Question One: Hussain, is a 66 year-old lab technician with 36 years' service. He works for Health First Ltd, located in Toronto, Ontario. Hussain was just dismissed without cause. Assuming Hussain does not have an employment contract, what would be the amount of reasonable damages he would be entitled to receive? Support your answer.
Question Two: Clayton began working for Sleep Eze, located in Newmarket, Ontario, in 1980 as a customer service manager. In 1995, Sleep Eze had Clayton and all other salespeople enter into a series of one-year agreements that stated that they could be terminated on 60 day's notice. Three years later, in 1998, the company insisted that Clayton incorporate, and from that point on, the agreements were between Sleep Eze and Clayton's incorporation. The agreements defined Clayton, and later his corporation as an "independent marketing consultant" and expressly stated that the relationship was not an employment relationship, but rather an independent contractor - principal relationship. Clayton paid for his own office space and remitted his own income taxes and workers' compensation premiums. At the same time, Sleep-Eze set prices, territory, and promotional methods and Clayton was limited to servicing Sleep-Eze exclusively. In 2003, Sleep-Eze terminated the agreement with 60 days' notice. Clayton sued for wrongful dismissal damages, alleging that he was an employee.
i. What arguments could Clayton make to support his position that he was an employee?
ii. What arguments could Sleep Eze make to support its position that Clayton was an independent contractor?
iii. Which side do you think would be successful? Your answer should be supported by relevant case law.
Question Three: Read the fact pattern below. You are the judge at the Ontario Court of Appeal. Determine whether the restrictive covenant is enforceable. Explain how you made your decision. Your decision should be supported by either a Supreme Court of Canada case or a Court of Appeal case (preferably in Ontario).
Bob Brown and Charles Corry (the "Employees") worked for XYZ Company Ltd. They sold commercial insurance to businesses. On October 18, 2007, the employees resigned and immediately began working in a similar capacity for ABC Company Ltd.
Both of the employees had written employment contracts with XYZ. The contracts contained a restrictive covenant stating the following:
In the event of termination of your employment with the Company, you undertake that you will not, for a period of 2 consecutive years following said termination, conduct business with any clients or customers of XYZ that were handled or serviced by you at the date of your termination.
The damages for any breach of this undertaking shall be a sum equal to 1 1/2 times the commission income received by you or your subsequent employer on account of business conducted on behalf of persons or businesses that were clients/customers of XYZ.
XYZ sued the employees for breach of the restrictive covenant. ABC was also named as a defendant.
On October 29, 2007, XYZ obtained an injunction preventing the employees and ABC from soliciting their customers. By that date, approximately 118 clients had moved their business from XYZ to ABC.
After a 13-day trial, the judge found the restrictive covenant in each of the employment contracts to be enforceable and ordered the employees to pay damages to XYZ of approximately 2 million dollars.
The employees have appealed to the Ontario Court of Appeal. They want the Court of Appeal to declare that the restrictive covenant is unenforceable.