



COURT OF APPEAL FOR ONTARIO

CITATION: Kearns v. Canadian Tire
    Corporation, Limited, 2020 ONCA 709

DATE: 20201109

DOCKET: C67413

Lauwers, Brown and Nordheimer
    JJ.A.

BETWEEN

Jamie Kearns

Plaintiff (Respondent)

and

Canadian Tire Corporation,
    Limited

Defendant (Appellant)

Stephen F. Gleave, for the appellant

Matthew A. Fisher, for the respondent

Heard: in writing

On appeal from the judgment of Justice Peter
    J. Cavanagh of the Superior Court of Justice dated August 22, 2019, with
    reasons reported at 2019 ONSC 4946, 57 C.C.E.L. (4th) 270.

BROWN J.A.:

I.        OVERVIEW

[1]

The appellant, Canadian Tire Corporation,
    Limited (Canadian Tire), terminated the employment of the respondent, Jamie
    Kearns, effective July 2018. Canadian Tire made termination-related payments to
    Mr. Kearns in July and September 2018. Mr. Kearns started a wrongful dismissal
    action in October 2018. Canadian Tire made a further payment to Mr. Kearns on
    November 23, 2018 (the November Payment). The parties went to mediation in
    December 2018. They settled and executed minutes of settlement (the Minutes)
    that provided Canadian Tire would pay Mr. Kearns $150,000 in addition to
    amounts already paid.

[2]

The Canadian Tire representatives who attended
    the mediation were not aware that the company had made the November Payment to
    Mr. Kearns. When, in February 2019, those representatives learned of the
    November Payment, the company took the position that it should be deducted from
    the settlement amount of $150,000.

[3]

Mr. Kearns moved for enforcement of the Minutes.
    The motion judge granted judgment in favour of Mr. Kearns. Canadian Tire
    appeals.
The company
submits that the motion judge failed to properly interpret the
    Minutes in their full context and erred in disposing of the matter by way of
    motion on the basis of the evidence filed.

[4]

For the reasons set out below, I would dismiss
    the appeal. As I will explain, the motion judge properly applied the principles
    of contractual interpretation and it was appropriate for him to dispose of the
    matter by way of motion.

II.       FACTS

[5]

Mr. Kearns was employed by Canadian Tire or
    affiliated dealers for approximately 27 years, until July 2018. At the time of
    his termination, Mr. Kearns employment was governed by an employment contract
    dated December 10, 2012. It provided that upon termination without cause, Mr.
    Kearns would be entitled to one months notice for each year of service up to a
    maximum of 24 months notice.

[6]

On June 21, 2018, Canadian Tire terminated Mr.
    Kearns employment without cause, effective July 13, 2018. At the time of his
    dismissal, Mr. Kearns was 53 years old and held the position of Associate
    Vice-President. In 2017, his final year of full employment with Canadian Tire,
    his income was $307,619.70.

[7]

The June 21, 2018 termination letter identified
    two kinds of compensation, which Canadian Tire called (i) guaranteed and (ii)
    contingent payments.

[8]

First, the so-called guaranteed payments
    included eight weeks base salary in lieu of notice as required under the
Employment
    Standards Act, 2000
, S.O. 2000, c. 41 (
ESA
). Mr. Kearns also
    would be paid:

·

12 weeks severance pay based on [his] years of
    service, and in full satisfaction of [his] entitlement under the
ESA
;

·

current benefits until September 7, 2018, the
    conclusion of the
ESA
statutory notice period and what the letter
    described as the Active Employment end date; and

·

certain incentive plan payments.

[9]

Second, as contingent payments the company
    offered Mr. Kearns an Enhanced Separation Package - Additional Notice that
    would only be available if he signed a release:

In addition to your entitlements under the
ESA
,
    the company is also prepared to provide a lump sum payment equivalent to 30
    weeks salary of Additional Notice, on a without prejudice basis, in full and
    final settlement of all issues related to your employment and the cessation of
    that employment. Payment of Additional Notice is contingent upon a signed Full
    and Final Release and Indemnity and is payable following the Active Employment
    end date.

[10]

The termination letter stated that if Mr. Kearns
    did not provide a signed release by a stipulated date, the companys offer of
    an enhanced separation package would be revoked and he would only be provided
    with the minimum statutory entitlements in accordance with the
ESA
,
as well as amounts required under the terms of [his] offer of
    employment
 (emphasis added)..

[11]

Mr. Kearns did not provide the company with a
    signed release.

[12]

On October 16, 2018 Mr. Kearns started an action
    for wrongful dismissal in which he sought damages of $700,000. Mr. Kearns
    pleaded that he first worked for Canadian Tire in September 1991 and had been
    continuously employed with the company between 1996 and 2018. He claimed he was
    entitled to 24 months pay in lieu of notice, together with associated
    incentive performance payments and benefits. Mr. Kearns also sought aggravated
    damages, as well as damages for breach of the
Human Rights Code
,
    R.S.O. 1990, c. H.19.

[13]

In its statement of defence filed on November
    20, 2018 Canadian Tire pleaded that the time Mr. Kearns spent working for
    affiliated dealers did not qualify as time employed by the company.
    Consequently, Mr. Kearns was employed with Canadian Tire for just over 11 years.
    Canadian Tire stated that it had provided Mr. Kearns with an appropriate
    termination package based on relevant factors and the reasonable notice period to
    which he was entitled.

[14]

The parties attended a mandatory mediation
    session on December 19, 2018.

[15]

By the time of the mediation, Mr. Kearns had
    received three termination-related payments from Canadian Tire:

(i)

July 20, 2018: $20,081.24, representing eight
    weeks statutory termination pay, less applicable deductions;

(ii)

September 14, 2018: $103,191.49, representing
    twelve weeks statutory severance pay based on the companys calculation of his
    years of service plus a pro-rated incentive plan payment, less applicable
    deductions; and

(iii)

November 23, 2018: $115,465.20, less applicable
    deductions.

[16]

In advance of the mediation, Canadian Tire
    provided Mr. Kearns lawyer with its statement of issues signed by its external
    counsel. Paragraph 5 of Canadian Tires statement of issues asserted:

In accordance with the Employment Agreement
    and the Ontario
Employment Standards Act, 2000
(
ESA
),
[Canadian
    Tire] provided [Mr. Kearns] with
eight (8) weeks of pay in lieu of
    statutory notice, twelve (12) weeks' severance pay,
and
    thirty (30) weeks' pay in lieu of additional notice
. [Emphasis added.]

[17]

Mr. Kearns attended the mediation with his
    counsel. Canadian Tire was represented by its manager of employee relations and
    external counsel.

[18]

The mediation was successful. Canadian Tire
    agreed to pay Mr. Kearns $150,000, consisting of $90,000 as a retiring
    allowance and $60,000 as general damages. Counsel for Canadian Tire drafted the
    Minutes. The parties discussed two iterations of the draft. Counsel for Mr.
    Kearns requested that the Minutes include language that the $150,000 payment
    would be in addition to amounts Canadian Tire had already paid Mr. Kearns.

[19]

The parties agreed on and executed a final
    version of the Minutes, para. 1 of which stated:

In addition to amounts
    already paid
, [Canadian Tire] will provide [Mr.
    Kearns] a lump sum payment in the amount of $150,000.00 as follows:

(a) $90,000.00 as a retiring allowance; and

(b) $60,000.00, as general damages without
    deductions or admission of any liability. [Emphasis added.]

[20]

Mr. Kearns signed a Full and Final Release and
    Indemnity, which was attached as Schedule A to the Minutes.

[21]

What happened next was described by the motion
    judge in his reasons, at paras. 12 to 17:

The Minutes of Settlement provide that the
    settlement funds will be paid within 30 days of the date on which [Canadian
    Tire] receives the documents referred to in the Minutes of Settlement. On
    January 11, 2019 [Mr. Kearns] lawyer provided [Canadian Tires] lawyer with a
    direction regarding funds and advised that he looked forward to receipt of the
    settlement proceeds on or before February 11, 2019.

By email dated February 6, 2019 from [Canadian
    Tires] lawyer to [Mr. Kearns] lawyers business manager, [Canadian Tires]
    lawyer advised that [Canadian Tire] had discovered an overpayment that impacts
    the settlement payment under the Minutes of Settlement. She advised that on
    November 23, 2018, payroll personnel at [Canadian Tire] mistakenly paid out
    gratuitous separation support payments that were offered in [Mr. Kearns]
    termination letter in exchange for a release.

The payments which [Canadian Tire] stated in
    the email were made in error were comprised of (i) 30 weeks of additional
    notice in the amount of $75,304.62; (ii) profit-sharing payment in the amount
    of $10,471; and (iii) short term incentive plan payment in the amount of
    $29,688.84 for a total gross payment of $115,465.20 which, less income tax
    deducted in the amount of $34,639.56, amounted to a net payment of $80,825.64.
    In this email, [Canadian Tire] advised that the outstanding difference between
    the negotiated settlement amount and the overpayment from November 23, 2018 is
    a non-taxable payment of $45,174.36. In her email, [Canadian Tires] lawyer
    advised that [Canadian Tire] would be making two payments in the amount of
    $10,000 (to be transferred to [Mr. Kearns] RRSP) and $35,174.36 in legal costs
    to be paid to [Mr. Kearns] lawyer, in trust.

On February 22, 2019, [Mr. Kearns] lawyers
    office received a cheque from [Canadian Tire] in the amount of $35,174.36
    payable to the law firms trust account. Around the same time, [Mr. Kearns]
    financial advisor received a cheque from [Canadian Tire] payable to his RRSP in
    the amount of $10,000. No further amounts were paid by [Canadian Tire].

[Mr. Kearns] brought a motion for judgment for
    enforcement of the Minutes of Settlement. [Canadian Tire] opposes this motion.

[Canadian Tire] brought a cross-motion seeking
    judgment in favour of [Mr. Kearns] for the amount set out in the Minutes of
    Settlement less the amount of $115,465.20 that, [Canadian Tire] alleges, was
    mistakenly paid to [Mr. Kearns] on November 23, 2018.

[22]

Affidavits on the motions were filed by Mr.
    Kearns, as well as by Canadian Tire employees and its external counsel. On his cross-examination,
    Mr. Kearns refused to answer a series of questions about what he had told his
    lawyer and what advice his lawyer had given him concerning the November Payment
    and the language in the Minutes that the $150,000 was in addition to amounts already
    paid.

[23]

Canadian Tire moved before Master Jolley for an
    order compelling Mr. Kearns to answer those questions. As well, Canadian Tire
    sought to examine Mr. Kearns lawyer pursuant to r. 39.03 of the
Rules of
    Civil Procedure
. The Master dismissed both requests: 2019 ONSC 4235.

[24]

The motion judge granted Mr. Kearns motion to
    enforce the Minutes and dismissed Canadian Tires cross-motion. I will review
    the motion judges key findings when reviewing the errors that Canadian Tire
    contends he made.

III.      ISSUES ON APPEAL

[25]

Canadian Tire identifies four issues on this
    appeal:

(1)

Did the motion judge err in applying the
    principles of contractual interpretation with respect to paragraph 1 of the Minutes?

(2)

Did the motion judge err by finding the parties
    were
ad idem
on the terms of the Minutes?

(3)

Did the motion judge err in failing to find that
    Kearns acted in bad faith by not disclosing the November Payment in the context
    of the settlement of his entitlements under his employment contract?

(4)

Did the motion judge err by finding that the
    matter could be resolved on a motion and without the need to exercise his
    powers under r. 20 or defer the matter to trial?

IV.     ANALYSIS

Issues 1, 2 and 3: The motion judges interpretation
    of the Minutes

[26]

The first three issues are related. I shall deal
    with them together.

[27]

Canadian Tire submits that the motion judge
    failed to look at the factual matrix when interpreting the Minutes, in
    particular the evidence of its two representatives concerning their
    understanding of matters at the time of the mediation. Canadian Tire
    acknowledges there is no evidence that anyone raised the November Payment
    during the mediation. However, it points to the evidence of its manager of
    employee relations and external counsel who deposed that at the time of the
    mediation they were not aware the company had made the November Payment to Mr.
    Kearns. As well, both deposed that they had reviewed pay stubs given to Mr.
    Kearns in advance of the mediation and none of them disclosed the November Payment.
    They thought they were trying to settle the outstanding issue of Mr. Kearns
    entitlement to any payments in addition to the July and September 2018
    payments.

[28]

Canadian Tire contends that the motion judge
    failed to consider this subjective understanding of its manager of employee
    relations and external counsel, with the result that he did not take the full factual
    matrix into account when interpreting para. 1 of the Minutes. As well, this
    subjective knowledge meant that the parties were not in agreement on the
    essential term of the settlement amount.

[29]

Finally, Canadian Tire argues that Mr. Kearns
    and his counsel had a good faith duty to disclose at the mediation the receipt
    of the November Payment. The company submits that Mr. Kearns did not fulfill
    that reasonable expectation of full disclosure and honesty in settling his exit
    from employment.

[30]

I am not persuaded by these submissions.

[31]

The motion judge applied
Olivieri v. Sherman
,
    2007 ONCA 491, 86 O.R. (3d) 778, the controlling authority regarding the
    enforcement of minutes of settlement. In doing so, he made five key findings.

[32]

First, the motion judge found there was no
    ambiguity in the written terms of the Minutes and held that the document
    included all terms essential to the formation of a contract: at para. 26.

[33]

Second, on the issue of whether Mr. Kearns knew
    that Canadian Tire was mistaken when it signed the Minutes, there was not a
    paucity of evidence on the point, as Canadian Tire asserted. The motion judge
    stated, at paras. 29 and 38:

When [Mr. Kearns] received the November 23,
    2018 payment, this represented an additional 30 weeks salary plus amounts in
    payment of [Mr. Kearns] STIP bonus. These amounts were shown on the remittance
    slip dated November 23, 2018.
The payment of these amounts appear to be
    amounts owing under [Mr. Kearns] offer of employment, which he was told that
    he would receive.



[Mr. Kearns] was directly asked, on
    cross-examination, whether he knew that the November 23, 2018 payment had been
    made in error and he responded directly that he was not so aware.
It was
    open to [Canadian Tire] to ask follow-up questions on matters that were not the
    subject of solicitor and client privilege.
[Canadian Tire] was not
    successful in obtaining an order which would allow it to obtain privileged
    information from [Mr. Kearns] and his legal counsel, and no motion for leave to
    appeal was made from the order of Master Jolley. [Emphasis added.]

The motion judge therefore held that there
    was no evidentiary basis upon which a reasonable inference could be drawn that
    Mr. Kearns knew Canadian Tire was mistaken when it entered into the Minutes: at
    paras. 29 and 38.

[34]

Third, on the basis of that finding, the motion
    judge held that Canadian Tire had not demonstrated that there was fraud or the
    equivalent of fraud on Mr. Kearns part: at para. 35.

[35]

Fourth, the motion judge concluded that the Minutes
    constituted a valid and binding contract: at para. 35.

[36]

Finally, in the motion judges view, the
    circumstances did not support exercising his discretion to decline to enforce
    the Minutes. The motion judge stated, at para. 39:

[Canadian Tire]
    submits that the amount of the settlement is so large that it is far in excess
    of what [Mr. Kearns] would have been entitled or expected to receive. [Canadian
    Tire] has not shown on the evidence before me that this is so.

[37]

I see no reversible error in any of those
    findings. The motion judge applied the controlling legal principles. As well,
    Canadian Tire has not demonstrated that the motion judge made any palpable and
    overriding error of fact.

[38]

The motion judge precisely identified the
    fundamental flaw in Canadian Tires position when he wrote, at para. 26:

The problem is not one of ambiguity.
The problem, from [Canadian Tires]
    perspective, is that when it entered into the Minutes of Settlement, the
    persons with authority to commit to the terms of settlement did not know that
    the November 23, 2018 payment had been made to [Mr. Kearns].
[Emphasis added.]

[39]

To this comment I would add that certain factors
    prevent accepting Canadian Tires assertion that the Minutes resulted from a
    unilateral mistake that justifies their rectification. To put the factors within
    their proper legal context, to succeed on an assertion of unilateral mistake Canadian
    Tire must establish that a mistake occurred and there was fraud, or the
    equivalent of fraud, on Mr. Kearns part in that he knew, or must be taken to
    have known, when the agreement was executed that Canadian Tire misunderstood
    its significance and he did nothing to enlighten the company:
Alampi v.
    Swartz
(1964), 43 D.L.R. (2d) 11 (Ont. C.A.), at p. 17;
Canada
    (Attorney General) v. Fairmont Hotels Inc.
, 2016 SCC 56, [2016] 2 S.C.R.
    720, at para. 15;
2484234 Ontario Inc. v. Hanley Park Developments Inc.
,
    2020 ONCA 273, 150 O.R. (3d) 481, at para. 26.

[40]

The first factor is that while the Canadian Tire
    representatives who attended the mediation may not have known that the November
    Payment had been made to Mr. Kearns, others in the company certainly knew.
    Although Canadian Tire adduced evidence to suggest that a clerk had dropped the
    ball in making the payment and a supervisor had failed to catch the blunder,
    the payroll records of the company clearly showed that the payment had been
    made to Mr. Kearns. The companys representatives at the mediation deposed that
    they had reviewed the pay stubs for Mr. Kearns.

[41]

Second, Canadian Tires argument ignores a key
    principle of contractual interpretation. It suggests that the context, or
    factual matrix, that the motion judge failed to take into account included the
    subjective understandings, or state of mind, of the two Canadian Tire
    representatives at the time of the mediation. But, as taught by
Sattva Capital
    Corp. v. Creston Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 58,
    the factual matrix consists only of objective evidence of the background facts
    at the time of the execution of the contract  that is, knowledge that was or
    reasonably ought to have been within the knowledge of both parties at or before
    the date of contract: see also,
Olivieri
, at para. 44. Evidence of the
    undisclosed or uncommunicated subjective knowledge or state of mind of the two
    Canadian Tire representatives at the mediation does not qualify as part of the factual
    matrix that could assist the interpretative process.

[42]

Finally, Canadian Tires position stands at odds
    with its own statement of issues filed at the mediation. That document was
    signed by its counsel. In it, the company acknowledged that it had provided Mr.
    Kearns with thirty (30) weeks' pay in lieu of additional notice. That 30
    weeks pay was part of the Additional Notice that Canadian Tire had offered
    to Mr. Kearns in the termination letter, upon his execution of a release. The statement
    of issues was sent to Mr. Kearns counsel on December 18, 2018, after Canadian
    Tire had made the November Payment. Canadian Tires communication of that
    information to Mr. Kearns before the mediation offered further support for the
    motion judges finding that there was no fraud or bad faith on Mr. Kearns
    part, in the sense that he knew or must be taken to have known that when the
    Minutes were executed Canadian Tire misunderstood their significance: at para.
    32, citing
Alampi,
at
p. 17.

[43]

Accordingly, I see no merit in the first three
    issues raised by Canadian Tire.

Issue 4: The motion judges determination of
    the matter by way of motion

[44]

As its final ground of appeal, Canadian Tire
    submits that the motion judge failed to address whether it was fair to proceed
    on the motion to enforce the settlement without resorting to the enhanced
    powers in rr. 20.04(2.1) and (2.2) available on such a motion. In addition, the
    company contends that it was unfair to deal with the matter by way of motion
    because there were gaps in the evidence due to Kearns refusal to disclose
    certain information on his cross-examination and his counsels refusal to give
    evidence.

[45]

I see no merit in these submissions. They are
    fully answered by para. 30 of the motion judges reasons, in which he stated:

The factual record in relation to this
    question is complete. There are no genuine issues of credibility requiring a
    trial. The evidence is that [Mr. Kearns] did not know that [Canadian Tire] was
    mistaken. There was no common or mutual mistake. The mistake, and I accept on
    the evidence filed on this motion that there was one, was a unilateral mistake
    by [Canadian Tire].

[46]

The record fully supports those findings by the
    motion judge.

V.      CONCLUSION

[47]

Prior to the mediation, Canadian Tire made three
    termination-related payments to Mr. Kearns. While the companys payroll records
    and para. 5 of its mediation statement of issues reflected those payments, the
    companys representatives who attended the mediation deposed that they were not
    aware of the last payment, made on November 23, 2018. As the motion judge noted,
    at para. 38, on cross-examination it was put to Mr. Kearns that he knew the
    November Payment had been made in error. He replied that he was not so aware.
    The motion judge accepted that Canadian Tire had made a unilateral mistake but
    concluded that there was no fraud or equivalent of fraud on Mr. Kearns part.
    As a result, the motion judge declared that the Minutes constituted a valid and
    binding contract. I see no reversible error in the motion judges analysis and
    findings.

[48]

I would note that this litigation could have
    been avoided through the simple drafting device of quantifying in the Minutes
    the amounts already paid.

VI.     DISPOSITION

[49]

For the reasons set out above, I would dismiss
    the appeal.

[50]

Mr. Kearns is entitled to his costs of the
    appeal. If the parties are unable to agree on the amount, they may file brief
    written cost submissions, not to exceed three pages, together with bills of
    costs within 10 days of the release of these reasons.

Released: PL NOV 09 2020

David
    Brown J.A.

I
    agree. P. Lauwers J.A.

I
    agree. I.V.B. Nordheimer J.A.


