The appellant in Evans was a sports agent with The Sports Corporation (“TSC”) and his contract was not renewed following the 2004-2005 NHL lockout. Mr. Evans claimed for bonus money, compensation and payment for the five-day period between when he was given his notice and the end of his contract. TSC counterclaimed, arguing Mr. Evans had breached the restrictive covenant prohibiting solicitation following his termination and, in the alternative, Mr. Evans owed a fiduciary duty to TSC which he breached when he solicited clients following his termination. TSC’s counterclaim succeeded at trial and Mr. Evans appealed.

Prior to the termination of his contract, Mr. Evans discussed his departure from TSC with certain valuable clients and contacts, and asked whether they would follow him if he left TSC. Among those he approached were Jaromir Henys and Peter Kadlecek. Mr. Henys and Mr. Kadlecek have been instrumental in developing TSC’s European connection by recruiting young players from Slovakia and the Czech Republic, and introducing them to TSC. Following Mr. Evans’ termination, Mr. Henys and Mr. Kadlecek, as well as a number of clients, left TSC to join Mr. Evans. Mr. Henys and Mr. Kadlecek supplied the majority of Mr. Evans’ new clientele.

On appeal, Mr. Evans argued the Trial Judge erred by concluding he was a fiduciary. Further, Mr. Evans argued he was not in breach of any of his duties because first, he did not directly solicit clients, and second, any applicable fiduciary obligations ended upon his termination.

Although Mr. Evans had never occupied a managerial or supervisory position, the Court of Appeal reasoned since he “was the face and voice of TSC in North America” and because he had been “entrusted with the primary responsibility for the development of these players” (at para 33) the element of vulnerability fundamental to any fiduciary relationship was present in this case. There was no undertaking by Mr. Evans to assume the obligations of a fiduciary, but the Court of Appeal stated an undertaking was not required to demonstrate a fiduciary relationship existed. Instead, the Court of Appeal concluded the existence of a fiduciary relationship “relates to the responsibilities entrusted to an employee, including an attendant power to affect the economic interests of the company” (at para 34). Mr. Evans’ solicitation of TSC’s clientele was ultimately characterized as “the appropriation of a corporate opportunity” (at para 35) for his own benefit.

The Court of Appeal in Evans effectively reversed ADM Measurements Ltd. v Bullet Electric Ltd., 2012 ABQB 150, 59 Alta LR (5th) 278 [ADM], which was discussed in the Davis LLP Summer 2012 Employment and Labour Bulletin.

In ADM, the Court of Queen’s Bench stated the element of vulnerability alone was not sufficient to establish a fiduciary relationship exists. In addition to the element of vulnerability, there must be an undertaking by the employee. ADM relied on the statement in Alberta v Elder Advocates of Alberta Society, 2011 SCC 24, [2011] 2 SCR 261 (“Elder Advocates”), that to be a fiduciary, the employee must provide an undertaking to act in the best interests of the employer (at para 30*). Evans however, restores the more expansive approach to the characterization of fiduciary duty.

On appeal, Mr. Evans cited ADM as authority for the principle that even if a fiduciary relationship did exist, his fiduciary obligations ended once he was dismissed. The Court of Appeal reversed ADM on this point as well, expressly rejecting “the view that a termination of employment will automatically relieve a former employee of ongoing fiduciary obligations” (at para 37*) and concluding that “TSC’s relatively minor breach of contract is irrelevant to Evans’ ongoing fiduciary obligations, and does not serve to relieve him of them”(at para 37*).

The Court of Appeal concluded that while Mr. Evans did not solicit business directly from TSC’s clients, he solicited clients indirectly through Mr. Henys and Mr. Kadlecek. Mr. Evans had done indirectly what he was prohibited from doing directly. Although in this case, the Court of Appeal held that indirect solicitation was a violation of fiduciary duty, its conclusion was largely based on the Trial Judge’s findings of credibility and it remains to be seen whether this particular aspect of Evans will be distinguished.