Executive Summary: Key Legal and Evidentiary Issues

• The dispute concerns whether unilateral changes to the plaintiff’s compensation structure constituted constructive dismissal.

• Scotia Capital Inc. asserts the changes were required for regulatory compliance, while Donna Molby alleges she was singled out and forced to resign.

• Factual conflicts and credibility issues exist regarding the nature, motivation, and effect of the imposed fee caps.

• The Court found the matter unsuitable for summary trial due to complexity, quantum of damages, and unresolved evidentiary gaps.

• The case must proceed to a conventional trial to resolve factual and credibility disputes.

• No damages were awarded at this stage; costs were ordered in the cause.

Background and facts of the case

Donna Molby, the plaintiff, brought a constructive dismissal action against Scotia Capital Inc. The case arose after Scotia, in early 2016, conducted a review of fees paid by Molby’s clients. No clients had complained, but Scotia initiated the review out of concern that some clients might have been paying unusually high costs. The review focused on pricing suitability, not on “churning” or broader investment suitability. During the review, two options were discussed: moving clients to fee-based accounts or retaining transactional pricing with caps related to return-on-assets thresholds. Because Molby’s clients resisted the fee-based model, her accounts were capped. Molby stated that this unilateral change caused a substantial reduction in her compensation, rendered the transactional model illusory, and left her with no choice but to resign in June 2016. She subsequently worked at another firm before founding OmniVita Wealth.

Molby asserted that only her book of business was scrutinized and subjected to unilaterally imposed pricing model changes. She sought damages at the upper end of reasonable notice, as well as punitive damages and compensation for loss of opportunity and increased tax liabilities. Her salary at the critical time was over $3.7 million, making the damages sought substantial.

Scotia denied constructive dismissal, asserting that the changes were required to comply with the Client Relationship Model (CRM), which was introduced by the Investment Industry Regulatory Organization of Canada (IIROC) to strengthen suitability obligations and client transparency. Scotia argued that the changes were consistent with Molby’s contractual and regulatory obligations.

Procedural history and positions of the parties

The action was commenced in 2018. There were multiple discoveries, including a third discovery in August 2025 focused on damages. Shortly before the hearing, Molby delivered a supplementary affidavit appending additional documents and summarizing expenses and losses. Scotia submitted that audits and other supporting documents remained outstanding and that, at a full trial, it may summon Mr. Djurfeldt, the former head of Scotia Capital, as a witness. Scotia sought an additional opportunity for discovery. Molby maintained that she had produced all relevant evidence and argued that Scotia had neither brought a formal application to compel production of the documents said to be missing nor sought to examine Mr. Djurfeldt under Rule 7-5 of the Supreme Court Civil Rules.

Legal framework and policy considerations

The Court set out the legal authority for constructive dismissal, citing Farber v. Royal Trust Co., Potter v. New Brunswick Legal Aid Services Commission, and other cases. Constructive dismissal arises where an employer makes a substantial, unilateral change to an essential term of the employment contract, the employee does not accept the change, and the employee resigns as a result. The Court must first determine whether the employer breached the employment contract by making a unilateral change to an express or implied term. If so, the Court must then consider whether a reasonable person in the employee’s position would view the change as substantially altering the essential terms of the contract. Minor or insubstantial changes are not enough.

The Court also considered Rule 9-7, which permits the court to grant judgment on a summary trial if the evidence allows the necessary findings of fact and it is not unjust to do so. The Court noted that summary trial is generally not suitable when there are direct, “head-on” contradictions on material issues that cannot be resolved without assessing credibility.

Analysis and outcome

Justice Sukstorf found that the plaintiff’s claims were not suitable for summary trial. The Court determined that the fair and proper resolution of the matter involved nuanced regulatory issues and the consideration of the obligations of advisers and investment firms. The plaintiff said the pricing caps imposed on her fundamentally altered her compensation structure, rendering the transactional model illusory. Scotia said the measures were regulatory in nature, consistent with the plaintiff’s contractual obligations, and left her with a genuine choice. Determining whether these changes were unilateral or contractually authorized depended on what was stated by Mr. Tiller and Mr. Djurfeldt, the options presented, and whether the changes reflected regulatory compulsion or business judgment. These disputes were credibility-laden.

Even if a breach were established, the second step of the Potter inquiry required the Court to determine whether a reasonable person in the plaintiff’s position would regard the essential terms of her contract as having been substantially altered. The plaintiff said her earnings would have been gutted by the changes, leaving her to work without pay once the thresholds were met. Scotia characterized the adjustments as consistent with industry standards and in the best interests of its clients. Assessing the magnitude and effect of the caps, the comparators used, and the viability of the transactional model required fact-finding that could not be reasonably undertaken based solely on affidavit evidence.

The plaintiff also invoked implied contractual terms that Scotia would not substantially alter her duties, responsibilities, or compensation without agreement or notice. Scotia denied breaching any such implied terms, stating that the plaintiff’s duties remained unchanged and only pricing adjustments were required. Determining whether those adjustments amounted to a fundamental breach of an implied term was fact-intensive and could not be resolved without viva voce testimony. Additional witnesses might be required on both sides.

Even if liability were clear, the damages claimed added further complexity. The plaintiff sought in excess of $3 million, including notice, punitive damages, loss of opportunity, and a tax gross-up. Scotia disputed that the plaintiff suffered any loss, citing her subsequent employment and earnings volatility. Quantifying these claims would require expert and documentary evidence not before the Court.

Applying the Inspiration Management factors, the Court found the amount at stake substantial, the matter factually and legally complex, and credibility central. The plaintiff was employed and faced no urgent hardship. To attempt summary resolution would fragment the litigation and carry a real risk of injustice.

For these reasons, the Court concluded that the record did not permit a fair application of the constructive dismissal framework at this stage. The matter must proceed to a conventional trial where credibility can be tested and evidentiary gaps addressed.

The plaintiff’s summary trial application was dismissed. Costs were ordered in the cause. No damages were awarded at this stage.