2007 BCSC 1377 Stenner v. ScotiaMcLeod

Before: The Honourable Mr. Justice R.R. Holmes

Reasons for Judgment

Counsel for the Plaintiff:	Murray L. Smith
Counsel for the Defendant, ScotiaMcLeod:	Stein K. Gudmundseth, Q.C.
Counsel for the Defendants, Vanessa Stenner-Campbell, Raymond Campbell, and Laura O’Connell	J. Geoffrey Howard
Date and Place of Trial:	December 4-8, 2006 December 11-15, 2006 January 15-19, 2007 January 22-26, 2007
	Vancouver, B.C.

BACKGROUND

[1] The plaintiff Gordon Stenner is a financial consultant and investment advisor who in November of 2002 was operating under contract and as an employee of the defendant National Bank Financial providing investment services and advice to the public.

[2] The investment services business was operated as a team within National Bank Financial, and the plaintiff’s daughter, Vanessa Stenner-Campbell, and her husband, the defendant Raymond Campbell, were investment advisors on the team, and the defendant Laura O’Connell was an administrative assistant. They were all employees of National Bank Financial, but the plaintiff alleges each was employed by him directly or beneficially.

[3] The plaintiff’s position is that the defendants Vanessa Stenner-Campbell, Raymond Campbell, and Laura O’Connell, each owed him fiduciary duties including obligations of good faith and loyalty.

[4] In November 2002 the defendants Ms. Stenner-Campbell, Mr. Campbell, and Ms. O’Connell terminated their employment with National Bank Financial without notice and moved to establish an investment team with the defendant ScotiaMcLeod, a competing financial institution.

[5] The plaintiff claims for damages, for interference with contractual relations, and an accounting and compensation for breach of fiduciary duty. Aggravated and punitive damages are also sought. A wide range of injunctive interim and permanent relief is claimed including an injunction to restrain the defendants from use of the word “Stenner” and any of the words “Investment”, “Team” or “Financial” in relation to the word “Stenner” in promotional or marketing activities; relief under s. 53.2 of the Trade-marks Act, R.S. 1985, c. T-13; and injunctive relief concerning the internet domain name “stennerteam.ca”.

[6] The plaintiff’s case is advanced on two primary grounds. The first ground is alleged breach of fiduciary duty by the defendant employees Ms. Stenner-Campbell, Mr. Campbell, and Ms. O’Connell who it is alleged when they moved to ScotiaMcLeod took confidential client information of the plaintiff. The second ground is these defendants passed themselves off as being associated with or successors to the plaintiff after leaving the plaintiff’s employ.

[7] The individual defendants deny liability to the plaintiff for any claim advanced and they seek a declaration that the plaintiff’s Stenner trademark is invalid.

[8] The position of the defendant ScotiaMcLeod is that none of the individual defendants were fiduciaries and that no defendant took any confidential information of the plaintiff and used it to solicit clients.

[9] The defendant ScotiaMcLeod’s position is that the defendants marketed themselves legally and appropriately using only their own names and that of the defendant as their employer without intent, or actually, causing any confusion amongst the public.

FACTS

[10] The defendant, Vanessa Stenner-Campbell, is 37 years of age. She worked for and with her father the plaintiff for eleven years commencing in 1991 as an administrative assistant. The plaintiff trained his daughter in regard to the way he operated his book of business which included her implementing changes to client portfolios in accordance with his instructions. The plaintiff had been successful in the use of a market sector rotation system based on his industry research for the allocation of client investments.

[11] In 1995 Ms. Stenner-Campbell accompanied her father when he moved to the firm of Midland Walwyn, which later became Merrill Lynch.

[12] Ms. Stenner-Campbell was an apt pupil, and in 1999 at age 29, she qualified as an investment advisor and was registered with the IDA. As an investment advisor she was able to deal directly with client asset allocation in mutual fund accounts, advise clients, and she was also licensed to make stock market trades in non mutual fund securities on behalf of clients.

[13] In 2000 the plaintiff moved his team from Merrill Lynch to the defendant National Bank Financial.

[14] Members of the Stenner Team that were engaged in working on the plaintiff’s Book of business were employed by National Bank Financial who paid a salary and provided employment benefits. They worked only on the plaintiff’s financial services business. This had also been the arrangement at Merrill Lynch and is an industry practice. A “Book of business” comprises the number of clients serviced by an advisor and the value of the assets of those clients invested or under administration.

[15] The defendant Laura O’Connell was paid salary by National Bank Financial but the plaintiff paid her certain expenses and bonuses directly. Vanessa Stenner-Campbell was paid a percentage of the plaitniff’s portion of the mutual fund commissions, and received all the commission from stock transactions as the plaintiff was not licensed to trade those securities.

[16] The plaintiff had since 1997 promised Ms. Stenner-Campbell that she would take over the Book of business he had developed and it was agreed in 1999 that the plaintiff would sell her half of his Book under a retirement plan at Merrill Lynch. The sale was to be for approximately $50 million in assets at a price of 1½% of that value.

[17] The sale however was not completed as Merrill Lynch refused to implement the Plan.

[18] The plaintiff and Ms. Stenner-Campbell discussed with Mr. LaChance at the time of their move to National Bank Financial the planned retirement of the plaintiff and transfer of his Book of business to Ms. Stenner-Campbell. Mr. LaChance considered that Ms. Stenner-Campbell represented the future of the business and she held the license to sell non-mutual fund securities. Without the presence of Ms. Stenner-Campbell, it is unlikely the defendant National Bank Financial would have contracted with the plaintiff.

[19] I am satisfied that, absent the commitment of the plaintiff for the sale of the Book of business to her, she would have pursued other avenues that would have allowed her to develop her own Book of business.

[20] Ms. Stenner-Campbell was an important member of the Stenner Team while at Merrill Lynch, and increasingly at National Bank Financial. She contributed significantly to the success of the Team, the increase of the Book of business, and development of goodwill generated with clients and the investing public. The defendant Raymond Campbell’s contribution was of much lesser degree, but helpful to his wife’s ability to increase the business.

[21] Ms. Stenner-Campbell and Mr. Campbell were responsible to follow up on leads generated by the plaintiff on his radio shows and seek to convert them to clients. Mr. Campbell was particularly successful in obtaining new clients from this source.

[22] Ms. Stenner-Campbell was primarily responsible for providing advice and service to clients. The high level of service she provided was reflected in the success of the Team and the goodwill associated with the growing Book of business.

[23] Ms. Stenner-Campbell was also the supervisor of the administrative members of the Team on a day by day basis. She consulted with the plaintiff on a regular basis and he was party to all significant decisions made. Ms. Stenner-Campbell had a constant presence in the office whereas the plaintiff was seldom present. The plaintiff had some health issues after 2000.

[24] The plaintiff’s primary responsibility was for marketing, research, twice weekly radio broadcasts and for periodic client newsletters. The plaintiff’s direct involvement with clients was mainly limited to a few long time clients or some of the larger investors.

[25] Ms. Stenner-Campbell had some presence on the marketing aspect of the business including co-signing client communications with the plaintiff, and she made regular appearances on his radio program.

[26] Ms. Stenner-Campbell had some input into the plaintiff’s research and she as well gained insight from the plaintiff’s research and recommendations on client portfolios. She implemented the plaintiff’s recommendations and was herself solely responsible for all non-mutual fund securities recommendations.

[27] Ms. Stenner-Campbell and Mr. Campbell developed some clients directly through referrals and persons who contacted the office without having been solicited.

[28] There was a major change in the compensation of Ms. Stenner-Campbell upon the move to Nation Bank Financial. While at Merrill Lynch as an associate advisor she was compensated, as was common in the industry, by salary from ScotiaMcLeod and a small bonus given by the plaintiff. At National Bank Financial she received 10% of the commission earned on all mutual fund securities. This was in effect 20% of the net commissions as the plaintiff received only approximately 50% of the gross, with the balance to National Bank Financial. The plaintiff however was responsible for a significant marketing expense from his larger share. All mutual fund transactions were processed through a code in the joint names of the plaintiff and Ms. Stenner-Campbell to facilitate tracking commission.

[29] Ms. Stenner-Campbell received all commissions from stock and bond transactions.

[30] The responsibilities of the plaintiff and Ms. Stenner-Campbell in the operation of the Team were divided and each relied upon the other for the overall success of the business. The plaintiff’s radio shows produced leads which Ms. Stenner-Campbell and Mr. Campbell worked on to convert to new clients. The research and investment advice of the plaintiff and the customer contact of Ms. Stenner-Campbell worked in combination to the increase in the Book of business and the goodwill of the clients.

[31] I am satisfied from the evidence that although the plaintiff’s work was mostly accomplished from his home, visits to branch offices, or at visits to client homes, he was involved in all major decisions relating to the Team. The plaintiff, and his wife Zenovia on his behalf, kept pulse on the operation of the Team, including the conversion of leads into clients, the generation of commissions, and the growth of the value of assets under administration in the Book of business.

[32] The plaintiff would receive monthly reports on commissions and assets and a Business Plan was updated on a quarterly basis. The evidence of Team members Ms. Stenner-Campbell, Ms. O’Connell, and Ms. Connaghan is that the plaintiff often would contact them regarding financial information.

[33] I agree with the observation of counsel for Ms. Stenner-Campbell that the relationship between her and her father had more of a “partnership” quality to it than one of employer-employee. The relationship reflected Ms. Stenner-Campbell’s status of “owner in waiting”, a person with an ownership interest not merely an employee.

[34] This view of the relationship has practical merit in the circumstance as the parties had agreed the Book was to be purchased by Ms. Stenner-Campbell and the Book of business was soon to be her own with the plaintiff beginning a phased retirement.

[35] The partnership-like operation of the Team would allow a smooth transition for the clients, with the plaintiff withdrawing and Ms. Stenner-Campbell’s personal contact and relationship well established.

[36] The defendant Laura O’Connell was a valued member of the Stenner Team, but her role was solely administrative. She had regular client contact but gave no investment advice. She had no managerial responsibilities.

NEGOTIATIONS FOR THE SALE OF THE BOOK

[37] The sale of his Book by the plaintiff to Ms. Stenner-Campbell and Mr. Campbell was delayed and a growing sense of frustration and irritation arose between the parties. Ms. Stenner-Campbell and her husband considered the plaintiff was delaying the sale by making changes and adding new demands. The plaintiff and his wife Zenovia Stenner felt there was a need for an expanded and detailed contract to protect and secure payment for assets and the continuing services of the plaintiff.

[38] The plaintiff professed to a distrust of the defendant Mr. Campbell and his involvement in the negotiations. The plaintiff felt that Mr. Campbell had not followed his directions on occasion and had made disparaging remarks about him to National Bank Financial management. The plaintiff had concern about his moral worthiness to advise and administer client funds because of drug use in his past.

[39] In particular the sale of the Lead List became contentious. The Lead List was a compilation of names and contact information for persons who had made inquiry as a result of the plaintiff’s radio programs. Ms. Stenner-Campbell and Mr. Campbell considered the older leads were of little value in development of new business as they were now “cold”. The plaintiff did not agree and considered the Lead List had a separate and substantial value. The Lead List did however contain the names of a few present clients and the defendants wished to avoid any possibility of another investment advisor calling upon these persons using the plaintiff’s radio show as a reference. They had therefore consistently insisted the Lead List be part of the Book that they were acquiring.

[40] The parties agreed that Justyn Stenner, the plaintiff’s son and the defendant Ms. Stenner-Campbell’s brother, would be an arbitrator and would settle the terms of sale of the plaintiff’s Book of business so the transaction could finally be completed. He gathered information and met with the parties. He succeeded in obtaining an agreement to material terms of sale, which were recorded in a document entitled “Irrevocable Agreement” dated July 8, 2002 and signed by the parties.

[41] Justyn Stenner’s evidence is that the document only represented an interim list of points agreed upon to date. The content of the document itself, its title, the fact it was signed by the parties, that it followed upon an arbitration that was to resolve the terms of sale, and that Mr. Rousseau, the National Bank Financial manager, was given a copy to show agreement had been reached for the sale, all in my view support the evidence of Ms. Stenner-Campbell and Mr. Campbell that that the document was intended to be a complete agreement and not just an ongoing process of negotiation.

[42] Mr. Rousseau was familiar with the plaintiff’s Book of business and the market value for such Books at the time. He considered the price agreed to be paid by Ms. Stenner-Campbell was “ridiculously high” and that it would “…fund Gordon’s retirement by mortgaging Vanessa’s future.” [Ex. 5, Tab 20 & 23]

[43] In the process of drafting a formal agreement of sale following the Irrevocable Agreement of July 8, 2002, the plaintiff continued to require changes to the sale contract, some of which were onerous and contrary to the prior irrevocable agreement. An example was that the defendants provide a mortgage on their home to secure their obligations. The plaintiff became upset when Ms. Stenner-Campbell and Mr. Campbell would not accept all the additional terms proposed, and it appears negotiations ended when Ms. Stenner-Campbell and her husband would not discuss extending the date for completion to March 30, 2003.

[44] The plaintiff gave essentially two reasons which lead to his decision, announced on October 31, 2002, that he was rejecting a sale to Ms. Stenner-Campbell and Mr. Campbell, and that he would instead sell the Book of business to Eric Muir, a National Bank Financial investment advisor working at a different branch.

[45] The first reason involved an alleged repeated refusal of the individual defendants to provide him copies of the Lead List and client related documents, despite repeated requests. The second reason was that Ms. Stenner-Campbell was opening new client accounts in her name alone.

[46] It would appear the plaintiff had a copy of the Lead List in March 2002 as his wife Zenovia was attempting to “shop” (sell) the List at that time. The evidence of Ms. Stenner-Campbell and Mr. Campbell is that in response to the plaintiff’s requests for copies of the Lead List, it was provided not only for him but also given to the Branch manager of the National Bank Financial and to Justyn Stenner in his role as an intermediary. Justyn Stenner denied he was given a copy.

[47] The plaintiff made repeated requests from June to September of 2002 for a large amount of client documentation that the individual defendants considered he intended to use for purposes of “shopping” his Book of business and therefore contrary to his agreement to sell to them.

[48] Ms. O’Connell said she printed out the information and gave it to Ms. Stenner-Campbell. I accept that she did. Ms. Stenner-Campbell said she left it for pick-up but that it was not picked up by the plaintiff and it was not in fact “discovered” until sometime in November 2002.

[49] I conclude that Ms. Stenner-Campbell did not consider the plaintiff should be given the documentation as he intended to use it to facilitate a sale of the Book to someone other than herself; its delivery was delayed and it was left in the National Bank Financial manager’s office.

[50] I accept that the second issue regarding the opening of new accounts in Ms. Stenner-Campbell’s name was satisfactorily explained on the evidence of Mr. Rousseau, Ms. O’Connell, Ruby Smith and Ms. Stenner-Campbell. A change of procedure required the “Know Your Client” portion of the electronic account opening document had to be filled in by the responsible investment advisor. The plaintiff was not adept at the use of computers and he was seldom in the office. The opening of the accounts in Ms. Stenner-Campbell’s name did not affect the plaintiff’s income as the commissions were recorded in the Joint Account. It is obvious however that the effect of the procedure would impact the value of the plaintiff’s Book of business as the asset values would not be recorded in his name.

[51] I accept it was not the intent of Ms. Stenner-Campbell to appropriate clients to herself in any manner or to lessen the total value of the Book she was to purchase. She was obviously not “stealing” the accounts secretly as the monthly accounting reports contained the assets under management growth allocations. The applicable commissions were recorded to the appropriate joint account. The defendants were always ready to pay the Book of business’s total value inclusive of the accounts opened in Ms. Stenner-Campbell’s name.

AGREEMENT FOR SALE OF THE BOOK OF BUSINESS TO Ms. Stenner-Campbell

[52] On October 31, 2002 the plaintiff advised National Bank Financial, and in turn National Bank Financial advised the individual defendants, that he was not completing sale of the Book to Ms. Stenner-Campbell and Mr. Campbell, but would be selling it to Eric Muir. His negotiations with Muir were without prior notice to the defendants.

[53] The plaintiff sought to have Mr. Campbell fired and to that end delivered a letter to Mr. Rousseau making serious allegations against Mr. Campbell. [Ex. 5, Tab 32-Oct 31/02 letter]

[54] Mr. Rousseau was not satisfied that any of the allegations were true, however he immediately suspended Mr. Campbell, cancelled his computer access, and he did not work thereafter at the office.

[55] The plaintiff’s desire to sell his book to Eric Muir had the immediate effect of terminating the existing arrangements of Ms. Stenner-Campbell and Mr. Campbell’s employment, including their supervision of administrative Team employees, serving clients, and their commission income.

[56] The plaintiff advised that commission income would cease but did not otherwise discuss Ms. Stenner-Campbell’s or Mr. Campbell’s possible options, which was left to the National Bank Financial manager Mr. Rousseau as their employees.

[57] Mr. Rousseau discussed Ms. Stenner-Campbell and Mr. Campbell’s options on two occasions. He said Mr. Campbell would be terminated without cause and he outlined four options for Ms. Stenner-Campbell. She could:

(a) seek an arrangement with Eric Muir;

(b) acquire a portion of the Book, and build her own business,

(d) join another firm and compete for clients.

[58] In regard to making some arrangement with Eric Muir the plaintiff had not made that a condition of sale. Ms. Stenner-Campbell did meet with Mr. Muir but no specific offer was forth coming. It was clear Mr. Muir envisaged that her role and compensation would be significantly reduced.

[59] The suggestion she could acquire a portion of the Book was never a viable option. The plaintiff was not prepared to sell her a portion of the Book, and he had never discussed that with Mr. Muir.

[60] The severance payment was less than two months’ earnings and the condition upon it totally unacceptable as it would prevent her obtaining any suitable employment in the financial services industry.

[61] Ms. Stenner-Campbell’s only viable option was to join another firm, solicit clients from National Bank Financial, and compete. I accept her evidence that Mr. Rousseau had on different occasions identified this option to her despite his evident that he does not presently recall. The tenor of the correspondence [in Ex. 5, Tabs 48, 50, 54 and 58] support Ms. Stenner-Campbell’s evidence.

RELOCATION TO SCOTIAMCLEOD

[62] Ms. Stenner-Campbell and Mr. Campbell first met with ScotiaMcLeod on November 4, 2002 after they had been advised the plaintiff was selling his Book of business to Eric Muir. Mr. Keegan was advised of the defendants’ negotiations with the plaintiff to purchase the Book of business and the notice by the plaintiff that he was selling to Mr. Muir. ScotiaMcLeod was aware of the role of the plaintiff and the defendant parties in regard to the Book of business and its development, and the arrangements regarding the Team operation.

[63] Ms. Stenner-Campbell and Mr. Campbell represented to Mr. Keegan they could successfully recruit a substantial number of the clients of National Bank Financial to move to ScotiaMcLeod.

[64] Mr. Keegan asked Ms. Stenner-Campbell to provide what would be some documentary evidence to prove the value of the plaintiff’s Book of business, and she complied. ScotiaMcLeod then agreed to pay $400,000 as a “signing bonus” to have Ms. Stenner-Campbell relocate to ScotiaMcLeod.

[65] Administrative members of the Team at National Bank Financial, Ms. O’Connell and Jody Connaghan, were then approached by ScotiaMcLeod with offers for employment which were accepted, and they followed Ms. Stenner-Campbell in the move to ScotiaMcLeod. They were advised to keep their new employment secret and not to give notice to National Bank Financial. ScotiaMcLeod instructed no files or documents relating to employment negotiations be kept.

[66] The evidence does not support the allegation that Ms. Stenner-Campbell organized and encouraged the staff members of the Team to leave National Bank Financial and to join her at ScotiaMcLeod, and that this deprived the plaintiff of the needed support staff to operate the business. I accept that their continued employment after the planned transition of the Book to Mr. Muir was not guaranteed and they had been advised by National Bank Financial that they should consider other available employment opportunities.

[67] Ms. O’Connell had been deeply offended by the plaintiff’s treatment of her regarding a minor work incident and she felt a personal loyalty and comfort to Ms. Stenner-Campbell with whom she had primarily worked.

[68] Ms. Stenner-Campbell and Mr. Campbell resigned from National Bank Financial on November 15, 2002 without any advance notice. They began to solicit clients immediately thereafter. They had been advised by ScotiaMcLeod to keep their new employment secret and not give advance notice and suggest that this is the standard practice in the industry and a procedure followed by both National Bank Financial and ScotiaMcLeod in their lateral hires. It was the way that the plaintiff and Ms. Stenner-Campbell moved to National Bank Financial from Merrill Lynch two years previously.

[69] In my view the plaintiff, Mr. Rousseau of National Bank Financial, and Eric Muir, as experienced members of the industry, must have anticipated that the individual defendants would locate with another firm and solicit the former clients. The action of the plaintiff in rejecting any sale of his Book of business to the defendants left them with no other viable economic option. The reason Ms. Stenner-Campbell was at National Bank Financial was to have ownership of the Book of business transferred to her.

ALLEGED PRE-RESIGNATION CONDUCT

[70] The plaintiff alleges that the individual defendants, prior to their departure from National Bank Financial on November 15, 2002, engaged in document and data theft, system sabotage and implemented a “scorched earth” policy, leaving the plaintiff’s business in a shambles. The plaintiff alleges confidential client information was removed from computers, records and files copied, files intentionally misplaced and computer data manipulated, altered or destroyed.

[71] I am of the view that the parties and persons closely allied to them were all capable by reason of varying degree of animosity capable of what might be termed “dirty tricks” to gain an advantage or make the other to appear to have acted improperly. Suspicion in these circumstances must be subordinate to proof.

[72] It is alleged that on November 13, 2002 at 9:43 a.m. the Lead List was sent by e-mail transfer from the computer used by Mr. Campbell at National Bank Financial offices to Ms. Stenner-Campbell and Mr. Campbell‘s home computer and then deleted from the office computer. It is not likely to have been Mr. Campbell who sent the e-mail as he had been suspended and barred from computer access. The plaintiff alleges it was Ms. Stenner-Campbell who authored the transfer as she would have password access through her husband, and it was the evidence of Justyn Stenner that he had actually seen her at Mr. Campbell’s computer on the date and at the time in question as he was present to join her for breakfast.

[73] Ms. Stenner-Campbell denies she used Mr. Campbell’s computer, but said she worked at her own. She denies she was meeting Justyn for breakfast.

[74] The evidence of Mr. Martin is the e-mail could have been created and back dated. The date of the e-mail could have been changed. The evidence is that the passwords of the departing employees were left at the computers and available to the plaintiff and other employees and persons who attended to assist him. I also note that there is no evidence that any person on the voluminous Lead List was ever contacted by the individual defendants or anyone on their behalf. Proof of what was transferred, what was deleted, when and by whom is lacking.

[75] Another allegation of the plaintiff was that the individual defendants or Ms. Connaghan had worked on and created the first client solicitation letter while still employed in the National Bank Financial office. The evidence was said to be an icon found on a desktop screen of the computer used by Ms. Connaghan and a hard copy of the letter found on the desk. Ms. Connaghan denies the screen icon was on her computer when she left. Mr. Martin was not able to examine the document linked to the icon. The hard copy of the letter was not found by Zenovia Stenner until after an electronic copy had been received by Justyn Stenner from a client named Baker.

[76] I do not believe that Ms. Connaghan would work on a letter of that import at an open work station, place an icon on her computer to identify it, and leave a hard copy on the desk. I do not find the evidence supports the allegation.

[77] All client information and data was kept on the National Bank Financial computer system. There is no evidence that any of this client information was altered, deleted, or tampered with in any manner.

[78] In the case of Ms. Gill, a client, I accept her evidence to that of the defendant Mr. Campbell. Ms. Gill was told by Mr. Campbell that her file was at ScotiaMcLeod however she saw no actual file documents there. Her file contents were found at National Bank Financial. Mr. Campbell either misled Ms. Gill or he had taken a copy of the file.

[79] The evidence of Ms. Stenner-Campbell is that the client list taken on leaving National Bank Financial was the list she maintained at her home. She had maintained a Personal Client List at her home prior to joining National Bank Financial with full knowledge and approval of the plaintiff. Ms. Stenner-Campbell said she created an excel spread sheet to create a client contact List of names, addresses, telephone and e-mail information. The defendants deny any confidential client information was used.

[80] The client List used by the individual defendants in their mailings and contact of clients was sorted by value of client assets. Ms. O’Connell also had a List of the top 50 clients by asset value which she said was taken by mistake but these top clients could have been reconstructed as being in the top 50 clients from the individual defendants’ memories as they were all familiar with them.

[81] There was also evidence Ms. O’Connell could not explain the source for a National Bank Financial account number she had placed on a blank transfer form. There is little evidence that client account numbers were used in solicitation and I conclude any account number taken was accidental and there was no attempt to use account numbers to enhance the solicitation of clients.

[82] The defendants began telephone solicitation of clients immediately over the weekend following their departure from National Bank Financial on Friday, November 15, 2002. The following week they were able to organize a mass mailing to clients soliciting their business including a blank transfer form requiring a signature to authorize transfer of their account to Ms. Stenner-Campbell at ScotiaMcLeod. The defendants then made follow up telephone calls and e-mails, and a second mass mailing was made in December. This process, in general terms, was one of a well-established pattern in the financial investment industry when financial advisors leave one company to join another and solicit clients to transfer their business.

[83] The plaintiff was required to immediately respond in order to preserve and defend his Book and it was his evidence he was hampered by having no advance notice of the defendants’ departure, the fact all the administrative staff had left, and there was alleged computer sabotage and difficulty in locating certain business and client records. There is no question the situation was difficult for the plaintiff and an extraordinary effort was required in response to the defendants’ attack on his Book.

[84] The plaintiff however overstates his case. The plaintiff must have known the probability was the defendants would leave for another financial institution. His sale of the Book of business to Mr. Muir without any attempt for some adequate provision for continuation of the defendants’ involvement would leave them without a reasonable option and lead to a predictable result.

[85] Mr. Rousseau anticipated that the business would be solicited. The plaintiff lost the services of Ms. O’Connell and Ms. Connaghan, administrative members of the Team, but had the services of a group of family, friends and co-workers to help oppose the defendants’ solicitation of his Book. The plaintiff’s wife, Zenovia, Justyn Stenner and his wife Kimberly, Marilyn West who had been a former member of his team at National Bank Financial, staff of National Bank Financial, and Mr. Muir and two of his assistants, all assisted the plaintiff.

[86] I am satisfied that in the campaign for the clients both the plaintiff and the individual defendants were not above use of half-truths, innuendo, and misleading information.

[87] The managers of the National Bank Financial and ScotiaMcLeod each tried to control their respective employees and have them act in a responsible manner, but misinformation was disseminated to clients or entered into the marketplace. Ms. Gill testified Mr. Campbell advised her that the plaintiff suffered from Alzheimer’s disease, which was not true. He testified he was speaking about his own father and not about the plaintiff, and that Ms. Gill misunderstood. I do not accept that Ms. Gill was confused or mistaken about what Mr. Campbell told her.

[88] Ms. Stenner-Campbell and Mr. Campbell advised several of the clients that the plaintiff was “retiring” or “transitioning out of the business”. In my view they were choosing words that were “half truths” in that they contained an element of truth but were not an entirely accurate explanation.

[89] The plaintiff’s intent was to withdraw from aspects of the business in order to concentrate on others. He was not going to be involved in the aspect of direct customer contact as a financial advisor, but was going to focus on marketing and research. He was likely intending to lessen his work load and responsibilities with leaving the industry, or retiring, still reserved to a future time.

[90] The plaintiff and Justyn Stenner also engaged in making allegations of misconduct prior to their leaving National Bank Financial against Ms. Stenner-Campbell and Mr. Campbell, including that they had sabotaged computers, removed or destroyed computer files, removed client information, improperly withheld recording customer business. Most of the allegations have not been proven. The plaintiff and Justyn Stenner told clients that Mr. Campbell had been fired, implying termination for cause. That was untrue. National Bank Financial was Mr. Campbell’s employer and although the plaintiff tried to have them fire Mr. Campbell they refused to do so.

[91] Ms. Stenner-Campbell and Mr. Campbell complain that the plaintiff was telling people that they had “tricked” clients into transferring to ScotiaMcLeod which might have been a view held by the plaintiff, but is a coloured description of his real complaint, which is that some clients might have been confused and thought the plaintiff had moved to ScotiaMcLeod, or that Ms. Stenner-Campbell was the successor to the plaintiff’s business.

TRADE NAMES

[92] “stennerteam” was a domain name registered in 2000 and renewed in 2002 while Ms. Stenner-Campbell was with the Stenner Team at National Bank Financial. The domain name was used in the directory in those years.

[93] Ms. Stenner-Campbell took her husbands surname, Campbell, upon marriage but for business purposes used “Stenner-Campbell”.

[94] Ms. Stenner-Campbell on joining ScotiaMcLeod adopted the appellation “Stenner/Campbell” to represent her and her husband. Ms. Stenner-Campbell was registered with the Investment Dealers Association under the name Stenner-Campbell and ScotiaMcLeod’s compliance department required she desist in use of the “Stenner/Campbell” designation. The use of Stenner/Campbell was however continued in much of the defendant’s advertising.

[95] Mr. Keegan instructed Ms. Stenner-Campbell not to remove any proprietary information from the plaintiff but took no steps to monitor her adherence to the instruction. ScotiaMcLeod did not ensure the domain name registered by the Stenner Team at National Bank Financial was not appropriated by her. Mr. Keegen received financial records of the plaintiff’s Book performance dating back to his time at Merrill Lynch. They were not documents or information used to solicit clients.

[96] The plaintiff had a long history of promotion of his financial services through the use of a radio show. The plaintiff had been highly successful in converting leads from the radio show into clients and it was probably the largest single source of new business in building his Book.

[97] Ms. Stenner-Campbell realized the value of radio advertising and in January 2003 made arrangement to host a radio show on the same radio station as the plaintiff. In March 2003 the plaintiff sold his Book of business to Eric Muir with a term of sale that the plaintiff continue his radio show for a period of time.

[98] The plaintiff alleges the conflict in Ms. Stenner-Campbell using the “Stenner” name in advertising and promotion caused Mr. Muir to cancel the plaintiff’s radio show.

[99] The plaintiff in the action commenced against the defendants in January 2003 included a claim of passing-off by use of the name “Stenner”. The plaintiff applied on January 21, 2003 for registration of the name “Stenner” as a trademark in the financial services industry based upon his use of that name in the industry from December 1988. The plaintiff tendered extensive evidence in support of the registration and the trademark was registered on May 16, 2005 [Ex. 4, Tab 129]. The material in support of the application indicated the plaintiff had spent over $8,000,000 in advertising including Reports, Bulletins, advertisements in community and local newspapers, magazines and directories, as well as for television and radio. The plaintiff in the period in question had written a book entitled “Stenner on Mutual Funds”, and articles and feature stories on him had been published in national financial newspapers and business journals. The plaintiff to the time of his application had made more than 1900 appearances on radio or television programs.

[100] The plaintiff’s son Thane Stenner is also a financial advisor. In 2003 he made an applicator to the Office of Trademarks for the name “The Stenner Group” in the financial services industry. His application was rejected in October 2003 because of the plaintiff’s use of the name Stenner since 1988. Ms. Stenner-Campbell was aware of her brother’s failure to obtain registration.

[101] The defendant Ms. Stenner-Campbell specifically seeks a declaration of invalidity of the plaintiff’s trademark pursuant to the Court’s jurisdiction under s. 52.3 of the Trade-marks Act (the “Act”). She alleges by the provisions of s. 18 of the Act the registration is invalid:

(a) as it was not registerable at the date of registration;

(b) the trademark is not distinctive as the time proceedings bringing validity into question were commenced;

[102] In respect of name based trademarks they must have gained a secondary meaning by their usage and reputation. Registration will be allowed where the trademark has “become distinctive at the date of filing an application for registration.” [Section 12 (1) (a) of the Act]

[103] The trademark must have become known to consumers as associated with one particular source, and not one used by others. [Tommy Hilfiger Licensing Inc. v. Produits de Qualité I.M.D. Inc. (2005), 37 C.P.R. (4th) 1, 2005 FC 10]

[104] The plaintiff, at the time of filing his application for trademark, was using the name “Stenner/Muir Team” and he was the Stenner referenced. The unregistered name “Stenner” had been in use since 1988 and the evidence of Messrs. Bergen and Deans was they associated the use of the name “Stenner” to mean the plaintiff.

[105] I do not have the evidence of Thane Stenner and have no way of knowing what use he claims or if any use he did make might then have been a passing-off or infringement of unregistered trademark.

[106] The manner of use by defendants of the trademark “Stenner” I have found constituted passing-off and that the use by the defendants of the name “Stenner” did cause confusion when all surrounding circumstances inclusive of those delineated in s. 6(5) of the Act.

[107] The plaintiff denies any intent to abandon the trademark. He has suggested it could be used, sold or licensed but he has apparently not taken steps to do so for three years. I assume this lawsuit accounts in part for the delay to date. I would expect the plaintiff’s risk of losing the trademark if not used will post- judgment spur him to use of the trademark if he intends to retain it. I decline to declare the trademark in the circumstances to be invalid at this time.

CLIENT ASSET TRANSFER TO SCOTIAMCLEOD

[108] The value of client assets transferred from National Bank Financial to ScotiaMcLeod was recorded by Ms. Stenner-Campbell as approximately $14 million as of August, 2003 which is a time when most transfers would have been completed. There are of course many reasons contributing to client turnover when a sale of the Book occurs. Some clients will inevitably leave as they do not wish to follow the purchaser. In circumstances present here some clients would not wish to be embroiled in controversy between the plaintiff and defendants.

[109] On December 31, 2002 the plaintiff signed a Letter of Understanding for sale of his Book of business to Mr. Muir for 1.3% of the Book’s asset value as of December 31, 2002. That was estimated to be about $61 million, subject to some adjustments as of June 30, 2002. The plaintiff in addition was guaranteed a marketing fee of $200,000 plus entitlement to commissions on any new business resulting from his radio show and for sales that he personally generated.

[110] Mr. Rousseau tried to secure a smooth transition of the plaintiff’s Book to Mr. Muir but a cumulative concern for an inability of the plaintiff to follow direction and to work satisfactorily with him led him to terminate the plaintiff on February 3, 2003, with notice, from his employment with the National Bank Financial.

[111] It appears that as a result of the plaintiff’s termination by National Bank Financial and the plaintiff’s wish to host a radio show for another investment advisor, Mr. Muir did not close the transaction on the terms of the December 31, 2002 Letter of Understanding, but he remained willing to pay 1.3% of the asset value of the Book of business plus payment for other specified services. I do not however have Mr. Muir’s guidance in respect to those matters.

[112] National Bank Financial, Mr. Muir and the plaintiff ultimately resolved their several differences in an agreement of March 5, 2003. It provided that Muir pay 1% of the value of the Book on March 1, 2003 adjusted as of November 3, 2003.

[113] National Bank Financial paid the plaintiff $91,330 and forgave a disputed Entrepreneurial Account deficit of $62,000. The plaintiff was to receive payment for radio shows of $7,500 a month, for eight months, but he only completed and was paid for six.

MARKETING EFFORTS OF MS. STENNER-CAMPBELL

[114] Ms. Stenner-Campbell has been hard-working and highly successful in building her Book of business at ScotiaMcLeod.

[115] Ms. Stenner-Campbell started with one radio show in January 2003 and that has now increased to four. The leads from these shows are her primary source of new business. She has also spent considerable sums of money on print media advertising mostly in community newspapers and publications.

[116] Ms. Stenner-Campbell has also presented and organized many investment seminars and has provided many client mailings. She has shown strong marketing skills and her client service and reputation is of a high level.

PASSING-OFF

[117] The evidence is that the plaintiff after November 18, 2002 until his retirement in June 2003 conducted business under the trade name of the “The Stenner/Muir Team” at National Bank Financial. The plaintiff has not continued in business since June 2002 when he retired.

[118] The plaintiff has some health impairment and he is no longer licensed to sell mutual funds or securities. He has not been licensed to sell securities, apart from mutual funds, for many years. The plaintiff testified he intends to get back in business and his license is “available”. The history of this matter, however, coupled with the plaintiff’s age and health concerns make his return unlikely.

[119] Ms. Stenner-Campbell since her separation from Mr. Campbell in late 2006 has used her birth name Vanessa Stenner for business purposes. That appellation identifies a specific “Stenner” and is now unlikely to confuse. The prior use by her of “Stenner/Campbell” and “Stenner-Campbell” however did not provide a specific identification of the name “Stenner” and could well generate confusion.

[120] The potential for confusion is heightened significantly by the circumstances here where there are three family members: father, son and daughter, all financial advisors operating independent businesses in a small geographical area. The potential to mislead is also exacerbated by all using the same advertising media extensively.

[121] The clients of the plaintiff’s Book at National Bank Financial might have been confused by use of the “Stenner” name in the sense of thinking that the “Stenner” of the National Bank Financial affiliation had left, retired, or that the defendants were successors to his business. These persons were, however, receiving letters from both Ms. Stenner-Campbell and the plaintiff. Most would therefore be well aware that Ms. Stenner-Campbell had left the National Bank Financial and that the plaintiff had remained.

[122] The use of “Stenner/Campbell” and “Stenner-Campbell” in both the print media and spoken on radio shows could give rise to confusion varying with a person’s prior experience and the context in which the name was used.

[123] I conclude the defendant’s were aware of the potential for confusion, they knew of the significant association in the financial industry and the community that the name “Stenner” referred to the plaintiff, and they appreciated there was a benefit to be derived from use of the name. If specific individual identity was the goal, Ms. Stenner-Campbell would have incorporated her Christian name, Vanessa, much earlier.

FIDUCIARY DUTY

[124] It is the plaintiff’s position that the defendants, although nominally employed by National Bank Financial, were members of the Stenner Team of financial advisors, which gave rise to their owing him fiduciary duties. Ms. Stenner-Campbell and Ms. O’Connell had been members of the Stenner Team at Merrill Lynch and Mr. Campbell joined the team after they had moved to National Bank Financial.

[125] The existence of a fiduciary duty is not grounded in contract but arises from the relationship between a fiduciary and a principal. The duty arises from the principal’s dependence and vulnerability and the ability of the fiduciary to exercise power unilaterally. [Frame v. Smith , [1987] 2 S.C.R. 99]

[126] In Hodgkinson v. Simms, [1944] 3 S.C.R. 377 at 415, Mr. Justice La Forest succinctly observed that: “At the heart of the fiduciary relationship lie the duel concepts of trust and loyalty.”

[127] The plaintiff urges that in the determination of whether a fiduciary duty was owed by Ms. Stenner-Campbell, Mr. Campbell, and Ms. O’Connell, their relationship should be examined on principles applicable to an employer or an agency relationship.

[128] It is of import, however, that the defendants were not employees of the plaintiff. The plaintiff and the individual defendants were all employees of National Bank Financial. National Bank Financial was added as a party by the plaintiff without a claim to relief. National Bank Financial did not wish to take action against the defendants, nor is the plaintiff an assignee of any rights against the defendants that National Bank Financial may have.

[129] The relationship here between the parties is unusual in that they are co-employees of National Bank Financial, their common employer. The relationship must therefore be considered with care.

[130] The basis for the relationship between Ms. Stenner-Campbell and the plaintiff at National Bank Financial was to facilitate the sale and transfer of the plaintiff’s Book of business to her. Ms. Stenner-Campbell was motivated in self-interest to maintain and increase the Book pending completion of the sale to her and was concurrently preparing for a smooth transition of the Book to her.

[131] Ms. Stenner-Campbell was the senior investment advisor at the White Rock office. The only other investment advisor was Mr. Campbell, her husband. She supervised and administered matters for the Stenner Team on a daily basis. She was remunerated from commission income on client transactions and was actively engaged serving the existing clients and following leads to new clients generated by the plaintiff’s radio and marketing activity. She was licensed for non-mutual fund trades, the plaintiff was not. Ms. Stenner-Campbell was an important member of the Stenner Team.

[132] The plaintiff operated mainly from his home and he basically left office management to Ms. Stenner-Campbell while he concentrated his efforts on research and marketing, as well as personally dealing with several personal clients who were “top clients” by asset value. He travelled to Branch offices in the Fraser Valley and on Vancouver Island to personally service those high asset value investors. The plaintiff’s research and recommendations were implemented by the defendants with the clients in respect of portfolio recommendations.

[133] In this fashion, division of duties between the plaintiff and Ms. Stenner-Campbell operated in a partnership-like manner. The evidence however is the plaintiff was considered “the boss”.

[134] The plaintiff had some health issues but I do not consider the whole of the evidence to show that he was vulnerable to the defendant’s unilateral exercise of power in their shared working arrangement. The plaintiff, or his wife on his behalf, was in constant communication with the White Rock office. There were no decisions of significant consequence to the business made without his approval. He was involved in forecasting, setting goals, and kept advised of the progress of the business. It appears the defendants all considered and treated the plaintiff as the active head of the Stenner Team.

[135] Consideration of the many factors germane to whether a fiduciary relationship existed invites a comparison of Ms. Stenner-Campbell’s responsibilities to those of the branch manager in RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc., 2003 BCSC 1773 (“RBC”), who was held not to be a fiduciary of his employer despite being responsible for the day to day operation of the branch; for hiring and coaching investment advisors, supervision, employee discipline, ensuring regulatory compliance, branch budgeting and local advertising.

[136] The branch manager was not a fiduciary as he had little direct involvement in formulation of company policy, was not in a position to effect the economic interests of the employer at the branch level, and neither he nor his employer intended that the relationship would have a fiduciary character.

[137] I conclude that analysis of the defendant Stenner-Campbell’s position on the Stenner Team was of importance but not of the character that would make her a “key” employee as that description has been viewed in cases following upon Alberts et al. v. Mountjoy et al. (1977) 16 O.R. (2d) 682 (H.C.J.) and impose fiduciary duties upon her. She was of course not an employee of the plaintiff at all and her employment with National Bank Financial did not invoke any special fiduciary duties upon her.

[138] The defendants’ position here is that even if they were fiduciaries they would still be entitled to solicit the clients. In Coin-A-Matic (Pacific) Ltd. v. Saibil (1986), 12 C.P.R. (3d) 33 (B.C.S.C.), a senior employee owing a fiduciary duty to his employer was allowed to solicit where the solicitation of employer’s customers was only a part of a solicitation of the public. In my view, the law has moved beyond any restriction that solicitation of the public alone is allowed.

[139] The law in this province supports that a direct solicitation of an employer’s customers by a former fiduciary employee is permitted. In Canadian Aero Service Ltd. v. O'Malley, [1974] S.C.R. 592, Mr. Justice Laskin quoted from a decision of the Arkansas Supreme Court [Raines v. Tomey, 313 S.W. 2d 802 (Ark. S.C., 1958)], that would allow direct solicitation (at 614):

… They cannot while still corporate fiduciaries set up a competitive enterprise ... or resign and take with them the key personnel of their corporations for the purposes of operating their own competitive enterprises ... but they can, while still employed, notify their corporation's customers of their intention to resign and subsequently go into business for themselves, and accept business from them and offer it to them ... but they can use in their own enterprise the experience and knowledge they gained while working for their corporation ... They can solicit the customers of their former corporation for business unless the customer list is itself confidential.

[140] In 57134 Manitoba Ltd. v. Palmer (1989), 37 B.C.L.R. (2d) 50 (C.A.) at 55, Justice of Appeal Esson referred to the quotation by Laskin J. and commented “I do not suggest that Laskin … adopted the statement of the law but, on the other hand, I cannot read his judgment as rejecting it.” Esson J.A. opined that fiduciaries may be permitted to compete or solicit customers of a former employer if they did so fairly.

[141] The issue of direct solicitation has since arisen in the context of several injunction applications where the view of Esson J.A. was taken into account. [Alnor Services Ltd. v. Sawyer (1990), 21 A.C.W.S. (3d) 995, [1990] B.C.J. No. 1452 (S.C); CIBC World Markets Inc. v. MacDonald, 2000 BCSC 503; Wilson Consultants Ltd. v. Twohig, 2002 BCSC 930]

[142] In Barton Insurance Brokers Ltd. v. Irwin (1999), 63 B.C.L.R. (3d) 215, 1999 BCCA 73, Hall J.A. notes with approval the view of Esson J.A. in Palmer, supra, that solicitation might have been permissible if done fairly (at ¶31).

[143] At present it appears that the recent decision in RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc., 2007 BCCA 223 (“Merrill Lynch”), suggests that a fiduciary may compete, but not unfairly, has been even further refined. Madam Justice of Appeal Southin held the law protects an employer’s goodwill and property “…by holding that the servant may not take away confidential documents and trade secrets.”

[144] The law has therefore evolved so a former fiduciary employee may solicit his former employers’ clients if the person does so without taking away and using confidential documents and trade secrets.

[145] In Visscher Holdings Inc. v. Intercoast Lumber Ltd., [1987] B.C.J. No. 786 (S.C.) Mr. Justice Toy considered the reference made by Laskin J. to Raines v. Toney and found it supported the view that “…the present state of the law does not dictate a complete prohibition against solicitation unless there is conduct that can be characterized as "unfair" on the part of the former employee.”

[146] The trend of these several references to the issue appear to have in this province consistently supported the policy so well articulated in Barton, supra, at ¶39-40 that:

… the general interest of the public in free competition and the consideration that in general citizens should be free to pursue new opportunities … requires courts to exercise caution in imposing restrictive duties on former employees in less than clear circumstances. ...

In certain circumstances, which I think would be relatively rare, a former employee of less than senior management or directorial status might be found subject to a fiduciary duty for instance a "key employee" finding might serve to found such a duty. But I do not believe that courts should be easily persuaded to find that ordinary employees would be subject to such continuing duties. …

DOCUMENTS USED FOR SOLICITATION

[147] Ms. Stenner-Campbell kept a personal client list on her home computer in a spread sheet format that could be periodically updated. The list originated when she worked with the plaintiff at Merrill Lynch. She kept such a list with full knowledge and approval of the plaintiff.

[148] The list contained client contact information including names, addresses, telephone numbers and e-mail addresses. The original computer disc used at ScotiaMcLeod for contact and solicitation was unfortunately lost or not retained and the list on her home computer was destroyed in a computer malfunction.

[149] The personal possession of a client list, invariably kept on a computer so it may easily be accessed, updated, and the data manipulated electronically if needed is a standard practice of financial advisors. It is acknowledged in the industry that one of the reasons for maintaining a personal client list is if a rapid change in firms should occur.

[150] In Merrill Lynch, supra, at ¶82 the client interest is described:

… an advisor should be able, without fear of litigation, to prepare a list of his own book of business from the records of the brokerage house. To hold in the 21st century that an advisor, who usually, by considerable personal diligence, has built up a book of business, must rely on his memory for the full names, addresses, telephone numbers and e-mail addresses of his clients, is not, in my opinion, in the interests of the clients and, therefore, is not in the public interest.

[151] The plaintiff argues that Ms. Stenner-Campbell, as a departing advisor, would not be entitled to take more than the contact information for her own Book of business. That parameter has application to limit the departing employee to clients with whom there was a relationship and thus permitting the client their right to choice of continuation. Here, Ms. Stenner-Campbell, as well as the plaintiff, had a relationship that encompassed all the clients and dated back many years, and predated the move to National Bank Financial.

[152] In the unique circumstances here there was only one Book of business with the plaintiff and the defendant each having a relationship with clients while working to complete a transition of the “Book” from the plaintiff to Ms. Stenner-Campbell by sale. I conclude Ms. Stenner-Campbell was entitled to make use of the personal client list in the contact and solicitation of the clients of the business.

[153] There were documents other than Ms. Stenner-Campbell’s personal client list which were taken by the defendants when they left. Ms. O’Connell said she inadvertently removed a list of the Stenner Team’s top 51 clients. I accept it was not done intentionally. The list was one created monthly from the National Bank Financial computer data, and used to service the clients. The document was not the plaintiff’s, and although it should not have been taken, it is a matter for National Bank Financial to deal with.

[154] It appears the document was used in solicitation but I accept that who the top 51 clients were was known to the individual defendants and they could have easily been identified. Any use of that feature of the document was of little impact.

PASSING-OFF AND TRADE MARK INFRINGEMENT

[155] The plaintiff claims that the defendants, Ms. Stenner-Campbell and Mr. Campbell, in marketing their business activities to the plaintiff’s clients and members of the public as the “Stenner-Campbell Team” and the “Stenner-Campbell Investment Team”, were passing themselves off as the plaintiff or his successor; alternatively the defendants marketed their activities to the plaintiff’s clients and members of the public in a manner calculated to lead the plaintiff’s clients and members of the public to believe the defendants offer the plaintiff’s services, or that they are the successors to the plaintiff.

[156] The common law action for passing-off protects the goodwill associated with a trade-mark or trade name. A person operating a business has a proprietary right to an established name. The property is business or goodwill that would be adversely affected by the representations of another person using the name to gain the benefit of that goodwill.

[157] Fridman in his text “Torts” at paragraph 21.66 describes goodwill:

Goodwill in law is a broad concept that means the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force that brings in custom.

[158] Fridman goes on to describe, at paragraph 21.70, the passing-off action:

The essence of passing-off is the representation of the defendant’s goods as being those of the plaintiff. One way this may occur is if the defendant uses a name which resembles that of the plaintiff: or gives the impression that the plaintiff is involved in the business of enterprise. Indeed even the use of one’s own name may be enjoined by injunction on the grounds of passing-off, if confusion results or is calculated to result from such use.

[159] Ciba-Geigy Canada Ltd. v. Apotex, [1992] 3 S.C.R. 120 requires that to succeed in a passing-off action, the plaintiff must prove “the existence of goodwill, deception of the public due to a misrepresentation and actual or potential damage to the plaintiff”.

[160] The plaintiff applied for trademark registration of the name “Stenner” and it was accepted for registration. Klar in “Remedies in Tort”, Carswell Volume 3 at page 19-16 describes one difference in an action of trade mark infringement to an action for passing-off:

An action for infringement of a registered trade mark under the Trade-marks Act differs from one in passing off, as registration of a trade mark creates an exclusive right to its use. An action will lie for improper use of a registered trade mark as soon as it is registered and the plaintiff need not prove that the mark was known to anyone in the market, whereas in a passing off action it is essential that the plaintiff prove that the mark, name or get-up was known and recognized generally in the market. .

[161] There is no doubt the plaintiff had acquired a reputation and goodwill in connection with financial services going back to 1988. Certainly the plaintiff had a de facto monopoly as of November 2002 over the Stenner name in the financial services industry, and that was confirmed de jure January 21, 2003 when the plaintiff applied for and was later granted a statutory trademark.

[162] The grant of the trademark by the Registrar of Trademarks provides proof that the plaintiff had a reputation and goodwill associated to his name Stenner in the financial services industry and that its use by others would mislead the public and cause the plaintiff damages. In addition the evidence of Messrs. Bergen and Deans was that it was well known within the financial services industry that use of “Stenner”, “Stenner Team”, and like combinations were associated with the plaintiff.

[163] I am satisfied that Ms. Stenner-Campbell and Mr. Campbell were well aware of the goodwill created in the Stenner name by the plaintiff. They had expected its benefit as part of their planned purchase of his Book of business. They knew generally of the many years and millions of dollars spent by the plaintiff advertising and promoting his business in the industry under the name Stenner. They appreciated an advantage to having “Stenner” in their business name.

[164] Ms. Stenner-Campbell and Mr. Campbell represented in several ways directly and impliedly that there was a connection or association with the plaintiff. They used the domain name “stennerteam” in their website and advertising. Stenner Team was a name used by the plaintiff for many years, and the domain name was registered in 2000 and renewed in 2002 well prior to the defendants leaving National Bank Financial. It had been used in the business at National Bank Financial.

[165] Ms. Stenner-Campbell and Mr. Campbell first chose and used the business name “Stenner/Campbell” and were later directed to change it by the ScotiaMcLeod compliance department to “Stenner-Campbell”. “Stenner/Campbell” implies there are two persons, one of whom is “Stenner”. It did not reflect Ms. Stenner-Campbell’s married name, the name previously used by her in business, nor the name on her license to sell securities, all of which were “Stenner-Campbell”. The change continued the use of the word “Stenner” in a context that could cause confusion that Ms. Stenner-Campbell was associated in some manner with the plaintiff’s business or goodwill.

[166] Solicitation letters by the defendants to the Stenner Team clients at National Bank Financial implied a link between the Stenner Team at ScotiaMcLeod and the Stenner Team at National Bank Financial. I doubt however that after the full series of correspondence to clients by the parties was concluded an existing client would have any doubt in the matter.

[167] The use of the name “Stenner “ in radio broadcasts on the same station the plaintiff had long used, and in advertisement in newspapers and print media used by the plaintiff, exacerbated the possibility for confusion in reference to the usage of the name “Stenner”.

[168] The defendants raise the “same name defence” claiming an entitlement of Ms. Stenner-Campbell to use her family name Stenner. The use of “Stenner” in combination with “Campbell” however does not make the use permissible as it is not a full and distinctive identification of a person which has been held to require use of full Christian names. [Biba Group Ltd. v. Biba Boutique, [1980] R.P.C. 413 (Eng.)]

[169] It is to be noted that Ms. Stenner-Campbell ‘s brother, Thane Stenner, was refused permission to trademark the name “Stenner Group” because of the usage by the plaintiff of the name Stenner in the industry since 1988.

[170] ScotiaMcLeod is liable for the actions of their employees, Ms. Stenner-Campbell and Mr. Campbell. ScotiaMcLeod was aware of the issue of the use of the name “Stenner”, or were wilfully blind to it, and failed to effectively monitor and supervise the defendants’ advertising and solicitation materials.

[171] Mr. Keegan of ScotiaMcLeod was well aware of the name and reputation of the plaintiff in the financial services industry and ScotiaMcLeod did benefit financially in commission income from its misuse by the defendants in obtaining business. There was laxity by Mr. Keegan and ScotiaMcLeod in supervision of the use of “Stenner” in radio and print media and promotional materials.

[172] The ongoing disregard for the infringement of the plaintiff’s entitlement to protection of the name “Stenner” was dramatically illustrated during the course of trial when a telephone call was placed to Ms. Stenner-Campbell’s office at ScotiaMcLeod and was answered by the receptionist as “The Stenner Team”. I accept that was by employee misunderstanding and was not what had been instructed, but more diligence is needed.

DAMAGES

[173] The plaintiff seeks damages in respect of the passing-off claim on the basis of an accounting of profits or an assessment of damages, with a choice before entry of judgment.

[174] The plaintiff calculates the defendants’ gain to trial to total approximately $11 million and additionally seeks reference to a Registrar for each of the ensuing five years for an accounting of profits earned each year attributable to the current Book of the defendants in accordance with the trial decision in RBC, supra.

[175] The plaintiff suggested, correctly, that it is difficult to assess the damages consequent upon the tort of passing-off but suggests the plaintiff’s goodwill associated to the Stenner name and any ability to sell the trademark has been seriously diminished by permanent loss of market share. Counsel suggests that the measure of damages to the plaintiff would be the $8 million spent over the years on promotional costs.

[176] The plaintiff’s valuation of damages assumes the defendant to have not met the burden of proving that any gain is unrelated to the breaches of fiduciary duty and passing-off or that any amount should be deducted from their gains to date by reason of apportionment. [Bayer Aktiengesellschaft v. Apotex Inc., [2001] O.T.C. 2 at ¶12-17]

[177] I am of the view that if an accounting for profits is the appropriate remedy it must be apportioned to reflect Ms. Stenner-Campbell’s achieved success in the growth of her Book of business largely for reasons unrelated to any connection to the plaintiff.

[178] An award of remedy by accounting of profits is a compensatory one, not punitive [Apotex, supra at ¶12]. Profit not causally related to infringement of the plaintiff’s rights would not be compensatory [Apotex, supra at ¶15]. This requires that the Court “…may have to apportion … profits between those that were caused by the infringement and those that were not” [Apotex, supra at ¶16].

[179] The burden with respect to apportionment is expressed by the Court in Apotex, supra at ¶23 as:

The result of these cases is that, in order to demonstrate that its profits from the infringing sales should be apportioned, the defendant must point to non-infringing elements which contributed to the marketability of the product. The profits to which the plaintiff is entitled are limited to the contribution of the plaintiff's patent to the overall value or marketability of the entire product. If the defendant fails to prove that its non-infringing contribution contributed to the profits, it is liable to the plaintiff for the entire amount.

[180] Ms. Stenner-Campbell has forged strong relationships with her clients based on service, good advice and her personal involvement. She is recognized in her own right as a top producer and she is very successful in her work. It is obvious Ms. Stenner-Campbell, who now uses her birth name Vanessa Stenner, attracts and holds her clients not because of any association to the plaintiff or prior relationship to his business, but because of her own reputation and standing in the financial services industry.

[181] The passing-off of which the defendants are guilty of was due to the creation of some confusion regarding the reference to “Stenner”, and that has diminished greatly over time. It would be absurd to suggest that Ms. Stenner-Campbell’s clients sought her out, purchased her services, and have continued with her as advisor on the basis of a reference to “Stenner” in her name. The defendant Ms. Stenner-Campbell, prior to leaving National Bank Financial, had a relationship with clients which they would recognize and would not be mislead or confused.

[182] The passing-off effect has much diminished over time. Initially the “Stenner/Campbell” designation used was the most seriously misleading; the change to “Stenner-Campbell”, made some improvement, and the present name of Vanessa Stenner, which is her full family and Christian name which she has used since separating from Mr. Campbell, I do not find objectionable. Unfortunately as noted there are apparently still lapses when “Stenner Team” or the like has been used.

[183] I consider to achieve a compensatory award here it would be just and appropriate for an award to be based on an accounting to apportion 10% of the defendants’ gain to trial as causally related to the passing-off that occurred. Accepting the plaintiff counsel’s calculations of approximately $11 million to date of trial, an award of $1.1 million is indicated.

[184] In addition I would allow an accounting yearly for a further five years based on an apportionment reduced from 10% to 5% of the present value of Ms. Stenner-Campbell’s Book of business.

[185] I would assess damages for the plaintiff’s loss of goodwill and trademark value as a result of the passing-off by the defendants at not more than $1 million. The $8 million historical expenditure on promotion has been largely recouped by concurrent benefits. I found nothing in the evidence to indicate the trade mark name had any significant independent value. There is no indication the plaintiff has even attempted to market the name. There is no evidence of the plaintiff of any fall in value that can be specifically related to the passing-off. The plaintiff has not used the trade mark to effect, or perhaps at all, in the last few years.

PUNITIVE DAMAGES

[186] The plaintiff’s claim against ScotiaMcLeod for punitive damages is dismissed. I do not find Mr. Keegan induced the defendants to breach their fiduciary duties, to remove confidential documents, or that there was any failure of supervision of the personal defendants which could be considered arrogant, high handed or reprehensible.

[187] Ms. Stenner-Campbell was entitled to the use of her personal client contact list information used on leaving National Bank Financial. The document provided by Ms. Stenner-Campbell to Mr. Keegan to confirm the size of the plaintiff’s Book of business worked on by her was perhaps proprietary but it was not information used in the solicitation of clients.

[188] I have found ScotiaMcLeod did not supervise the individual defendants’ advertising and other use of the name “Stenner” as closely and effectively as ought to have been done but I do not consider the circumstances require condemnation by the Court. [Whitten v. Pilot Insurance Co., [2002] 1 S.C.R. 595]

[189] Ms. Stenner-Campbell and Mr. Campbell were stubborn in their continued usage of the “Stenner” name. It is understandable that Ms. Stenner-Campbell wished to use her family name of Stenner. She was proud of her name, had started and worked for her father under the Stenner banner, and her brother was also a Stenner in the financial services industry. Had she incorporated the use of her Christian name or another descriptive choice earlier the serious consequences of a passing-off action might have been avoided.

[190] I do not find an award of punitive damages is merited in present circumstances. In context I do not find the conduct of the individual defendants in regard to their actions in the passing-off claim to be arrogant, high handed or reprehensible and they do not meet the standard of conduct requiring strong condemnation as dealt with in Whitten, supra.

RESULT

[191] The action against the defendant Laura O’Connell is dismissed.

[192] The application for declaration of invalidity of trademark is dismissed.

[193] There will be judgment against the defendants ScotiaMcLeod, Ms. Stenner-Campbell, and Mr. Campbell, with costs, for the tort of passing-off with judgment as indicated upon election by the plaintiff as to an accounting or an assessment of damages; a permanent injunction from the continuation of the name “stennerteam.ca” and transfer by assignment or otherwise of the internet domain name “stennerteam.ca” to the plaintiff; and the return of any proprietary documents held.

[194] The application for an injunction restraining each of the defendants from using the word “Stenner” and any of the words “Investment”, “Team”, or “Financial”, or derivatives thereof, in relation to the word “Stenner” in any promotional or marketing activities is too broad in its scope. The word “Stenner” may for example be qualified to allow for an acceptable use by modification with a Christian name or names as I have indicated in regard to the name Vanessa Stenner.

[195] The parties have liberty to apply in the event they require further reasons to enable entry of judgment.

“R.R. Holmes, J.”
The Honourable Mr. Justice R.R. Holmes

Citation:	*Stenner v. ScotiaMcLeod,*
	2007 BCSC 1377