McCaulley also spoke to Ms. Weigert. He had heard rumours that she was unhappy at the salon, and asked her whether she was thinking of leaving. She told him that her plans were unsettled. She said that her mother was dying, and that she was going to Germany for awhile to be with her. She said she would decide on her own future after she returned to Vancouver. She specifically denied that she was going to work with Ms. Pelletreau.

[15] That same day, Ms. Weigert advised the office manager that she was going to Germany, and asked that her appointments for the following week be re-booked. October 20 was Ms. Weigert’s last day at Axiom. At the end of the day, she packed all of her equipment into her trolleys, and left the shop after saying goodbye to some long term employees. As Mr. McCaulley was in Toronto on a business trip, she simply left a note for him telling him that she would not be returning.

[16] Ms. Weigert claims that while she had been unhappy at Axiom for some time, she had not decided to leave until she started packing up her things on October 20. She claims to have made a spontaneous decision, at that point, that she was not going to return. She says that she planned to book a flight to Germany on October 21 or 22, but spoke to her sister prior to doing so, and learned that her mother’s situation had stabilized. She says decided to postpone her plans to go to Germany, and contacted Ms. Pelletreau to see if she could work at Ms. Pelletreau’s salon. While her testimony as to the timing of the conversation with Ms. Pelletreau is not completely consistent, I find that any such conversation must have occurred on October 21. Ms. Pelletreau advised her that she would not be taking over the salon until November 1, and suggested that Ms. Pelletreau talk to Mr. Fazio in the interim. She contacted him, and worked at Ripples from October 25 to 27. She continued with Catz Hair Lair when Ms. Pelletreau took over the operations on November 1.

[17] I do not find Ms. Weigert’s version of events to be truthful. The evidence points unequivocally to the conclusion that Ms. Weigert planned her exit from Axiom carefully, and in advance. I find that she made arrangements with Ms. Pelletreau to work at her salon before Ms. Pelletreau even completed the purchase.

[18] Perhaps the most damning evidence against Ms. Weigert’s version of events is that in late September or early October, 2001, she requested that the office manager, Ms. Kohl, provide her with a list of her customers. Ms. Weigert knew that she was not entitled to the list and gives no explanation for why she obtained it, other than to say that she wanted to be able to contact her clients after she left Axiom.

[19] I accept the evidence of Satinder Pannu, an aesthetician at Axiom, that on the day that she left, Ms. Weigert told her that she was going to go to work with Ms. Pelletreau at her new salon.

[20] The haste with which Ms. Weigert commenced work with Ripples is also telling. Given that she worked only Thursdays, Fridays and Saturdays, it is evident that she lost not a single day of work in the transition. Without the transition having been planned, that would be a truly remarkable feat.

[21] Although neither Ms. Weigert nor Ms. Pelletreau admits to discussions prior to Ms. Weigert leaving Axiom, I find that such discussions must have occurred. Ms. Weigert arranged to rent a chair at Catz Hair Lair, and gave Ms. Pelletreau $5,000 as an advance on rent. This was an extraordinary gesture, as Ms. Weigert’s rent was only $350 per month. No satisfactory explanation has been provided to me.

[22] I find the most probable sequence of events is that Ms. Weigert learned of Ms. Pelletreau’s interest in Ripples in September 2001. Thereafter, she encouraged Ms. Pelletreau to proceed with the acquisition, and advised her that she was willing to advance funds to her to assist in the acquisition if she were given the right to rent a chair at the salon. Ms. Pelletreau was in need of funds to complete the purchase and renovations, and agreed to rent a chair at the new salon to Ms. Weigert at a rate of $350 per month, on condition that Ms. Weigert advance her the amount of $5,000 up front. In the event that Ms. Weigert chose to leave Catz Hair Salon, the agreement provided that her rent credit would be repaid to her at the rate of $200 per month (including interest at 6%).

[23] The arrangement worked well for both women. Ms. Weigert, as a senior hairstylist who was winding down her career, was not an especially attractive prospect for most salons. She wanted to work independently within a small salon, at a modest rent. The opportunity at Catz Hair Lair fulfilled these needs.

[24] Ms. Pelletreau, on the other hand, wanted to open her own shop, but had limited capital. She was pleased to obtain funds from Ms. Weigert, effectively interest-free, and also to have a chair in her new salon occupied by an experienced stylist, who could provide her with casual advice on managing a salon.

[25] After arranging to work at Ripples, Ms. Weigert began contacting her clients, using the list she had had printed out from the Axiom database. I find that over a course of weeks, she contacted all of her long-term clients, and that the majority of them followed her to her new location, although a number did not find the location of the new salon to their liking, and did not continue there. Only a handful of Ms. Weigert’s clients remained loyal to Axiom.

[26] Ms. Pelletreau did not acquire a printout of her clients from Axiom. She recognized that the computer database at Axiom was confidential, and did not even ask whether she could access it. She considered that to do so would be “unprofessional”. From early on in her career, however, she had maintained an address book in which she recorded telephone and address information for her regular clients. After leaving Axiom, she contacted her regular clients. Most of her clients followed her to Catz Hair Lair. Very few remained with Axiom.

[27] The loss of Ms. Pelletreau and Ms. Weigert was a severe economic blow to Axiom. There is evidence that typically, when a stylist leaves a salon, only about 30% of the stylist’s clients remain with the salon. In the cases of Ms. Pelletreau and Ms. Weigert, the proportion of clients who remained with Axiom was much smaller than that – probably less than a dozen in total.

[28] The economic effects on Axiom were significant. Ms. Pelletreau, in particular, was a strong producer, and both she and Ms. Weigert were part of Axiom’s core group of stylists. While the loss of any stylist would have adversely affected Axiom in the short term, the loss of Ms. Pelletreau was particularly damaging, given her revenue figures, and the loss of two experienced stylists at once made the damage much more severe and longer lasting than it would otherwise have been.

Were the Defendants under Fiduciary Obligations?

[29] The plaintiffs argue that the defendants had fiduciary obligations to Axiom Services Ltd., and that by contacting Axiom’s clients after going to Catz Hair Lair, they breached those obligations.

[30] With respect to Ms. Weigert, the plaintiffs argue that she had sold, as part of Axiom Services Ltd., the “customer base” of Axiom Hair Design. It is said that in being kept on as a stylist with Axiom, Ms. Weigert was in a situation in which the new owners were vulnerable to her abusing her influence.

[31] With all due respect to the able submissions of the plaintiffs’ counsel, I do not agree that Ms. Weigert assumed the obligations of a fiduciary following the sale of Axiom to McCaulley and Le. She was a mere employee (and not a particularly important one, at that) in the aftermath of the sale. She played no part in the management of the company, and exercised no supervisory role over employees.

[32] Ms. Weigert’s duties to the plaintiffs were, for the most part, simply the duties of an ordinary employee. To the extent that she had additional duties to the plaintiffs, they were defined by contract, in the Share Purchase Agreement and in the Non Competition Agreement. I reject the contention that Ms. Weigert was a fiduciary.

[33] The plaintiffs also argue that Ms. Pelletreau owed fiduciary obligations to her former employer. To the extent that the plaintiffs seek to analogize the position of Ms. Pelletreau to that of a senior manager or director, the argument must fail. Ms. Pelletreau was one of the top three stylists at Axiom, in terms of revenue, but she was neither a director, manager, nor even a “key employee” such as to attract special fiduciary duties.

[34] In saying this, I do not suggest that either Ms. Weigert or Ms. Pelletreau had no duties towards her former employer. I accept the proposition that all employees have duties of fidelity to their employers, and that some of those duties survive the employment relationship. Those duties include a prohibition against disclosing trade secrets, and may encompass other sorts of unfair dealing toward a former employer. Generally, however, such duties will not include a duty not to compete with the former employer, nor will they prohibit the former employee from attempting to woo the existing clients of the former employer: Barton Insurance Brokers Ltd. v. Irwin¸ 1999 BCCA 73, 170 D.L.R. (4th) 69.

[35] In Jostens Canada Ltd. v. Gibsons Studio Ltd., (1997) 42 B.C.L.R. (3d) 149, Southin J.A. noted (at paragraph 19) that speaking of “fiduciary duties at large” is not particularly helpful in this context, and stated (at paragraph 20) that, “Every servant and every agent owes to his master or principal duties of good faith and fidelity.” She further noted (at paragraph 24) that, “What is encompassed in the obligation of good faith and fidelity during the currency of the relationship will differ according to the circumstances of the particular parties.” This succinct statement of principles is applicable to the case at bar. In order to succeed, the plaintiff must show that particular obligations of the defendants that arose in the context of the employment relationship have been breached. Reliance on a more general, and ill defined “fiduciary duty” will not suffice.

Contractual Duty not to Compete

[36] There is not, in general, any duty on a former employee to refrain from competing with a former employer. Indeed, even express contractual terms restraining an employee from engaging in competition with a former employer are seen as restraints of trade, and unless carefully limited, will be held to be void as contrary to the public interest. On the other hand, non-competition agreements that are entered into by vendors of businesses will generally be given more scope: see J.G. Collins Insurance Agencies v. Elsley Estate, [1978] 2 S.C.R. 916.

[37] In the case at bar, the plaintiffs argue that a valid non-competition agreement was reached between themselves and Ms. Weigert at the time she sold her shares in Axiom Services. They say that in going to Catz Hair Lair, Ms. Weigert breached the agreement.

[38] I have set out the relevant terms of the agreement above, at paragraph [7]. The first paragraph of the agreement provides that Ms. Weigert must not “own, manage, operate, join control or participate in the ownership, management, operation, consultation or control of or be connected in any manner in any business which is engaged in the supply, sale and delivery of hair care and beauty services for sale to the public.”

[39] While the plaintiffs contend that I should infer that Ms. Weigert was involved in the ownership, operation or management of Catz Hair Lair, the evidence simply does not support that inference. Ms. Weigert undoubtedly lent Ms. Pelletreau money to commence her operation, but there is no suggestion that she was entitled to participate in the profits of the enterprise, nor that she had any control over its operations.

[40] The plaintiffs also argue that Ms. Weigert was involved in “consultation”, in that Ms. Pelletreau sought out her opinion on the adequacy of the electrical supply and water heater after she had purchased the salon. There is some suggestion that Ms. Weigert may also have offered an opinion as to whether Ms. Pelletreau should simply paint the salon or do more major redecorating.

[41] I do not think that these various incidental, gratuitous opinions were the sort of “consultation” contemplated by the agreement. They were not given in a professional capacity, nor were they intended to be relied upon. They certainly did not place Ms. Weigert in a position of management or control of the operations of Catz Hair Lair.

[42] On the other hand, there is no doubt that Ms. Weigert was “connected in any manner” with Catz Hair Lair, in the ordinary meaning of that phrase. The ordinary meaning must, however, be qualified by the second paragraph of the Non-Competition Agreement, which provides that: “Theresia Weigert shall be able to cut hair and provide services at another salon.” Ms. Weigert’s functions at Catz Hair Lair are fairly characterized as “cutting hair and providing services.”

[43] The plaintiffs argue that even though Ms. Weigert was allowed, under the non-competition agreement, to work as a hairstylist, the covenant did not allow her to cut the hair of clients that she worked with at Axiom. I am unable to construe the non-competition clause in that way. It does not, in its terms, place any restriction on what clients Ms. Weigert is entitled to accept in the event that she moves to another salon.

[44] I do not find any ambiguities in the wording of the agreement that compel me to consider the circumstances of the parties at the time the agreement was negotiated. If I were to take into account their circumstances, however, it would only strengthen Ms. Weigert’s position. Ms. Weigert was near the end of her career, and wanted to be able to continue to cut hair for her longstanding, loyal clients. She insisted on the limitation on the non-competition clause so that she would be able to do so. The plaintiffs, on the other hand, had little reason to fear the minimal amount of business that Ms. Weigert might take from their salon through cutting the hair of her longstanding clients: the amount of business was relatively small, and there was no certainty that the majority of Ms. Weigert’s clients would continue with Axiom in the event that Ms. Weigert was no longer there.

[45] Taking the context into account, including Ms. Weigert’s advancing age and loyalty to her long-time clients, I am unable to find that there was any intention on her part to be restricted to cutting the hair of “new” customers as opposed to her established clientele.

[46] As I do not find any infringement of the non-competition agreement, it is unnecessary for me to consider whether or not the agreement was enforceable, or whether it was unreasonably broad, and therefore void as being contrary to public interest.

The Computer Printout

[47] The plaintiffs argue that even if Ms. Weigert was entitled to work at Catz Hair Lair, she breached her duties of fidelity to the plaintiffs by taking information from their client database.

[48] The evidence is unequivocal that Ms. Weigert asked the office manager at Axiom Hair Design to print out her client list in late September or early October. Ms. Weigert was well aware that the database was confidential, and that stylists were not entitled to access it. Indeed, in her testimony, Ms. Weigert acknowledged that she had printed out a list of her clients immediately prior to the selling Axiom to Mr. McCaulley and Ms. Le, because she expected that after the sale, she would not have access to that information.

[49] The office manager testified that she gave Ms. Weigert a printout of her client list only because of Ms. Weigert’s position as her former mentor and boss. She assumed that Ms. Weigert wanted the information for an innocuous purpose, such as updating the salon’s records or sending Christmas gifts to her clients.

[50] I find that Ms. Weigert secured a client list from Axiom’s database knowing that she was not entitled to it. She then used the client list to contact her clients, and to ensure that they continued with her rather than with Axiom. In my view, the taking of the client list was nothing short of theft. Ms. Weigert knew that she had no entitlement to it, and that it was confidential. She improperly used her relationship with the office manager to obtain it.

[51] Ms. Weigert’s use of the client list was, in all material respects, identical to the use of a client list in Golden Images Management Ltd. v. Champers Enterprises Ltd., 2001 BCSC 924, although more egregious in that she secured the list improperly. Ms. Weigert is liable to the plaintiffs for her taking and using the client list.

Is Ms. Pelletreau Liable for Using her Address Book?

[52] In general, mere employees are prohibited from taking customer lists and information belonging to their former employers. They are, however, entitled to use their own resources to attempt to contact former clients after leaving an employer: Barton Insurance Brokers Ltd. v. Irwin, supra; Golden Images Management Ltd. v. Champers Enterprises Ltd., supra.

[53] The plaintiffs argue that in this case, the defendants were not entitled to contact their former clients upon leaving Axiom, because Axiom had a clear policy that clients belonged to the salon, and not to the individual stylists. They contend, therefore, that any attempt by the defendants to contact their clients after leaving Axiom violated their duties to Axiom.

[54] I have no doubt that Axiom’s stated policy was as argued by the plaintiffs. Indeed, I have heard a great deal of evidence from Ms. Weigert, Mr. McCaulley, Ms. Le, and others, to the effect that the policy of Axiom Services was that clients were clients of Axiom, not clients of the individual stylists.

[55] It seems to me, however, that such a dichotomy is not particularly helpful. It was not for Axiom, or for the stylists, to designate clients as belonging to one or the other. Clients are not property. It was for the individual customers to decide whose clients they were. Indeed, while Ms. Weigert and Ms. Pelletreau remained at Axiom, there was little sense in asking whether the customers were their clients or Axiom’s clients; they were both.

[56] With all due respect for the arguments of counsel, it does not seem to me that the question of whether Ms. Weigert and Ms. Pelletreau were entitled to contact clients after leaving Axiom can be resolved by construing the clients as the “property” of either the salon or the stylist. Rather, the question that must be asked is whether it was a term of the stylists’ contracts of employment that they would not approach their former clients after leaving Axiom.

[57] It may be that the management of Axiom had the impression that designating clients to be “clients of Axiom” as opposed to being clients of the individual stylists meant that stylists were prohibited from soliciting those clients after leaving the salon. If that was the intention, it was inadequately carried into action. Given the nature of the hairstyling industry, any intention to place such an important restraint on the ability of a hairstylist to continue his or her trade upon leaving Axiom should have been explicit, and embodied in an express agreement.

[58] I am, in short, not prepared to imply a non-competition clause into the terms of employment of Ms. Pelletreau, nor am I prepared to augment the non-competition agreement entered into by Ms. Weigert by implying more stringent provisions into her terms of employment. The mere fact that Axiom’s managers stated that clients belonged to the salon rather than to the individual stylist did not mean that stylists were bound not to solicit former clients once they left Axiom.

[59] That is not, however, the end of the matter. Ms. Pelletreau did more than simply contact clients from memory after leaving Axiom. Instead, while she was an employee of Axiom, she kept an ongoing record of client information. While I am not prepared to accede to the plaintiffs’ contention that this amounted to a theft of information, it does seem to me to be arguable that it Ms. Pelletreau’s actions breached a duty to Axiom.

[60] During an employee’s tenure with an employer, the employee owes the employer a duty of loyalty. It is not appropriate for an employee, in the course of his or her employment, to take steps to personally benefit at the expense of the employer. If the sole purpose of keeping track of client addresses and phone numbers had been to lure clients after leaving Axiom, it seems to me that it would constitute a breach of the duty of loyalty during the currency of employment.

[61] Indeed, in many employment situations, an employee would clearly be breaching his or her duty of loyalty to his or her employer by keeping track of customer information. Much, however, must depend on the nature and terms of the employee’s employment, and the expectations of the employer and employee. In my view, the question of whether or not Ms. Pelletreau acted improperly by keeping a client list must be determined by considering her purposes in keeping the information. The policies of the salon and the expectations of both Axiom and Ms. Pelletreau may assist in determining what her purposes were.

[62] I note that the duty of loyalty we are considering extends only to the period of employment. Ms. Pelletreau could not have breached the duty of loyalty by recording contact information for clients either before or after her employment with Axiom. I accept Ms. Pelletreau’s evidence she maintained an address book from the beginning of her career as a stylist and that many of the clients in her address book were clients who she served prior to joining Axiom.

[63] Unless Ms. Pelletreau’s purpose in maintaining client contact information was to benefit herself at the expense of Axiom, no breach of the duty of loyalty can be made out. Ms. Pelletreau was entitled to keep a list of client contacts, for example, for social purposes, or indeed for promotional purposes while at Axiom (Ms. Pelletreau’s pay was a proportion of the revenue she brought in to Axiom).

[64] As I understood Ms. Pelletreau’s evidence, she became friendly with many of her clients, and it is perfectly understandable that she would have contact information for them. I note that she did not keep contact information for customers who were not her regular clients.

[65] To the best of my recollection, Ms. Pelletreau was not directly asked whether or not her purpose in recording client contact information was to take custom away from Axiom in the event that she left the salon. I find that other purposes (both personal and business) are equally possible. In the absence of clear evidence to the contrary, I am not satisfied that improper motives for compiling the contact data ought to be implied.

[66] If Axiom had had a clear policy against stylists keeping contact information for clients, I might have been persuaded that an inference should be drawn against Ms. Pelletreau. On the whole of the evidence, however, I am not prepared to find that any such clear policy existed.

[67] Ms. Weigert’s evidence with respect to any policy was inconsistent. At times she said that she imposed a policy of not allowing stylists to keep contact information for clients, while at other times, she denied ever having raised the issue. Ms. Weigert was not a particularly satisfactory witness. She appeared to be more than willing to fabricate evidence whenever she thought it might put her in a more favourable light or reduce the need to endure cross-examination. I place little reliance on her evidence, which, in any event, goes in both directions on this issue.

[68] I found Mr. McCaulley, on the other hand, to be a reliable witness. He gave his evidence in a straightforward manner; without hesitation, he provided answers even when they did not advance his case. Mr. McCaulley admitted knowing that some stylists, including Ms. Pelletreau, kept books with contact information on their clients. He stated that he did not, at any time, discuss the existence of the book with Ms. Pelletreau, nor did he, prior to Ms. Pelletreau’s departure, expressly advise employees that they should not keep client contact information.

[69] In their evidence, Ms. Kohl, Ms. Pannu and Ms. Le all suggested that it was contrary to salon policy for stylists to keep contact information on their clients. I am not, however, convinced that their evidence relates to the period before Ms. Pelletreau’s departure. Ms. Kohl was a receptionist, not an office manager, prior to Ms. Pelletreau’s departure. There was no reason for her, as a receptionist, to be concerned with the issue of whether stylists were entitled to keep personal records of client contact data. Ms. Pannu was away from Axiom from 1996 to 1999, and returned as an aesthetician. Again, her concern over client contact information, particularly prior to 1999, must have been very limited. Ms. Le, while stating that there was a policy to the effect that stylists were not allowed to keep client contact information, also stated that Mr. McCaulley, rather than herself, had addressed the issue at a meeting.

[70] It may well be that Axiom now has a policy prohibiting stylists from keeping client contact information. I have no doubt that the issue of keeping contact information has been a matter of some concern since Ms. Pelletreau’s departure. I am not, however, satisfied that the salon had any such clear policy prior to Ms. Pelletreau’s departure, or that Ms. Pelletreau was ever advised of such a policy. I accept Ms. Pelletreau’s evidence that no such policy was ever communicated to her.

[71] The evidence satisfies me that many stylists did keep contact information for clients, and that while the keeping of such information was not encouraged, neither was it forbidden. What was required was that all contact information be recorded on the salon’s database, not that staff refrain from also recording it elsewhere.

[72] I find, further, that it is common practice in the industry for individual stylists to keep contact information for clients. I infer that individual stylists keep such information for a variety of reasons. In the circumstances, I am not prepared to assume an improper motive on Ms. Pelletreau’s part for keeping such information.

[73] The claim against Ms. Pelletreau is dismissed.

Ms. Pelletreau’s Counterclaim

[74] The counterclaim by Ms. Pelletreau has not been seriously pursued. It was based on a claim that Axiom had attempted to draw customers away from her by representing to them that Axiom would provide services for them at a discount from the prices that Ms. Pelletreau charged. There is no evidence to support the allegation. The counterclaim is dismissed.

Summary of Liability

[75] The claim against Ms. Pelletreau is dismissed, as is Ms. Pelletreau’s counterclaim. The claim against Ms. Weigert is allowed, on the basis that she wrongfully appropriated database information that was the property of the plaintiffs.

[76] It has been argued that Ms. Pelletreau is, as Ms. Weigert’s employer, jointly liable for Ms. Weigert’s tort. In my view, this is not a case for vicarious liability. Ms. Weigert was not an employee of Ms. Pelletreau; rather, she was an independent contractor, renting a chair in Ms. Pelletreau’s shop. Aside from vicarious liability, no basis has been put forward on which Ms. Pelletreau would be jointly liable with Ms. Weigert. Ms. Pelletreau neither participated in nor benefited from Ms. Weigert’s appropriation of the plaintiffs’ data.

Damages

[77] The evidence does not provide any method of accurately quantifying the damages caused to the plaintiffs as a result of Ms. Weigert’s wrongful appropriation of client lists.

[78] The plaintiffs suggest that the assessment of damages should begin by considering the decrease in the Axiom’s profitability after Ms. Weigert and Ms. Pelletreau left the salon. I do not find that starting point to be useful. Most of the plaintiffs’ decrease in business following the departure of the two stylists was attributable to Ms. Pelletreau’s departure rather than Ms. Weigert’s. As I have found that Ms. Pelletreau did not breach any duty to the plaintiffs, it follows that they are not entitled to any recovery for the bulk of their financial setback.

[79] The loss attributable to Ms. Weigert’s departure is better estimated by looking at Ms. Weigert’s subsequent income than by looking at Axiom’s decrease in revenues or profits. It appears that for the years 2000 to 2003, Ms. Weigert’s income was approximately $23,000 per year. Only a proportion of that amount, however, would have stayed with Axiom in the event that Ms. Weigert had not taken and used client lists when she departed Axiom. Further, by replacing Ms. Weigert with a new stylist, Axiom was able to reduce its losses, and ultimately recover from Ms. Weigert’s departure.

[80] There is some evidence to suggest that, as a rule of thumb, 30% of a stylist’s customers remain with a salon when a stylist leaves. I expect that on Ms. Weigert’s departure, the proportion would have been smaller, due to the personal loyalty and longstanding nature of her customers. As well, due to her relatively small client base, I expect that she would have been able to contact a large proportion of her clients even if she had not appropriated client lists.

[81] The circumstances of Ms. Weigert’s departure made it difficult for Axiom to mitigate its damages. She departed at the same time as Ms. Pelletreau, and gave no notice. Her departure was at a busy time of the year. In the circumstances, it seems to me that it would take a considerable amount of time for Axiom to recover from her departure.

[82] I assess the total damages suffered by Axiom as a result of Ms. Weigert’s breach of duty at $10,000. For the purposes of calculating any interest entitlement, this amount should be deemed to have been suffered at a constant rate over a period of 2 years following Ms. Weigert’s departure from Axiom.

[83] Unless there are specific factors that counsel wish to address, I would follow the normal rule that costs follow the event. Subject to further submissions by counsel, I would propose to award the plaintiffs their costs on scale 3 against Ms. Weigert; to award Ms. Pelletreau her costs on scale 3 against the plaintiffs in respect of their claim; and to award the plaintiffs their costs on scale 3 against Ms. Pelletreau in respect of the counterclaim.

[84] Should counsel wish to bring to my attention any special factors that make the proposed order as to costs inappropriate, they may do so by letter to the trial coordinator, to be brought to my attention. Any such letter should be forwarded within 30 days of the pronouncement of these reasons.

“H.M. Groberman, J.”
The Honourable Mr. Justice H.M. Groberman