Court of Appeal for Ontario
MacPherson, Sharpe and Rouleau JJ.A.
BETWEEN:
Desmond Soye
Plaintiff (Respondent)
and
Corinthian Colleges Inc., CDI Career Development Institutes Ltd., CDI Education Corporation and Corinthian Canada Acquisition Inc.
Defendants (appellants)
David Harris for the defendants (appellants)
A. Jane Milburn for the plaintiff (respondent)
Heard & released orally: April 2, 2009
On appeal from the judgment of Justice Keith Hoilett of the Superior Court of Justice dated March 5, 2008.
Reasons for Decision
1The appellants appeal from the decision of Hoilett J.1 ordering the appellants to pay the respondent $418,732.00 damages for wrongful dismissal.
2The respondent was a senior executive with the appellants CDI Career Development Institutes Ltd. CDI was acquired by the appellant Corinthian Colleges Inc. in August 2003. The parties attempted to negotiate new terms of employment for the respondent but failed to reach an agreement. The respondent was terminated without cause on September 11, 2003. The respondent sued the appellants for breach of contract, wrongful dismissal and ancillary relief. The respondent claimed that the employment agreement he signed in 1994, as amended in writing in 1997, was no longer in effect – it having been replaced by a new oral agreement reached in July 2003 or in the alternative, in accordance with the Common Law.
3The appellants’ position was that the respondent continued to be bound by the 1994 agreement as amended. The trial judge agreed with the appellants’ position finding that the 1994 agreement as amended was still in effect and generally governed the termination. The termination clause in the 1994 agreement as amended required the appellants to pay the respondent severance of 12 months salary.
4In assessing damages, the trial judge gave a generous interpretation to the term salary and accepted that the respondent was entitled to receive payments for several items not specified in the agreement. The most significant of these being a retention bonus of $165,000 that he found had been agreed to between the parties in pre-acquisition discussions.
5The appellants argue that the trial judge erred in two respects. First, they claim that action ought to have been dismissed in its entirety because the respondent did not, in his pleadings, make any claim under the 1994 contract as amended and in fact, had taken the position that it had been replaced or cancelled. Second, they submit that the trial judge erred in his interpretation of the 1994 agreement as amended and in not limiting the respondent’s recovery to what is specifically provided for in the text of the 1994 agreement as amended in 1997.
6I do not agree.
7As to the first issue, the respondent’s pleading was sufficiently broad so as to encompass the findings made by the trial judge. The appellants cannot argue that they were taken by surprise given that the trial judge in effect accepted their submission that the termination was governed by the 1994 agreement as amended. It is only the trial judge’s interpretation and application of that agreement and his findings that oral amendments or additions had been agreed to that the appellants disagree with. By the time of trial, the respondent’s alternative position on the 1994 agreement as amended was known to the appellants and squarely before the court.
8Turning to the second issue raised, with one exception, I see no basis for interfering with the trial judge’s award. There was ample evidence from which the trial judge could conclude that the parties had agreed that the respondent would be paid a retention bonus of $165,000 in the event that the respondent stayed through the merger and did not resign for one year after the merger. When the appellants terminated the respondent without cause, this bonus became due and owing. The factual record also amply supports the other elements of the trial judge’s damage award. Specifically, there was evidence that:
a) the appellants had agreed to pay the respondent $1000 a month more in remuneration as a result of the appellants having discontinued the respondent’s car allowance;
b) the bonus provision as set out in the 1994 agreement as amended had been varied over the years, albeit not in writing, and did not preclude bonus payments for part years if targets were being met. Additionally, bonus was now a significant component of the respondent’s remuneration and therefore, was properly considered to be salary for purposes of severance entitlement;
c) CDI’s policy requiring employees to use or lose their vacations was not really enforced and that the respondent did not take all of his holidays in prior years; and
d) the remuneration provided by CDI now included the employer matching employee RRSP contributions.
9I also see no basis to interfere with the trial judge’s conclusion that during the 12 months pay in lieu of notice period, the appellants had to provide the respondent with medical and dental benefits. In my view, however, the trial judge erred in requiring that the appellants reimburse the respondent for $5,123 in expenses he incurred in his efforts to mitigate his damages. The agreement provided for payment in lieu of notice regardless of whether the respondent mitigated. In these circumstances, there was no basis for the trial judge’s award of the expenses.
10In the result, I would allow the appeal with respect to the trial judge’s award of $5,123 in mitigation expenses and in all other respects, I would dismiss the appeal with costs to the respondent on a partial indemnity scale fixed at $19,000 inclusive of GST and disbursements.
“Paul Rouleau J.A.”
“I agree J.C. MacPherson J.A.”
“I agree Robert J. Sharpe J.A.”
RELEASED: April 9, 2009