The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A $1.346m wrongful dismissal claim against a BISX-listed insurer, rejected by the Court of Appeal, was yesterday branded by an employment law specialist as the “biggest” he has ever seen in The Bahamas.

Robert Adams, consultant attorney at Delaney Partners, who led Family Guardian’s successful defence against the action brought by a former agency manager, told Tribune Business he was unaware of such damages being sought in any other case.

“To my mind, this is the largest,” he said. “As far as I’m concerned I’ve never dealt with any claim as large as this from an individual employee. I haven’t seen anything bigger in The Bahamas, and I’ve done a fair amount of them.”

The Court of Appeal, in a June 10 verdict, rejected the breach of contract and wrongful dismissal claim by Julie McIntosh, a 26-year Family Guardian veteran, who waited until almost five years after her departure to initiate legal action against the BISX-listed life and health insurer.

Appeal Justice Stella Crane-Scott, in a unanimous verdict, noted that the dispute arose after a 2011 internal restructuring sought to transform Family Guardian’s agents and agency managers into “financial services sales representatives”.

Detailing the background to the legal fight, the Court of Appeal noted that Mrs McIntosh was hired as a Family Guardian agent on August 26, 1985, via a contract that permitted the insurer to modify the provisions relating to commission payments at any time. And her employment could be terminated by either side, “with or without cause”, via written notice.

More than two decades later, Mrs McIntosh was promoted to agency manager on January 16, 2007. The contract terms allowed Family Guardian to terminate her employment with “not less than two months” written notice, and to invoke this clause for any breaches it deemed serious.

A key term of the contract also required her to “continue operating as an agent”, and failing to do so would result in “immediate” termination. This ultimately became key when Mrs McIntosh, who was earning $450,000 per year, refused to accept the employment terms offered to her, including an altered commission structure, when the 2011 restructuring was initiated.

“On January 12, 2011, Family Guardian wrote to its agents and agency managers (including Mrs McIntosh) informing them that due to various legislative changes which had taken place in the insurance industry, it had decided to undertake certain internal restructuring,” Appeal justice Crane-Scott wrote.

“Family Guardian’s agents and agency managers were invited to agree to the terms of a proposed financial services sales representative agreement (FSSRA) under which they would operate as financial services sales representatives for a new entity, FG Insurance Agents and Brokers Ltd, which was described as a wholly-owned subsidiary of Family Guardian.”

FG Insurance Agents and Brokers was established to facilitate Family Guardian’s entry into the property and casualty (general) insurance market, but the BISX-listed underwriter ultimately decided not to pursue placing all its agents and agency managers under this entity.

However, it still decided to convert those employees into financial services representatives. Mrs McIntosh was presented with the new employment terms, and changed commission structure, on July 8, 2011, but she steadfastly refused to execute it to the exasperation of Family Guardian and the vice-president of its financial services division, Michael Adderley, given that all other agents had signed up.

He warned her via a September 5, 2011, e-mail that she was placing Family Guardian “in a precarious position” as the company could not afford to have an agent “continue to operate in this manner”. Three weeks later, Mr Adderley issued Mrs McIntosh with a termination letter on the basis that she had ceased acting as a Family Guardian agent - something that was mandated by her agency managers’ agreement.

Mrs McIntosh, in the immediate aftermath of her dismissal, gave her “sincere thanks” to Family Guardian for being allowed to work for the company for 26 years. Yet five years later she turned around and, on June 6, 2016, initiated legal action against the insurer for alleged breach of contract and wrongful dismissal.

Justice Ian Winder, though, rejected her claim for $1.346m in “special damages” representing the loss of salary and commissions over an 18-month period at the rate of $546,431 per annum, plus the loss of insurance coverage, vacation pay and “vested” pension earnings.

Noting the basis of her appeal against that ruling, Appeal justice Crane-Scott wrote: “It is obvious that underlying all three grounds is Mrs McIntosh’s opinion that she was entitled to refuse to sign the updated agents’ agreement which was presented for her signature because, having regard to its express terms, it represented an attempt by Family Guardian to unilaterally change her legal status from that of employee to that of an independent contractor.

“And, further, that by issuing the termination letter without giving notice, Family Guardian breached her agency manager’s agreement and wrongfully dismissed her.” The Court of Appeal, though, said Mrs McIntosh’s appeal seemed to be “somewhat illogical” as her contention that she was an independent contractor - as opposed to an employee - undermined the foundations of her breach of contract/wrongful dismissal claim.

“It was therefore not easy to follow why Mrs McIntosh would seek to complain that the learned judge’s finding that she was an employee and not an independent contractor was an error of law,” the Court of Appeal concluded, branding the submissions by her attorney, Trades Union Congress (TUC) president, Obie Ferguson, as “untenable”.

It added that Mr Ferguson’s submissions strayed beyond the case Mrs McIntosh pleaded in the Supreme Court, and she was now prevented from presenting new arguments before the Court of Appeal as they had never been raised in the lower court.

“Having regard to the parties’ pleadings and the evidence before him, we are satisfied that [Justice Winder] was clearly correct to find that Family Guardian’s insistence on Mrs McIntosh executing the updated agreement was not unreasonable, and that it was unreasonable for Mrs McIntosh to ‘hold out’ on signing the updated agent’s agreement when all of Family Guardian’s other agents had signed it,” the Court of Appeal found.

“As we see it, Mrs McIntosh’s refusal to ‘fall in line’ with the updated agreement was unreasonable as it would have resulted in her being accorded different treatment from the other agents. In short, the learned judge was entitled to find that Mrs McIntosh’s failure to sign the amended agency agreement constituted a repudiation of her employment contract which it could properly act upon.”

Mr Ferguson also unsuccessfully sought to introduce a letter from Colina Insurance Company, Mrs McIntosh’s current employer and Family Guardian’s main rival, in a bid to show she had suffered losses as a result of her termination.

This, too, was rejected by the Court of Appeal, which noted that she had failed to provide the Supreme Court with proof of her reduced earnings.