



COURT OF APPEAL FOR ONTARIO

CITATION: O'Reilly v. IMAX Corporation, 2019 ONCA 991

DATE: 20191217

DOCKET: C66591

Strathy C.J.O., Doherty and Sharpe JJ.A.

BETWEEN

Larry OReilly

Plaintiff (Respondent/

Appellant by way of cross-appeal)

and

IMAX Corporation

Defendant (Appellant/

Respondent by way of cross-appeal)

M. Catherine Osborne and Justin Tetreault, for the respondent/appellant by way of cross-appeal

Trevor Lawson and Brandon Kain, for the appellant/respondent by way of cross-appeal

Heard: November 1, 2019

On appeal from the
    judgment of Justice Mario D. Faieta of the Superior Court of Justice, dated January
    25, 2019, with reasons reported at 2019 ONSC 342, 52 C.C.E.L. (4th) 50, and
    supplementary reasons, dated February 21, 2019, with reasons reported at 2019
    ONSC 1239, 52 C.C.E.L. (4th) 85.

Strathy C.J.O.:

[1]

This appeal concerns an issue that is being litigated with increasing
    frequency: the entitlement of a wrongfully dismissed employee to exercise stock
    options, receive bonuses, or take advantage of other aspects of his or her
    compensation package during the reasonable notice period.
[1]


[2]

In this case, the employer, IMAX, contended that the terms of the employees
    stock options and restricted share units (RSUs) prevented them from vesting
    after the date he was dismissed without cause. The motion judge rejected this
    submission, finding that the options and share units continued to vest during
    the reasonable notice period and that the employee was entitled to damages for the
    loss of the opportunity to exercise them.

[3]

The employer appeals to this court, arguing that the language of these incentive
    agreements resulted in their cancellation on the effective termination date. It
    submits that the relevant contractual language is substantially the same as that
    in
Kieran v. Ingram Micro Inc.
(2004), 189 O.A.C. 58, leave to appeal
    refused, [2004] S.C.C.A. No. 423, in which this court found the employees
    options had been cancelled as a result of his dismissal.

[4]

The employee cross-appeals, claiming the motion judge erred in
    calculating his damages for the loss of the options and RSUs.

[5]

For the reasons that follow, I would dismiss both the appeal and the
    cross-appeal.

I.

Factual Background

[6]

The respondent, Larry OReilly, had been employed for 22 years with IMAX
    Corporation when he was dismissed as President, Institutional and Strategic
    Sales and Executive Vice President, Sales, on January 4, 2016. The termination was
    to be effective March 31, 2016.

[7]

His compensation package included a base salary, commissions, group
    benefits, and participation in both a Long Term Incentive Plan (LTIP), which
    included both RSUs and stock options, and a Stock Option Plan (collectively, the
    awards). The terms of the relevant plans are set out below.

[8]

After unsuccessful attempts to negotiate a severance package, IMAX extended
    the effective termination date from March 31, 2016 to July 8, 2016. It advised
    Mr. OReilly that any awards that had already vested could be exercised for up
    to 30 days after the latter date. Any awards that had not vested as of that
    date would be cancelled and forfeited without any consideration.

[9]

Mr. OReilly brought an action for wrongful dismissal. The parties
    agreed that the issues could be dealt with by summary judgment.

II.

The Motion Judges Reasons

[10]

The motion judge found that the respondent was entitled to damages,
    calculated on the basis of 24 months reasonable notice, together with all
    commissions outstanding at the date of termination. The judge also determined
    the respondents damages for wrongful dismissal, including the damages for lost
    opportunity to earn commissions on sales during the reasonable notice period,
    the pension contributions that would have been made during that period, and the
    value of benefits lost during the notice period.

[11]

None of these conclusions is subject to appeal.

[12]

The remaining issue was the respondents claim that the awards were a
    fundamental part of his compensation and that he was entitled to damages for
    the lost opportunity to exercise the awards that would have vested during the
    reasonable notice period.

[13]

The motion judge concluded that the respondents damages for the loss of
    the awards should be calculated on the basis of what would have probably
    happened had he remained employed until the end of the notice period. He noted
    that the respondent had exercised his options in the past and that he therefore
    would likely have done so in this case, had his employment not been terminated.

[14]

The motion judge found that the language of the relevant awards was not
    sufficient to cancel the respondents entitlement to exercise the awards or to
    remove his entitlement to damages for their loss. He was therefore entitled to
    damages for the loss of the right to exercise the RSUs and stock options that
    would have vested during the reasonable notice period.

[15]

The appellant appeals this aspect of the judges order.

[16]

Having concluded that the respondent was entitled to damages, the motion
    judge was tasked with determining when the respondent would have exercised his right.
    The motion judge accepted the respondents evidence that he would have
    exercised the options at the earliest possible opportunity. However, as there
    were corporate policies that restricted the timing of the sale of the shares,
    he directed the parties to deliver further submissions on when the resulting
    shares would have been sold. Having received and heard those submissions, the
    motion judge issued supplementary reasons, calculating damages on the basis
    that the respondent would have sold the shares that vested during the
    reasonable notice period five months after their vesting date.

[17]

This determination is the subject of the cross appeal.

III.

The Contractual Provisions

[18]

The LTIP contained provisions for the award of both RSUs and stock
    options:

RSUs under the LTIP

This Agreement sets forth the general terms and conditions of
    Restricted Share Units (RSUs). By accepting the RSUs, the Participant agrees
    to the terms and conditions set forth in this Agreement and the IMAX 2013 Long
    Term Incentive Plan (the 
IMAX LTIP
).

4.
Termination of Employment Generally
.
    In the event that the Participants employment with the Company terminates for
    any reason other than death, Disability or for Cause, the RSUs shall cease to
    vest and any unvested RSUs shall be cancelled immediately without consideration
    as of the date of such termination. Any vested RSUs shall continue to be
    settled on the applicable Settlement Date.

5.
Death; Disability
. If the
    Participants employment with the Company terminates as a result of the
    Participants death or Disability, a portion of the RSUs shall vest such that,
    when combined with previously vested RSUs, an aggregate of 50% of the RSUs
    granted pursuant to the Agreement shall have vested. Any vested RSUs shall be
    settled on the applicable Settlement Date and any unvested RSUs shall be
    cancelled immediately without consideration as of the date of termination.

6.
Termination for Cause
. If the
    Participants employment with the Company terminates for Cause, any outstanding
    RSUs, whether or not vested, shall be cancelled immediately without
    consideration as of the date of termination, and the
Participant
    shall have no further right or interest therein.

Stock Option Grants under the LTIP

This Agreement sets forth the general terms and conditions of
    Options. By accepting the Options, the Participant agrees to the terms and
    conditions set forth in this Agreement and the IMAX Corporation Long-Term
    Incentive Plan (the 
IMAX LTIP
).

(5)
Termination of Employment Generally
.
    In the event that the Participants employment with the Company terminates for
    any reason other than death, Disability or for Cause, the Options shall cease
    to vest, any unvested Options shall immediately be cancelled and revert back to
    the Company for no consideration and the Participant shall have no further
    right or interest therein. Any vested Options shall continue to be exercisable
    for a period of thirty (30) days following the date of such termination;  To
    the extent that any vested Options are not exercised within such period
    following termination of employment, such Options shall be cancelled and revert
    back to the Company for no consideration and the Participant shall have no
    further right or interest therein.

[19]

A separate Stock Option Plan provided for the award of stock options in
    addition to those provided under the LTIP. The relevant provision stated as
    follows:

Stock Option Grants under the Stock Option Plan

7. Termination of Employment, Consulting Agreement or Term of
    Office

(a) In the event that a
Participants
employment,
    consulting arrangement or term of office with the
Company
or one of
    its
Subsidiaries
terminates for any reason, unless the
Board
or the
Committee
determines otherwise, any
Options
which have
    not become
Vested Options
shall terminate and be cancelled without any
    consideration being paid therefor. [Emphasis in original.]

IV.

Analysis

A.

Standard
    of review

[20]

The respondent concedes the appellants
    submission that the applicable standard of review is correctness, referring to
Ledcor
    Construction Ltd. v. Northbridge Indemnity Insurance Co.
,
    2016 SCC 37, [2016] 2 S.C.R. 23,
at paras. 24, 27-39. See
    also:
Mikelsteins v. Morrison Hershfield Limited
,
2019 ONCA 515, 56 C.C.E.L. (4th) 1, at
    para. 12,
leave to appeal requested, 38806
;
Manastersky
    v. Royal Bank of Canada
, 2019 ONCA 609, 146 O.R. (3d) 647
, at para. 44, leave to appeal requested, 38788;

Styles v. Alberta Investment Management Corporation
, 2017 ABCA 1, 44 Alta. L.R. (6th) 214, at para. 19, leave to appeal
    refused, [2017] S.C.C.A. No. 76
.

[21]

I begin with the governing principles applicable
    to the issue on this appeal.

B.

The governing principles

[22]

The principle underlying an award of damages for wrongful dismissal is
    that the terminated employee is entitled to compensation for all losses arising
    from the employers breach of contract in failing to give proper notice:
Paquette
    v. TeraGo Networks Inc.
, 2016 ONCA 618, 352 O.A.C. 1, at para. 16. The
    purpose of damages is to place the employee in the same financial position they
    would have been in had such notice been given:
Sylvester v. British
    Columbia
, [1997] 2 S.C.R. 315, at para. 1. The goal, in other words, is to
    make the employee whole again.

[23]

It has long been established that a wrongfully terminated employee is
    entitled to compensation for the loss of contractual benefits that they would
    have earned during the reasonable notice period, including the loss of pension
    benefits, bonuses, stock options, or other incentives:
Taggart v. Canada
    Life Assurance Co.
, 2006 C.L.L.C 210-007 (Ont. C.A.) (pension benefits);
Paquette
(bonuses);
Kieran
(stock options);
Veer v. Dover Corporation
    (Canada) Ltd.
(1999), 120 O.A.C. 394 (stock options); and
Gryba v.
    Moneta Porcupine Mines Ltd
. (2000), 139 O.A.C. 40, leave to appeal
    refused, [2001] S.C.C.A. No. 92 (stock options).

[24]

In this courts decision in
Taggart
, Sharpe J.A. articulated
    the approach to be taken by courts in determining an employees claim. At para.
    12 of his decision, he stated:

In my opinion, the proper way to analyze the respondents claim
    is to consider:

(1)

his common law right to damages
    for breach of contract, and

(2)

whether the terms of the [contract]
    alter or remove a common law right.

[25]

With regards to the first inquiry, the employee will have a common law
    right to damages where they would have earned a benefit but for the employers
    breach of contract:
Taggart
, at para. 20. This will generally be the
    case where the benefit can be described as an integral part of the terminated
    employees compensation:
Paquette
, at paras. 17, 30;
Lin v.
    Ontario Teachers Pension Plan
, 2016 ONCA 619, 402 D.L.R. (4th) 325, at
    para. 86.

[26]

If a common law right is established, the question at this stage is
    whether there is something in the language of the [contract] between the
    parties that takes away or limits that common law right:
Taggart
, at
    para. 20. In the context of a stock option plan, therefore, the question is
    whether there is language in the plan that specifically removes the employees
    common law entitlement. As noted by van Rensburg J.A. in
Paquette
,
    however, [t]he question is not whether the contract or plan is ambiguous, but
    whether the wording of the plan unambiguously alters or removes the
    [employees] common law rights: at para. 31. In undertaking this analysis, the
    proper focus is on the wording of the particular plan:
Kieran
, at
    para. 58, citing
Brock v. Matthews Group Ltd.
(1991), 43 O.A.C. 369,
    at para. 22.

[27]

A number of decisions of this court have applied these general
    principles in the context of stock option plans. For instance, in
Brock
,
    the court held that an employee was not entitled to exercise his options up to
    the expiration of the period of reasonable notice because the relevant plans
    established that, regardless of the mode of termination, his right was extinguished
    on his 
ceasing to be an employee
 and that any
    options had to be exercised 15 days
from the date notice
    of dismissal
is given: at paras. 14, 16, 22-23 (emphasis in original). The
    language thus unambiguously removed the common law right.

[28]

In contrast, in
Veer
, Goudge J.A. held that an employee was entitled
    to exercise his stock options up to the end of the notice period because,
    unlike in
Brock
, the language of the plan did not expressly extinguish
    his rights on wrongful dismissal. The relevant contractual language was as
    follows:

If the option holders employment with the corporation
is terminated for any reason other than set forth in paragraphs
    6, 7 or 8 above
[death, retirement or incapacity],
whether such termination be voluntary or involuntary
,
    without his having fully exercised his option, the option shall be cancelled
    and he shall have no further rights to exercise his option or any part thereof
    and all of his rights hereunder shall terminate as of the effective date of
    such termination. [Emphasis in original.]

[29]

Goudge J.A. rejected the appellants argument that the inclusion of the
    reference to
involuntary
termination (i.e.,
    termination initiated by the employer), necessarily included wrongful
    termination without notice. He observed, at para. 14:

In my view, voluntary termination refers to a termination
    that is consensual or initiated by the employee, whereas involuntary
    termination is that initiated by the employer. In either case, the termination
    contemplated must, I think, mean termination according to law. Absent express
    language providing for it, I cannot conclude that the parties intended that an
    unlawful termination would trigger the end of the employees option rights. The
    agreement should not be presumed to have provided for unlawful triggering
    events.
Rather, the parties must be taken to have
    intended that the triggering actions would comply with the law in the absence
    of clear language to the contrary
. There is no such language in these stock
    option agreements. [Emphasis added.]
[2]

[30]

Similarly, in
Gryba
, the majority of the court held that,
    while, as in
Brock
, the plan spoke of the optionee ceasing to be
    employed, it also established that the date for the exercise of stock options
    is 30 days following the
effective
date of termination. The majority
    found that the effective date would include the notice period and therefore
    the employee was entitled to claim damages: at para. 51 (emphasis in original).
    For the majority, the plan was distinct from the one at issue in
Brock
,
    where the right was to be extinguished regardless of whether the mode of
    termination was lawful or unlawful:

The wording of the stock option plan in this case can be read
    as contemplating a lawful notice of termination and the effective date of the
    cessation of employment is the end of the notice period. Our interpretation is
    supported by the fact that the stock option clause also provides that in the
    event of death or dismissal for cause the employee has no right to exercise
    stock options: at para. 51.
[3]


[31]

Finally, while
Paquette
dealt with the right to receive bonuses,
    not stock options, van Rensburg J.A. reviewed a series of stock option cases,
    including
Kieran
,
Gryba
,
Veer
, and
Brock
. She
    noted that the timing of the exercise of an option is key to its value to an
    employee and that the cases have required clear language to limit the right to
    exercise options on termination. Language such as termination or cessation
    of employment has been insufficient to prevent the exercise of an option during
    the wrongful dismissal period: at paras. 40-41. She suggested that the approach
    in these cases can be summed up by the language of Goudge J.A. in
Veer
:
    the parties must be taken to have intended that the triggering actions [for
    the cancellation of an employees stock option rights] would comply with the
    law in the absence of clear language to the contrary:
Paquette
, at
    para. 42, citing to
Veer
, at para. 14.

[32]

A useful summary of the principles set out in
Taggart
,
Lin
,
    and
Paquette
is provided in
Manastersky
, at paras. 39-43. At
    the risk of paraphrasing Brown J.A., in light of the foregoing analysis, I would
    further summarize as follows:

1. A wrongfully dismissed employee is
    entitled to damages for the loss of wages, salary and other benefits, that
    would have been earned during the reasonable notice period.

2. This principle applies to bonuses,
    stock options, or incentives that are an integral part of the employees
    compensation, as well as pension benefits that would have accrued or been
    earned during the reasonable notice period.

3. In considering whether the loss of
    such benefits is recoverable, the court undertakes a two-step analysis.

4. The first step requires a
    determination of the employees common law right to damages for breach of
    contract, bearing in mind that the measure of damages is the amount to which
    the employee would have been entitled had the employer performed the contract.

5. The second step requires the court
    to determine whether the terms of the relevant contract or plan unambiguously
    alter or remove the employee's common law rights, having regard to the
    presumption that the parties intended to apply the law, in the absence of clear
    language to the contrary.

[33]

Before applying these principles to the facts of this case, I will
    address the appellants submission
that the contractual
    language here is on all fours with the contract in
Kieran
and that the appeal must therefore be allowed.

C.

Kieran v. Ingram Micro Inc.

[34]

The appellant does not dispute the principles set out above. Rather, as
    I have noted, it simply takes the position that the contractual language in
Kieran
is substantially the same as the language of the IMAX contract and that the
    outcome in this case should therefore be the same. The appellant points out
    that the respondent has not asked the court to strike a five-judge panel for
    the purpose of hearing argument that
Kieran
should be overruled.

[35]

For the reasons that follow, I would not accept the appellants
    submission that
Kieran
is dispositive of this case. The contractual
    language is not substantially the same.

[36]

Mr. Kieran was a Senior Vice President of Ingram Micro Inc. This court
    reversed the trial judges finding that he had resigned from his position and
    instead found that he had been constructively dismissed. However, it found that
    he had successfully mitigated his damages by finding alternative employment and
    thus sustained no damages. This court also affirmed the trial judges dismissal
    of his claim for damages of $1.2 million for the loss of stock options that
    would have vested during the period of reasonable notice. The courts decision
    was based on a finding that, despite the existence of a common law right to
    damages, that right was effectively extinguished by unambiguous language in the
    relevant stock option plans.

[37]

In
Kieran
, there were three plans at issue: (a) the Restricted
    Plan; (b) the Equity Plan and (c) the Rollover Plan. The language of the Restricted
    and Equity plans was quite similar, while the Rollover Plan was somewhat distinct.
    The appellant submits that the language in the Rollover Plan is substantially
    the same as in the plans in this case.

[38]

The Restricted Plan provided:

If Participants employment with Micro or any Affiliate
is terminated for any reason
other than death,
    disability  or retirement prior to the time when all Shares have become
    Unrestricted Shares , Restricted Shares shall be repurchased by Micro at the
    lower of (x) the Purchase Price and (y) the Fair Market Value of such Shares on
    the Repurchase Date.
[A]ny termination of a
    participants employment for any reason shall occur on the date Participant
    ceases to perform services for Micro or any Affiliate without regard to whether
    Participant continues thereafter to receive any compensatory payments therefrom
    or is paid salary thereby in lieu of notice of termination
. [Emphasis
    added].

[39]

The Equity Plan provided:

Except as the Committee may at any time otherwise provide or as
    required to comply with applicable law, if the Participants employment with
    Micro or its Affiliates
is terminated for any reason
other than death, disability, or retirement, the Participants right to
    exercise any Non-Qualified Stock Option or Stock Appreciation Right
shall terminate
and such Option or Stock Appreciation
    Right shall expire, on  the sixtieth day following such termination of
    employment. [Emphasis added].

[40]

The Equity Plan also gave an employee leaving by reason of death,
    disability, or retirement a one-year period within which to exercise his or her
    options. As well, like the Restricted Plan, the Equity plan defined the date on
    which the employee ceased to perform services as 
without
    regard to whether the employee continues thereafter to receive any compensatory
    payments therefrom or is paid salary thereby in lieu of notice of termination

    (emphasis added).

[41]

The Rollover Plan provided:

Except as the Committee may at any time otherwise provide or as
    required to comply with applicable law, if the Participants employment with
    the Participants Employer or any of its Subsidiaries is
terminated
    for any reason
other than death, permanent and total disability,
    retirement or Cause, the Participants right to exercise any Non-Qualified
    Stock Option
shall terminate
, and such Option
    shall expire on the 60th day following such termination of employment. [Emphasis
    added].

[42]

The Rollover Plan was distinct because it did not specifically address,
    as did the Restricted and Equity Plans, a situation where the employee was
    given compensatory payments in lieu of notice of termination: at para. 52.
    However, the General Provisions of the Rollover Plan provided that the employer
    could dismiss the employee at
any time
, 
free from any liability or any claim under the Plan or
    otherwise, unless otherwise expressly provided in the Plan or in any Option
    Agreement
 (emphasis added). The plan provided exceptions from this
    general provision for employees terminated by death, disability, or retirement.
    In these cases, the employees would have one year to exercise their options,
    post-employment. No exception was provided for employees terminated without
    cause.

[43]

The trial judge found that the provisions of the plans dealing with the
    employees rights on termination were virtually identical:
Kieran v.
    Ingram Micro Inc.
, [2001] O.J. No. 4318 (S.C.), at para. 60. He held that
    the language in the plans in the instant case clearly contemplates a
    termination made unlawful by no, or too little, notice and provides that in
    determining the date of termination, any continuing compensation or salary in
    lieu of notice is to be disregarded: at para. 66.

[44]

This court affirmed the trial judges decision, finding that the
    language of the plans was unambiguous. In examining the specific language of
    the three stock option plans, Lang J.A. made three key observations.

[45]

First, the plans unambiguously stated that Mr. Kierans right to
    exercise his stock options would expire if his employment was terminated for
    any reason other than death, disability, retirement (or cause, in the case of
    the Rollover Plan): at paras. 59-60.

[46]

Second, the Restricted and Equity plans specifically provided that Mr.
    Kierans employment terminated on the date he ceased to perform services,
    without regard to whether he continued to receive compensatory payments or
    salary in lieu of notice: at para. 59.

[47]

And third, the Rollover Plan provided that the employer could dismiss
    the employee at any time free from any liability or any claim under the Plan
    or otherwise, unless otherwise expressly provided in the Plan or in any Option
    Agreement: at para. 51. The plan provided that if an employee was terminated
    by reason of death, disability, or retirement, they would have one year to
    exercise their options, post employment: at para. 50. It did not make any
    express statements regarding avenues of claim for employees in the event they
    were terminated by wrongful dismissal.

[48]

In light of these observations, Lang J.A. found that all three plans
    excluded a claim for shares or options that vested during the reasonable notice
    period. An examination of all three plans demonstrated that the relevant
    provisions had two features, expressed in one way in the Restricted Plan and
    the Equity Plan and another way in the Rollover Plan. First, each plan
    established that an employee terminated without cause would have no entitlement
    to exercise any option rights and, second, each plan determined when that would
    occur. The Restricted Plan and the Equity Plan established that termination
    would occur on the date the employee ceased to perform services whether or not
    he or she continued to receive salary in lieu of notice. These provisions
    clearly and unambiguously took away the employees common law rights. The
    Rollover Plan, while using different language, removed the right to exercise
    the stock option on termination, and went on to provide, in the general
    conditions, that the employer could dismiss the employee
at
    any time
, free from any liability or any claim under the Plan or
    otherwise. While termination, without more, refers to lawful termination,
    the additional language of the general conditions was sufficient to expressly
    remove that presumption.

[49]

But for the additional language in all three plans, the words
    terminate or termination, would have been ambiguous. They could refer to
    the date notice was given or to the end of the reasonable notice period. In
    light of that ambiguity, they would have been interpreted as requiring the
    latter, namely, termination according to law at the end of the reasonable
    notice period. However, the ambiguity was removed by the additional language and,
    with it, so was the employees common law right.

[50]

Mr. Kieran was thus bound by the plain language of the plans, his
    right to exercise the options was not extended by the period of reasonable
    notice, and he was not entitled to damages for the loss of the options.

[51]

The appellant contends that the language of the Rollover Plan in
Kieran
is substantially the same as the language of the plans in this case.
    Consequently, the respondents awards should be found to have ceased to vest on
    the effective date of his termination.

[52]

I would not give effect to that argument. While the language in all the
    plans at issue in this case extinguish the respondents right to exercise any
    unvested awards as of the date of termination or when employment
    terminates, they do not establish, in unambiguous terms, when the date of
    termination is or when employment terminates. In other words, they leave open
    the possibility that termination could have occurred at the end of the
    reasonable notice period. And, as expressed above, where such ambiguity exists,
    the language will be interpreted as mandating a lawful termination.

[53]

While the appellant is correct to note that the language of the IMAX plans
    and the Rollover Plan in
Kieran
are similar, he overlooks the fact
    that, in
Kieran
, additional language was used to remove any
    entitlement to damages. There was no such language in this case.

[54]

I would therefore reject the appellants argument that we are bound by
Kieran
.
    In light of this conclusion, the next step is to determine whether the motion
    judge correctly applied the governing principles and arrived at the correct conclusion.

D.

Application of the principles to this case

[55]

The motion judge identified and expressly applied the principles set out
    above, referring to, among others,
Veer
,
Taggart
, and
Paquette
.
    He found as a fact that the awards were an integral part of the respondents
    employment, that they would have vested had his employment not been wrongfully
    terminated, and that he would have exercised the awards, as he had done in the
    past. This was the first step in the
Taggart/Paquette
analysis.

[56]

In the application of the second step, the motion judge, referring to
Veer
,
    found that the reference to terminates for any reason in the plans could not
    be presumed to refer to termination without cause. Further, he found that the
    phrase cancelled immediately without consideration was not a clear, express
    provision that remove[d] the common law right of an employee, terminated
    without cause, to claim damages in respect of lost unvested RSUs: at para. 64.

[57]

The motion judge applied the correct legal principles and arrived at the
    correct conclusion. As I have explained in the discussion of
Kieran
, above,
    in the absence of unambiguous contractual language, as there was in
Kieran
,
    the awards continued to vest during the reasonable notice period. The
    respondent was entitled to damages for the loss of his entitlement to exercise
    his rights.

[58]

I would therefore dismiss the appeal.

V.

The Cross-Appeal

[59]

The thrust of the respondents cross-appeal is that, having accepted the
    plaintiffs evidence that he would have exercised the RSU and stock option
    grants at the earliest possible opportunity, the motion judge erred by
    concluding that he would have sold the shares five months after their vesting
    dates. This conclusion was based on an analysis of the plaintiffs actual sales
    activities during the reasonable notice period in respect of other RSUs and
    stock options. The motion judge did not characterize this analysis as being in
    conflict with his earlier finding, but simply a determination of the meaning of
    earliest possible opportunity.

[60]

The cross-appellant makes several submissions, including: (a) that the motion
    judge breached the rules of natural justice by permitting IMAX to re-argue an
    issue that had been previously decided; (b) that IMAX breached the requirement
    to put its best foot forward on a summary judgment motion; (c) that IMAX was
    guilty of litigation by instalment, by adducing fresh evidence on the damages
    issue; and (d) that the motion judges conclusion that he would have retained
    his shares in a falling market amounted to a palpable and overriding error.

[61]

I would not give effect to any of these submissions. I do not see this
    as a case of re-opening the trial, as occurred in
671122 Ontario Ltd. v.
    Sagaz Industries Canada Inc.
, 2001 SCC 59, [2001] S.C.R. 983. The motion
    judge had not come to any final conclusion on the quantum of damages and had
    expressly left that issue open. I would defer to the exercise of his discretion
    in adopting a process that was fair to both parties and that ensured that both
    parties had an opportunity to make full submissions on the issues. The cross-appellant
    made no objection to the so-called fresh evidence and indeed referred to that
    evidence in his submissions on damages, urging a different interpretation on
    the motion judge.

[62]

Nor did the motion judge make a palpable and overriding error in his
    assessment of the evidence concerning damages. He rejected IMAXs approach to
    the calculation of damages  the use of the average number of months the
    cross-appellant had taken to sell vested incentives prior to the termination of
    his employment (13.7 months)  which he found was an overstatement. Instead, he
    looked at the evidence concerning the cross-appellants actual sales during the
    reasonable notice period. This was an appropriate approach to take. As for the cross-appellants
    argument that he would have sold immediately in a falling market, he admitted,
    as he had to, that he had no way of knowing whether the price would go up or
    down.

VI.

Disposition

[63]

For these reasons, I would dismiss both the appeal and the cross appeal.

[64]

There were no submissions as to costs. If the parties are unable to
    agree on costs, they may address costs by written submissions, to be filed
    within 21 days of the release of these reasons.

Released: GS  DEC 17 2019

George R. Strathy C.J.O.

I agree. Doherty J.A.

I agree. Robert J. Sharpe J.A.





[1]
That this area remains fertile ground for litigation is demonstrated by the
    fact that in the past year there have been four decisions of this court on the
    same subject:
Dawe v. The Equitable Life
    Insurance Company of Canada
, 2019 ONCA 512, 435 D.L.R. (4th) 573 (bonus
    plans);
Mikelsteins v. Morrison Hershfield
    Limited
, 2019 ONCA 515, 56 C.C.E.L. (4th) 1, leave to appeal requested, 38806
    (shareholders agreement and share bonus);
Manastersky v. Royal Bank of Canada
, 2019
    ONCA 609, 146 O.R. (3d) 647, leave to appeal requested, 38788 (incentive plan);
    and
Andros v. Colliers Macaulay Nicolls
    Inc.
, 2019 ONCA 679, 437 D.L.R. (4th) 546 (bonus).



[2]
The emphasized language has been referred to as a rule of contractual
    interpretation in the context of a stock option agreement. The rule holds that,
    in the absence of unambiguous terms to the contrary, the terms of a contract
    should be presumed to refer to lawful termination rather than unlawful
    termination: Finlayson J.A., dissenting, in
Gryba
, at para. 22.



[3]
In dissent, Finlayson J.A., referring to the similar language in
Brock
, found that the effective date of
    termination was the date on which Mr. Gryba was dismissed without cause. He
    would have denied the employee any damages for losses after the 30 day period
    following his dismissal: at para. 24.


