The supreme court of Nova Scotia has ruled in a recent decision that Glen Carrigan, a financial advisor in Halifax, was constructively dismissed by his employer, Berkshire Securities Inc. Justice John Murphy also has ruled that no money was owed to Carrigan because the firm had already paid him more than what the court would have awarded.
Carrigan had asked for $275,000 in damages. In the end, he and his former employer walked away with a simple message: a handshake is not as good as a contract. Says Jane O\u2019Neill, a lawyer with McInnes Cooper<\/b> in Halifax who had represented Carrigan: \u201cThe decision reinforces the importance of having a clear, written agreement at the outset between advisors and their firms.\u201d
Four issues were before the court in the Carrigan<\/i> case: whether there was an agreement to pay Carrigan damages for acting in reliance on a party who failed to fulfil its obligation; if Carrigan was misled in understanding what the terms of his employment would be; if Carrigan was constructively dismissed from his job; and if he was entitled to damages.
On every issue except that of constructive dismissal, the court found in favour of Burlington, Ont.-based Berkshire, since acquired by Manulife Securities Inc. <\/b>
When Carrigan was hired by Berkshire more than a decade ago, he had opted to be paid under what was known as an \u201cassociate\u201d model, which carried more risk but offered the prospect of higher payouts. Specifically, Carrigan, in his capacity as a branch manager, received a personal commission on his own sales and 85% of the gross commissions earned by other advisors working for him. Carrigan retained an override of up to 10% on the latter.
Shortly after joining Berkshire, Carrigan\u2019s role expanded and he became regional director, with a territory encompassing three provinces. When a new management team came on board in 2001, Carrigan\u2019s role changed again. He no longer had any regional responsibility and his compensation became limited to commissions generated by his personal production as well as a mere 2% override on commissions generated by the advisors in the Halifax office.
In response to Carrigan\u2019s request for compensation for lost income under the new model, Berkshire paid him slightly more than $100,000. Their relationship ended less than a year later.
Acceptance of that money, the court found, did not prevent Carrigan from successfully claiming he had been constructively dismissed by his firm. Justice Murphy wrote in his decision: \u201cAlthough the plaintiff retained the amounts the defendant advanced as compensation, I find that he did not accept settlement terms, but rather treated them as advances or partial payments while he continued to try to negotiate. No release documentation was signed, and the defendant\u2019s view that the dispute was concluded was not shared by Mr. Carrigan.\u201d
Colin Piercey, a lawyer with Stewart McKelvey<\/b> in Halifax who had represented Berkshire, notes: \u201cThe decision confirms that the appropriate method to approach constructive dismissal is to determine whether or not appropriate notice of the change in the employment relationship has been provided to the advisor.\u201d
Carrigan however, did not get a payout as a result of the court decision. The court found that the money Carrigan would have been legally entitled to as a result of his constructive dismissal was not as much as Berkshire had already paid. Says Piercey: \u201cThe decision confirms that [advisors] are entitled to compensation in the form of appropriate notice, or damages in lieu of notice, for a change in their employment terms amounting to constructive dismissal. For firms, it points out that \u2014 provided the advisor is sufficiently compensated by payments in excess of the appropriate notice period \u2014 [they] will not be found liable for other claims for damages.\u201d \tIE<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"
Court\u2019s decision \u201creinforces the importance of having a clear, written agree-ment between advisors and their firms\u201d<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3013,3021],"tags":[],"yst_prominent_words":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/317454"}],"collection":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/comments?post=317454"}],"version-history":[{"count":1,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/317454\/revisions"}],"predecessor-version":[{"id":374160,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/317454\/revisions\/374160"}],"wp:attachment":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/media?parent=317454"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/categories?post=317454"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/tags?post=317454"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/yst_prominent_words?post=317454"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}