



COURT OF APPEAL FOR ONTARIO

CITATION: Singer v. Nordstrong Equipment Limited, 2018 ONCA
    364

DATE: 20180413

DOCKET: C64472

Feldman and Benotto JJ.A. and Sachs J. (
ad hoc
)

BETWEEN

André Singer

Plaintiff (Appellant/ Respondent by
    way of cross-appeal)

and

Nordstrong Equipment Limited

Defendant (Respondent/ Appellant by
    way of cross-appeal)

Jeff C. Hopkins and Kristen Pennington, for the
    appellant/respondent by way of cross-appeal

Gerald Griffiths, for the respondent/appellant by way of
    cross-appeal

Heard: March 26, 2018

On appeal from the judgment of Justice James F. Diamond
    of the Superior Court of Justice, dated October 6, 2017, with reasons reported
    at 2017 ONSC 5906.

Feldman J.A.:

[1]

The respondent terminated the appellants employment as President and
    General Manager of one of two of its divisions, the East Division, without just
    cause in December 2016. The appellant was 51 years old at the time, and had
    been employed by the respondent for 11 years, 4 years as President. He reported
    to the Chief Financial Officer of the respondents parent company, Canerector
    Inc.

[2]

The appellant brought a motion for summary judgment to determine the
    issues of reasonable notice, loss of bonus for the 2016 year that he had
    worked, loss of bonus during the notice period, and loss of benefits during the
    notice period.

[3]

The motion judge awarded the appellant 17 months salary in lieu of
    reasonable notice, as well as an amount for his bonus for 2016. The motion judge
    denied the appellants claim for his bonus during the 17 month notice period in
    2017 and part of 2018, as well as any amount for the loss of his benefits
    package during the notice period.

[4]

The appellant appeals the dismissal of his claims for his bonus and
    benefits during the 17 month period of reasonable notice. The respondent
    cross-appeals from the award of 17 months reasonable notice, saying it should
    have been between 12 and 15 months, and from the award of a bonus for 2016. It
    will be most convenient to address the two issues on the cross-appeal first.

A.

Issues on the cross-appeal

(1)

Reasonable notice period of 17 months

[5]

The respondent submits that the motion judge erred in principle by
    awarding a period of reasonable notice that is outside the reasonable range for
    an employee in comparable circumstances, and by overemphasizing one of the
Bardal
factors
[1]
,
    the character of the employment, while underemphasizing the other
Bardal
factors, such as length of service and the availability of similar employment.

[6]

The motion judge began his analysis at para. 13 of his reasons by
    reciting all of the
Bardal
factors, and instructing himself to assess
    reasonable notice in a holistic manner, without giving disproportionate
    weight to one factor over another. He was clearly alive to the very error the
    respondent alleges he committed.

[7]

Furthermore, in his analysis, the motion judge cited a passage from
Fisher
    v. Hirtz
, 2016 ONSC 4768, where Perell J. explained that a longer notice
    period is generally justified for older, long term employees who are often at a
    competitive disadvantage in securing new employment. The motion judges reliance
    on
this passage
demonstrates
    that he considered the other
Bardal
factors  age, length of service,
    and availability of similar employment  in determining the appellants
    reasonable notice period.

[8]

The motion judge also referred to the recent decision of Grace J. in
Day
    v. JCB Excavators Ltd.
, 2011 ONSC 6848 as a comparable. In
Day
, where
    a 51 year old regional business managers employment was terminated after over
    14 years, Grace J. set the reasonable notice period at 17 months. The
    respondent objects that in that case, there was evidence of poor prospects in
    the industry for re-employment at the time. However, in this case, there was
    significant evidence of the appellants attempts to mitigate and his inability
    to find a comparable position. This evidence addresses the factor of
    availability of similar employment that the respondent is concerned about.

[9]

The respondent also refers to three other cases from 1988, 2002, and
    2009, where damages based on reasonable notice periods of 14 months, 15 months,
    and 12 months were awarded respectively. It submits that those cases delineate
    the correct range as 12 to 15 months. The same submission was made to the
    motion judge. The motion judge was entitled to reject this submission, to refer
    to the
Day
case as a very recent comparable, and to apply the
Bardal
criteria as he did. I see no error in the approach taken or the result reached
    by the motion judge and no basis to intervene.

(2)

Claim for 2016 bonus

[10]

The
    appellant produced in evidence a document provided to him and other employees
    in 2009 entitled Canerector Inc. Corporate Culture, which describes the bonus
    or profit sharing plan of the parent company. The motion judge considered that
    document, other email correspondence between Canerectors operations manager
    and the appellant, and the appellants past record of receiving bonuses of
    between 3.87% and 6.02% of pre-tax profit, and found at para. 25 that:

While there was some inherent variability in Singers bonus
    payments from year to year, the language used in the Corporate Culture
    document, together with [Canerectors operations managers] responding email of
    February 8, 2013, make it clear that, as Nordstrong Easts President, Singer
    was entitled to a share of the bonus pool created by the earning of a positive
    pre-tax profit (a bonus typically falling within the 25 to 50% range).

[11]

The motion judge awarded the appellant a bonus for 2016 based on 4.634%
    of 2016 pre-tax profit.

[12]

Before the motion judge, the respondent submitted that the appellant
    should receive no bonus, on the basis that it discovered in 2015 that the
    appellant was not a good manager and that they hoped he would improve in 2016
    but he did not, and was therefore not entitled to any bonus. In rejecting this
    submission, the motion judge noted that the appellants termination letter made
    no mention of any concerns regarding his job performance. We note that in oral
    argument on the appeal, counsel advised that the appellant was not told about
    any performance concerns either in 2015 or after.

[13]

The respondent argues on appeal that the motion judge erred by awarding
    the appellant a bonus for the 2016 year because: his division was not profitable
    enough, it was underperforming, he had not created expected efficiency gains, and
    the company had denied other division heads a performance bonus in the past for
    poor performance.

[14]

By this submission, the respondent is essentially attempting to reargue
    the motion. It identifies no error of law or palpable and overriding error of
    fact by the motion judge. There is no basis to interfere with the finding of
    the motion judge that the appellant was entitled to share in the profit pool
    designated for bonuses for the 2016 year that he worked.

B.

Issues on the appeal

(1)

Claim for benefits during the notice period

[15]

The motion judge denied the appellants claim for the loss of his
    benefit package on the basis that the appellant did not prove that he suffered
    a loss. The appellant gave no evidence that he replaced the benefits during the
    notice period.

[16]

The motion judge cited no authority for this approach to the benefits
    issue. However, the law in Ontario was settled by this court in 1991 in
Davidson
    v. Allelix Inc.

(1991), 7 O.R. (3d) 581 (C.A.), where the court
    stated at p. 589:

Allelix cross-appealed against the award of damages for loss of
    benefits proposed by the trial judge relying on a line of British Columbia
    decisions. They held that the loss of benefits from termination of employment
    is limited to losses or expenses actually incurred, the sum of $6,052.97
    referred to above for which Dr. Davidson was entitled to be compensated under
    the benefit coverage: see
Sorel v. Tomenson Saunders Whitehead Ltd.
(1987), 16 C.C.E.L. 223, 39 D.L.R. (4th) 460 (B.C. C.A.),
Wilks v. Moore
    Dry Kiln Co. of Canada
(1981), 32 B.C.L.R. 149 (S.C.), and
McKilligan
    v. Pacific Vocational Institute
(1981), 28 B.C.L.R. 324 (C.A.).

Counsel for Allelix candidly acknowledged that there was
    conflicting jurisprudence on this point. In my opinion the British Columbia
    decisions do not apply in Ontario where the law is settled that a wrongfully
    dismissed employee may claim, in addition to lost salary, the pecuniary value
    of lost benefits flowing from such dismissal. This principle was referred to
    with approval by this court in
Peck v. Levesque Plywood Ltd.
(1979),
    27 O.R. (2d) 108, 105 D.L.R. (3d) 520, where Dubin J.A. said at pp. 113-14
    O.R., pp. 525-26 D.L.R.:

In a successful action for wrongful
    dismissal, an employee is entitled to damages for the breach of his contract of
    employment.

In Batt, Law of Master and Servant,
    5th ed. (1967), at p. 263 the following proposition is enunciated:

. . . in
Savage v. British
    India SS. Co.
, (1930), 46 T.L.R. 294, Wright, J., appears to have given
    the plaintiff twelve months' salary as damages because the plaintiff was
    entitled to twelve months' notice. But clearly the servant's damages ought not
    to be so limited; the master has committed a breach of contract and so all
    damages naturally flowing therefrom ought to be recoverable.

In the case of
Lawson v.
    Dominion Securities Corp
., June 30, 1977 and September 30, 1977,
    unreported, this Court held:

The recovery of lost income is not
    limited to salary. In this case the appellant conceded that pension plan
    benefits should also be included. . . . other income items should be admitted
    including contractual profit-sharing, a share purchase option, and many fringe
    benefits such as a company car, club membership, pension, disability and
    medical plans . . . McGregor on Damages (13th ed.), para. 885 at 595.

[17]

The
    respondent refers to the 2010 decision of the New Brunswick Court of Appeal in
Jean
    v. Pêcheries Roger L. Ltée
, 2010 NBCA 10, 354 N.B.R. (2d) 300 and submits
    that this court should follow that decision. The court there stated at para. 56:

[T]he method of assessing damages
    for wrongful dismissal applied in the past must undergo fine-tuning to accord
    with the principles enunciated in
Fidler v. Sun Life
and
Honda
    Canada v. Keays
. Compensation in lieu of notice must now be calculated in
    accordance with the principles that inform the assessment of all damages for
    breach of contract. The purpose of such damages is to place the aggrieved
    employee in the same position he would have been in but for the breach by the
    employer of the implied term of the contract of employment to give reasonable
    notice. Therefore, courts must focus on the loss sustained by the employee by
    reason of the employers failure to give proper notice instead of what it would
    have cost the employer had the employment continued throughout the notice
    period:
Covered Bridge Recreation Inc. v. Shurman
.

[18]

I would not accept this submission. The argument asserted by the
    respondent and accepted by the motion judge was specifically considered and
    rejected by this court in the
Davidson
decision. If the law were to be
    changed, it would have to be by a five-judge panel of the court, upon the order
    of the Chief Justice.

[19]

The motion judge erred in law by rejecting the appellants claim for
    benefits during the reasonable notice period. The appellant proved on the
    motion that the cost to replace his benefits for one year was $6,676, and is therefore
    entitled to damages of $9,458, the replacement cost of his benefits over the 17
    month notice period.

(2)

Claim for bonus during the notice period

[20]

The
    motion judge rejected the appellants claim to receive an amount to compensate
    him for the loss of his bonus during the reasonable notice period. His
    reasoning is at paras. 41-42:

The purpose of reasonable notice is to provide a terminated
    employee with sufficient time to locate comparable employment.  Historically,
    bonuses were earned and calculated at the conclusion of the defendants
    fiscal/calendar year, and no doubt granted on the basis of an employees
    positive efforts and contributions to Nordstrong Easts business.

Subject to successful mitigation
    efforts, Singers employment with the defendant would have ended in or around
    May 2018.  The purpose of the defendants incentive plan is to maximize efforts
    to generate profits.  As in
Fulmer
[
v. Nordstrong Equipment
    Limited
2017 ONSC 5529], I do not find it to be within Singers reasonable
    expectation to be able to earn a bonus for the 2017 and 2018 fiscal years while
    he searched for alternative comparable employment.

[21]

I
    agree with the appellant that the motion judge erred in law by failing to apply
    the two-part test set out by this court in
Pacquette v. TeraGo Networks
    Inc.
, 2016 ONCA 618, 352 O.A.C. 1, at paras. 30-31 for determining whether
    an employee is entitled to be compensated for the loss of his bonus as part of
    his damages for wrongful dismissal:

1)

Was the bonus an
    integral part of his compensation package, triggering a common law entitlement
    to damages in lieu of bonus?; and

2)

If so, is there any
    language in the bonus plan that would restrict his common law entitlement to
    damages in lieu of a bonus over the notice period?

[22]

Had the motion judge applied the two-part test, based on his analysis
    regarding the bonus owed for the 2016 year, he would have found that the bonus
    was an integral part of the appellants compensation package. Nor is there
    anything in the Canerector Inc. Corporate Culture document that would limit
    that right over the notice period.

[23]

The respondent submits that the appellant would have known that it was
    the companys policy not to pay any bonus to employees after their employment
    was terminated, and that this was justified by the fact that part of the
    purpose of the bonus was to incentivize employees to perform.

[24]

Although that may have been the companys
de facto
approach, it
    was not written into the document that governs the bonus payment scheme.
    Further, any bonus plan will include both an aspect of incentive, as well as an
    aspect of reward for performance, neither of which continue to apply to any
    employee who is no longer working for the employer. Nevertheless, where a bonus
    is considered an integral part of a compensation package and there is nothing
    in the bonus plan that negates entitlement to a bonus during a period of
    reasonable notice, damages for wrongful dismissal include compensation for loss
    of the bonus:
Paquette
,
at paras. 17-18; and
Lin v. Ontario Teachers Pension Plan
, 2016 ONCA
    619, 402 D.L.R. (4th) 325, at paras. 84-86.

[25]

As the motion judge erred in law, his decision on the issue of bonus during
    the notice period will be set aside and the amount claimed by the appellant,
    $166,945, will be awarded for the 17 month notice period. This amount is based
    on the average monthly value of the appellants bonuses from the two years
    preceding the termination of his employment (which were $120,000 for 2015 and
    $115,687 for 2016), pro-rated to the end of the 17 month notice period.

Result

[26]

In the result, I would allow the appeal on the issues raised by the
    appellant and dismiss the cross-appeal. The appellant is entitled to damages
    for loss of his 2016 profit entitlement, for his loss of salary during the 17
    month reasonable notice period awarded by the motion judge, and also for the
    loss of the other components of his employment compensation during the 17 month
    notice period he claims: bonus in the amount of $166,945 and benefits in the
    amount of $9,458.

[27]

I would award the costs of the appeal and cross-appeal to the appellant,
    fixed in the amount of $25,000 inclusive of disbursements and HST. As requested
    by the appellant, I would refer the issue of costs of the motion back to the
    motion judge to award based on the outcome of the appeal and on any offers to
    settle that he determines are appropriate to consider.

Released: K.F. April 13, 2018

K.
    Feldman J.A.

I
    agree. M.L. Benotto J.A.

I
    agree. Sachs J. (ad hoc)





[1]

The
Bardal
factors, which are relevant to
    determining the period of reasonable notice on wrongful dismissal, are derived
    from
Bardal v. Globe & Mail Ltd.
(1960), 24 D.L.R. (2d) 140 (Ont.
    H.C.), at p. 145.


