Former owner of practice allowed to remove items not included in sale, but lack of notice and rude behaviour terminated employment contract
An Ontario optometrist who sold his practice and continued to work under a fixed-term contract provided just cause for termination with insubordinate and unprofessional behaviour, the Ontario Superior Court of Justice has ruled.
Steven Frohlich was a licensed optometrist who sold his Toronto practice to Yunfan Zhang in November 2015. As part of the agreement of purchase and sale (APS), Frohlich received money as well as a one-year employment contract running from Dec. 23, 2015 to Dec. 22, 2016. The APS also listed several items of equipment and property that Zhang could keep with the practice — including specialized optometric equipment and stated that Frohlich was “to leave on the premises all chattels, fixtures, equipment and leasehold improvements and additional items specified in the APS herein...”
A few months later, Zhang installed closed-circuit security cameras in the office.
In late spring 2016, Frohlich and his wife removed several items from the clinic including folding chairs, framed pictures that were on the walls, mirrors, tools, parts, a calendar, an antique scale and toys. None of the items were listed in the APS.
Zhang met with Frohlich on June 6 and said he believed the contract of sale included all materials in the clinic. Frohlich disagreed and said that only items listed in the APS were protected.
Zhang began to lose trust in Frohlich and started to question his honesty and integrity. He also suspected Frohlich wasn’t declaring all of the income from the practice — particularly proceeds from the sale of contact lenses — due to irregular records, though they eventually agreed that Frohlich owed Zhang about $750. In addition, instead of apologizing for removing the items from the clinic without prior notice, Frohlich was confrontational, mouthed a profanity and gestured with his middle finger.
Frohlich also refused to disclose passwords to computers that were part of the sale and didn’t return the key to the office, forcing Zhang to change the locks.
On June 14, Zhang terminated Frohlich’s employment for not acting in good faith or in the best interests of the clinic, as well as theft. Frohlich claimed wrongful dismissal and that Zhang owed him for the remaining six months of the fixed-term employment contract. He also returned the items he took on June 16.
The court found that the items in question weren’t set out in the APS as equipment or inventory and the APS limited the items acquired in the sale to those specified in the agreement. Therefore, there was no theft, said the court, noting that the items Frolhich took were “items of sentimental value only and not essential to the practice of optometry.”
The court noted that “business agreements are often complex legal documents that are sometimes imprecise” so the intentions of the parties must be made clear in the contract as a whole. In this case, the APS listed the chattels of the optometry practice to be included in the sale, so it was clear the intention of both sides was not to include the items taken by Frohlich.
However, although the court found Frohlich was entitled to remove the items, it also found Frohlich’s failure to give Zhang prior notice of his intention was “inappropriate due to the potential disruption to the business.”
The court also found that Frohlich’s gestures and behaviour at the clinic in the wake of removing the items were unprofessional and Zhang found them “extremely offensive and very upsetting” with no evidence that Frohlich tried to apologize. This behaviour along with the refusal to return the office key was insubordination and it was reasonable for Zhang to have concerns that Frohlich wasn’t acting in the best interests of the optometry practice.
“[Frohlich’s] conduct in the workplace was clearly unprofessional,” said the court. “The removal of property from the business premises without notice coupled with rude and obscene gestures was insolent.”
The court determined that the removal of the items from the office without notice — although Frohlich had the right to remove them — along with the rude gestures and refusal to return the key made it impossible for the employment relationship to be viable. As a result, Frohlich’s behaviour was sufficient to provide just cause for termination of his employment before the end of its term in December 2016. See Frohlich v. Yunfan Zhang Optometry Professional Corp. (June 21, 2019), Doc. Toronto SC-16-12780-0000 (Ont. S.C.J.).