



COURT OF APPEAL FOR ONTARIO

CITATION: Groves v. UTS Consultants Inc.,
    2020 ONCA 630

DATE: 20201002

DOCKET: C67641

Juriansz, Hourigan and Thorburn
    JJ.A.

BETWEEN

Wayne Groves

Plaintiff

(Respondent)

and

UTS
    Consultants Inc.

Defendant

(Appellant)

Casey M. Dockendorff and Giovanna Di
    Sauro, for the appellant

Kumail Karimjee and Mika Imai, for the
    respondent

Heard: September 28, 2020

On
    appeal from the judgment of Justice Sandra Nishikawa of the Superior Court of
    Justice dated September 27, 2019, with reasons reported at 2019 ONSC 5605

REASONS FOR DECISION

(1)

Introduction

[1]

This is an appeal from a judgment granting the
    respondents motion for summary judgment in his action for wrongful dismissal.

[2]

The appellant raises several grounds of appeal,
    primarily arguing that the motion judge made extricable errors of law in her
    analysis of the appellant's employment contract. We are not persuaded that
    appellate intervention is warranted. Accordingly, for the reasons that follow,
    the appeal is dismissed.

(2)

Background

[3]

In November 2014, the respondent, Wayne Groves,
    executed a commercial agreement to sell the shares of 1223099 Ontario Limited
    o/a UTS Consultants ("122") to the appellant, UTS Consultants Inc.
    ("UTS"). Before the transaction, Mr. Groves had been a shareholder,
    officer, and director of 122 for many years.

[4]

Under the terms of the share sale, Mr. Groves signed
    a resignation stating that he resigned as an officer and director of 122. Mr.
    Groves also executed a release in connection with the transaction. On the same
    day, Mr. Groves entered into an employment agreement with UTS.

[5]

On September 26, 2017, UTS terminated Mr. Groves
    without cause. Mr. Groves commenced an action for wrongful dismissal and
    brought a motion for summary judgment in that action. UTS brought a
    cross-motion for summary judgment.

[6]

In granting Mr. Groves summary judgment motion,
    the motion judge found that he resigned as an officer and director of 122, but
    never resigned as an employee. She further found that both the termination
    provision in the employment contract and the release were void because they breached
Employment Standards Act, 2000
, S.O. 2000, c. 41, (
ESA
).
    The motion judge concluded that a reasonable notice period was 24 months and
    that Mr. Groves was entitled to damages, including bonus pay, which was an
    integral part of his compensation.

(3)

Grounds of Appeal

[7]

UTS raises the following grounds of appeal:

(a)

The motion judge erred by failing to interpret
    the resignation, release, and employment contract in the context of the share
    sale;

(b)

The motion judge erred in finding that Mr.
    Groves had not resigned as an employee of 122;

(c)

The motion judge erred in her interpretation of
    the release;

(d)

The motion judge erred in her conclusion that a
    reasonable notice period was 24 months; and

(e)

The motion judge erred in including bonus
    payments as part of the entitlements to which Mr. Groves would be entitled
    throughout the notice period.

(4)

Analysis

[8]

Before analyzing the grounds of appeal, it is
    essential to consider the applicable standard of review. Issues of contractual
    interpretation of non-standard form contracts of the sort at issue in this
    appeal are generally questions of mixed fact and law and are reviewable on the
    standard of palpable and overriding error. Only extricable questions of law are
    reviewed on a correctness standard:
Sattva Capital Corp. v. Creston Moly
    Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 50-52.

[9]

An extricable question of law includes the
    application of an incorrect principle, the failure to consider a required
    element of a legal test, or the failure to consider a relevant factor. In
Sattva
,
    the Supreme Court directed courts of appeal to be cautious in identifying
    extricable questions of law in disputes over contractual interpretation. The
    court recognized that it is often difficult to extricate a legal issue from the
    factual matrix, and in such cases, the alleged error is a question of mixed
    fact and law:
Sattva
, at paras. 53-54.

[10]

Many of UTS arguments advanced on this appeal
    endeavour to categorize the motion judges findings of mixed fact and law as
    extricable errors of law, in an attempt to have this court review the alleged
    errors on a correctness standard.

(a)

Commercial Context

[11]

UTS principal argument is that the motion judge
    made an extricable error in law by failing to interpret Mr. Groves employment
    contract in the context of the commercial agreement between the parties.  UTS submits
    that the motion judge erred in applying the principles enunciated in
Wood
    v. Deeley
, 2017 ONCA 158, 134 O.R. (3d) 481, without considering that the
    factual matrix at hand, being a commercial transaction, differs from a typical
    employment contract.

[12]

Relying on the Supreme Courts decision in
Payette
    v. Guay Inc.
, 2013 SCC 45, [2013] 3 S.C.R. 95, a case about the
    enforceability of a non-competition clause, UTS argues that the motion judge
    should have interpreted Mr. Groves employment contract according to the
    intention of the parties as part of their commercial transaction.

[13]

This argument is not persuasive. A fair reading
    of the motion judge's reasons makes plain that she repeatedly averted to the
    share transaction and took into account the factual matrix in her analysis. To
    the extent that UTS is advancing an argument that in the context of a
    commercial contract, the
ESA
provisions do not apply, we disagree.
    There is nothing in the
ESA
that indicates that it is inapplicable in employment
    relationships connected to commercial transactions.

(b)

Resignation

[14]

UTS submits that the motion judge erred in fact
    in finding that Mr. Groves resigned as a director and president of 122 but not
    as an employee. UTS further submits that the motion judge's failure to apply
    this court's decision in
Cosentino v. Sherwood Dash Inc.
, 2014 ONCA
    843, constituted an extricable error of law. We do not accept these
    submissions.

[15]

The motion judges finding that Mr. Groves did
    not resign was well rooted in the evidence, including an admission by UTS
    affiant on cross-examination that Mr. Groves did not resign.

[16]

We also see no error in the motion judges
    finding that
Cosentino
is distinguishable on the basis that, in that
    case, the share purchase agreement contemplated continued employment only if
    requested by the purchaser and then only for one month.

[17]

Given these conclusions, it is unnecessary to
    consider Mr. Groves alternative argument that s. 65(2) of the
ESA
renders the issue of resignation irrelevant.

(c)

Release

[18]

UTS position is that the motion judge erred in
    her consideration of the release. Specifically, it is submitted that the motion
    judge failed to properly construe the document as releasing only Mr. Groves common
    law entitlements and not his
ESA
rights. Further, UTS argues that the
    motion judge erred in law in not following
Kerzner v. American Iron &
    Metal Company Inc.
, 2018 ONCA 989, leave to appeal to S.C.C. refused, 38503
    (May 23, 2019), where this court set aside a waiver of
ESA
rights but
    did not interfere with the release of common law rights.

[19]

We note that UTS position on this issue has
    changed on appeal. Previously it submitted that the parties intended for Mr.
    Groves to waive all of his claims arising from his termination under the
    release, including
ESA
claims. Now it asserts that the release was
    intended to waive common law claims only.

[20]

Leaving aside the issue of the inconsistency in UTS
    position, this ground of appeal is fully answered by the motion judges finding
    at paragraph 66 of her reasons, where she states:

In
Kerzner
, however, the release did
    not specifically waive the employees
ESA
entitlements. In this case,
    the language of the release is broader than the provision in
Kerzner
.
    The release states that it releases and discharges "any claims" for
    "termination or severance pay" which are not common law entitlements,
    but rather entitlements under the
ESA
. Given that this violates the
ESA
,
    it is null and void for all purposes:
Cormier
, at paras. 87-88.

[21]

This was a finding of mixed fact and law that
    was open to the motion judge. We see no basis for appellate interference and
    would therefore dismiss this ground of appeal.

(d)

Notice Period

[22]

This submission may be dealt with summarily.
    Given our conclusions on the other grounds of appeal, Mr. Groves was not
    limited to notice based only on his post-sale employment period.  Therefore, we
    see no error in the motion judge's conclusion that Mr. Groves, as a 65-year-old
    with over 25 years of service, was entitled to a notice period of 24 months'
    notice.

(e)

Bonus

[23]

The motion judge awarded Mr. Groves damages for
    a pro-rata bonus for the period in 2017 when he was employed and for lost
    bonuses during the notice period from September 26, 2017 to September 26, 2019.

[24]

In so doing, the motion judge applied the
    two-step process mandated by
Paquette v. TeraGo Networks Inc.
, 2016
    ONCA 618, 352 O.A.C. 1 to determine whether an employee is entitled to
    compensation for a bonus. She first found that Mr. Groves had a common law
    entitlement to a bonus and then concluded that nothing in the bonus plan
    removed that common law entitlement.

[25]

With regard to the common law entitlement, UTS
    submits that there was no evidence that the parties entered into a bonus plan
    after 2015. We disagree. There was ample evidence to support the motion judges
    finding that the bonus plan continued beyond 2015, including Mr. Groves
    termination letter drafted by UTS, which references a bonus program during
    2017.

[26]

We also see no error in the motion judge's
    finding that the bonus was an integral part of Mr. Groves compensation. The
    evidence established that the bonus was 30 percent of his salary and was an
    incentive to ensure that Mr. Groves remained with and grew the business.

[27]

Regarding whether the terms of the plan
    disentitled Mr. Groves to a bonus, this was an issue of mixed fact and law. We
    are not satisfied that the motion judge made a palpable and overriding error in
    her analysis.

(5)

Disposition

[28]

The appeal is dismissed. Consistent with the
    parties agreement, UTS shall pay Mr. Groves his costs of the appeal in the
    all-inclusive sum of $15,000.

R.G. Juriansz J.A.

C.W. Hourigan J.A.

J.A. Thorburn J.A.


