A recent case decided by the Court of Appeal for Ontario demonstrates the limitations of the tort of conversion for supporting an employer’s claim that its book of business was unlawfully sold to a new employer. Courts have been inconsistent about whether the tort of conversion applies to intangible things, such as a book of business, and employers may need to rely on additional legal theories to protect themselves.

In Tar Heel Investments Inc. v. H.L. Staebler Co. Ltd., 2022 ONCA 842, a business alleged that its former employee sold two books of business to a subsequent employer. The Superior Court of Justice (SCJ) found that the employee was entitled to sell one of the books of business because she owned it, but committed the tort of conversion when she sold the second book of business. On appeal, the Court of Appeal for Ontario (OCA) set aside the SCJ’s decision and ordered a new trial, expressing a number of concerns about the SCJ’s decision, including its finding that the employee owned the second book of business; the fact that the SCJ viewed the case through the lens of the tort of conversion despite judicial inconsistency regarding whether the tort applies to intangible property; the relatively few reasons the SCJ gave for finding that the employee did not owe a fiduciary duty to the former employer; and the fact that the SCJ declined to make findings on various other causes of action.

Background

While working at a brokerage firm prior to her employment with...

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