The Ontario Superior Court has ruled that real estate brokerage Cabin Country Realty Ltd. had just cause to terminate one of its long-time agents, citing a pattern of misconduct including verbal threats and deceptive practices.
The ruling, issued by Justice F. B. Fitzpatrick, comes after a lengthy legal dispute between the agent — H.W. — and the company, which began when the agent was dismissed in 2017.
The judgment, delivered after a trial that spanned four days of in-person hearings in Kenora, Ont., and additional written submissions, found that H.W.’s actions, which included a physical threat against the company’s broker of record and his involvement in a competing real estate transaction without company consent, were sufficient grounds for his dismissal.
The realtor filed the lawsuit against H.W. for damages arising from an alleged breach of restrictive covenants and interference in contractual and economic relations. H.W. countersued for wrongful dismissal.
Background
H.W., the former owner of Cabin Country, had been employed as an agent after selling the business to 2551965 Ontario Ltd. He had continued to work for the brokerage under an agreement that provided for an 80% commission on any sales he completed. However, relations between the parties deteriorated, culminating in H.W.’s termination in October 2017 for a series of alleged infractions.
In his ruling, Justice Fitzpatrick determined that the most serious of these infractions occurred on April 13, 2017, when H.W. and one of the owners were involved in a heated altercation at the company’s office. According to the evidence presented at trial, H.W. threatened the owner with physical violence, stating, “If you ever talk to me like that again, I am going to hit you.”
The court heard that the confrontation, which took place in front of several staff members, left the owner feeling afraid, prompting him to install security cameras at both his office and home.
“The words ‘[f]uck you’ and the accompanying threat of violence were serious acts of misconduct,” Justice Fitzpatrick wrote in his decision. “In my view, the company has just cause to dismiss him at that moment.”
Deceptive practices
In addition to the verbal threats, the court also found that H.W. had engaged in deceptive practices in relation to a property transaction involving a former client. H.W. was found to have facilitated the sale of the client’s property through a competing brokerage, Vogue Realty, while misleading the client into believing that the transaction was being handled by Cabin Country. Justice Fitzpatrick concluded that H.W.’s actions had deprived Cabin Country of commission on the sale, causing economic harm to the company.
“I do not accept (his) evidence that he was only trying to facilitate the sale of the property,” Justice Fitzpatrick stated, adding that H.W.’s conduct constituted “willful misconduct and willful neglect of duty” under Ontario’s Employment Standards Act.
Inappropriate language
Throughout the trial, H.W. maintained that his dismissal was without cause and filed a counterclaim for wrongful dismissal. However, the court rejected this argument, finding that his conduct — including his use of inappropriate language in the company’s internal communications system, Top Producer — demonstrated a lack of professionalism and disregard for company policies.
In one instance, H.W. referred to the owner as a “sniveling idiot” and a “greedy asshole” in notes accessible to all employees. Justice Fitzpatrick found these comments to be unprofessional and unacceptable, further supporting the company’s decision to terminate his employment.
“The notes speak for themselves,” the judge wrote. “I find that they were unacceptable, unprofessional, and inappropriate messages for a workplace database.”
Counterclaim dismissed
H.W.’s counterclaim for wrongful dismissal, which sought damages and severance pay, was dismissed. Justice Fitzpatrick ruled that because H.W. had been dismissed for just cause, he was not entitled to any notice or pay in lieu of notice under the Employment Standards Act.
“If I am wrong with respect to my conclusion on Issue 2,” Justice Fitzpatrick noted, referring to the finding of willful misconduct, “I would then find that (H.W.) was entitled to three months’ notice of his termination or pay in lieu thereof.”
Restrictive covenant too broad: Court
Another key issue addressed in the ruling was whether the restrictive covenants in the Share Purchase Agreement (SPA) signed when H.W. sold Cabin Country were enforceable. The covenants prohibited H.W. from competing with Cabin Country or soliciting its clients for a period of three years after his employment ended. However, the court found that the geographic scope of the non-compete clause — described in the SPA as “Northwestern Ontario” — was too broad and unenforceable.
“I agree with (H.W.’s) submission that the geographic area of non-competition, described in the SPA as ‘Northwestern Ontario,’ is too broad and ambiguous given the nature of the real estate business,” Justice Fitzpatrick ruled.
As a result, the court dismissed Cabin Country’s claim for damages related to his alleged breach of the restrictive covenants, finding that the company was not entitled to punitive damages for his post-termination conduct.
The court left the issue of legal costs open for a future case conference, noting that both sides had presented compelling arguments during the trial.
For more information, see 2551965 Ontario Ltd. v. Warkentin, 2024 ONSC 4876 (CanLII).
