Court of Appeal for Ontario

Date: June 19, 2019 Docket: C65540

Judges: Pepall, Trotter and Harvison Young JJ.A.

Between

Michael Dawe Plaintiff (Respondent)

and

The Equitable Life Insurance Company of Canada Defendant (Appellant)

Counsel

For the Appellant: Michael A. Hines and Amanda J. Hunter

For the Respondent: Andrew F. Camman, Susan A. Toth and Sarah Bauer

Heard: February 4, 2019

On Appeal

From the judgment of Justice Donald J. Gordon of the Superior Court of Justice dated May 23, 2018, with reasons reported at 2018 ONSC 3130.

Trotter J.A.:

A. Overview

[1] Michael Dawe was employed as a Senior Vice President with The Equitable Life Insurance Company of Canada ("Equitable Life"). After 37 years of employment, he was terminated without cause, following a minor dispute about the purchase and use of promotional sporting event tickets.

[2] Mr. Dawe sued for wrongful dismissal. Both parties moved for partial summary judgment on two issues relating to the calculation of damages: (1) the proper notice period; and (2) Mr. Dawe's entitlement under Equitable Life's bonus plans. Mr. Dawe's other claims, including claims for punitive and moral damages, were left to be determined at trial.

[3] The motion judge held that 30 months was the appropriate notice period and that Mr. Dawe was entitled to bonus payments over this period.

[4] Equitable Life appeals against both holdings. It submits that the motion judge's determination of reasonable notice was excessive. It also contends that the motion judge erred by failing to find that Mr. Dawe's bonus entitlement was limited by a termination provision contained in Equitable Life's bonus plans.

[5] I would allow the appeal on the issue of notice, reducing it to 24 months. There were no exceptional circumstances that warranted a longer notice period. I would dismiss the appeal as it relates to bonus entitlement. Mr. Dawe's receipt of bonus payments was an integral part of his compensation package. Although I disagree with the motion judge's conclusion, at para. 62, that the termination provision contained in each of the two bonus plans was "unclear and confusing", I agree with his finding that the termination provision was unenforceable because it was imposed unilaterally and was not brought to Mr. Dawe's attention by Equitable Life at any time before his termination.

B. Background Facts

(1) Introduction

[6] Mr. Dawe enjoyed a successful career in insurance sales. He started his career in 1978 at Allstate Life Insurance Company of Canada ("Allstate"), when he was 25 years old.

[7] Equitable Life acquired Allstate in 1995. Following the acquisition, Mr. Dawe continued his employment at Equitable Life as an Assistant Vice President of Sales & Marketing. Over the years, Mr. Dawe received several promotions. When he was terminated without cause, he was a Senior Vice President.

(2) The Compensation Scheme

[8] Mr. Dawe's compensation package was comprised of a base salary and a cash bonus, along with various other benefits. The bonus scheme changed over the years. According to the affidavit of Chris Brown, Senior Vice President of Human Resources of Equitable Life, all changes to the compensation plan were imposed unilaterally by Equitable Life. That is, the changes were not negotiated, nor was any "sign off" required from those affected by the changes. Mr. Dawe and other executives were advised of the changes and it was up to them to decide whether to continue to work under them, or to leave. Mr. Dawe always continued to work.

[9] In 1998, Equitable Life implemented a new compensation package. It was designed to ensure that Equitable Life's base salary was at the 50th percentile in the industry, and that its overall compensation scheme would be at the 75th percentile. The goal of this program was to retain good employees and make the company more competitive.

[10] On December 10, 1998, Ronald D. Beaubien, who was President and CEO of Equitable Life at the time, sent a letter to Mr. Dawe in which he said, "I am pleased to advise you of some positive changes to your total compensation package." Mr. Beaubien outlined some of the positive features of the plan. He also warned of the restrictive term that provided that, in order to participate in the plan, an employee "must be in the employ of the company at the time" the pay is processed.

[11] In 2006, Equitable Life introduced two new bonus plans – the Long Term Incentive Plan ("LTIP") and the Short Term Incentive Plan ("STIP"). On March 29, 2006, Ron Beettam, President and CEO of Equitable Life, sent a memo to Mr. Dawe, advising him of the new plans. The memo enclosed "[p]lan details with respect to the Long Term Incentive Program". The memo provided a brief explanation of how bonuses would be calculated. The STIP was introduced shortly after the LTIP. As discussed below, the plans introduced new provisions that substantially limit employees' bonus entitlements in circumstances of resignation, termination for cause, retirement, death, and termination without cause. In cases of termination without cause, the plans provide for a "Terminal Award" pro-rated to the last day of active employment, and require that the employee sign a "Full and Final Release" in order to receive the Terminal Award.

[12] Mr. Dawe said that he had no recollection of receiving copies of the two new plans. Mr. Beettam claimed that he delivered copies of the plans by hand to Mr. Dawe, and continued to do so each year a change was made to the LTIP. Mr. Beettam and Mr. Brown provided evidence that the STIP was available on the company intranet. The motion judge observed, at para. 44, that there is no record, electronic or otherwise, confirming delivery of the plans. Nevertheless, he concluded that it was "more likely than not that the plan documents were delivered to Mr. Dawe": at para. 45.

[13] One thing is not in dispute – there was nothing in the documentation accompanying these plans that highlighted the introduction of the termination provision that is in dispute in this case.

[14] Mr. Brown swore that a meeting of senior executives was held on March 30, 2006 to review the terms of the LTIP and STIP. Mr. Brown said that those in attendance were permitted to ask questions about the plans. However, supporting documentation that a meeting ever took place was slim, and there was no confirmation that the termination provision was discussed.

[15] In an attempt to prove that Mr. Dawe was aware of the termination provision, Equitable Life produced a number of memoranda from Mr. Beettam to Mr. Dawe concerning his yearly bonus. In each of these memos, Mr. Beettam advised Mr. Dawe of his bonus payment and how it was calculated, as well as his revised base salary. None of these memos referenced the consequences of termination. However, the memos indicated that "details" of the STIP plan could be found on the company's intranet, and one of the memos referenced that the LTIP document was attached.

[16] The motion judge found that Mr. Dawe had received bonus payments under both plans since 2006, except for 2011 or 2012, when Equitable Life experienced unexpected losses resulting from a fraudulent scheme undertaken by some brokers. In that year, both Mr. Dawe and Mr. Beettam did not receive an STIP payment and their LTIP entitlements were reduced. In 2015, the last year that Mr. Dawe was employed at Equitable Life, his base salary was $249,000. In February of 2015, he received his bonus for 2014 in the amount of $379,585.

(3) The Termination of Mr. Dawe's Employment

[17] Mr. Dawe's employment with Equitable Life was terminated in October 2015. In his affidavit, Mr. Dawe described an increasingly strained relationship with Mr. Beettam. Mr. Dawe made notes of some of his negative experiences. For his part, Mr. Beettam reported a friendly relationship with Mr. Dawe, describing many occasions when he and his wife would socialize with Mr. Dawe and his wife.

[18] Things came to a head in September 2015. A dispute arose over the purchase of hockey and basketball tickets by Mr. Dawe for promotional and personal use. For the purposes of determining the issues on appeal, it is not necessary to review the various accounts of this conflict. Suffice to say, during a meeting between the two men, Mr. Beettam verbally reprimanded Mr. Dawe for purchasing tickets without proper authorization. Mr. Dawe became very agitated during the meeting and requested that Mr. Brown and an in-house lawyer join the meeting. Mr. Beettam could only locate Mr. Brown, who joined the meeting.

[19] Mr. Beettam and Mr. Brown said that Mr. Dawe requested an exit strategy or plan. Mr. Brown said that Mr. Dawe wanted the company to offer him a severance package. Mr. Dawe said in his affidavit, "I did suggest we look at ways to disengage my employment from Equitable. I was upset that my integrity was being questioned and precipitously felt that I might have no choice but to leave."

[20] Mr. Dawe took a few days off. He consulted a lawyer. Negotiations over a severance package ensued. At this time, Mr. Dawe alleged that he had been harassed and bullied by Mr. Beettam. When asked for further details, Mr. Dawe provided handwritten notes concerning two incidents beyond the hockey ticket incident. One note referenced a heated discussion between the two men in 2010, and the other note referenced a meeting in 2013 in which Mr. Beettam was allegedly acting aggressively toward Mr. Dawe, and raised his voice. Mr. Dawe's lawyer refused to provide further details at the time. No agreement was reached on Mr. Dawe's terms of departure.

[21] Equitable Life ultimately determined that Mr. Dawe's future employment with the company was untenable. His employment was terminated on October 8, 2015, effective the following day. Mr. Dawe rejected an offer of 24 months' notice and the Terminal Awards under the LTIP and STIP. His combined Terminal Award payments under both plans amounted to a little over $400,000. The termination letter included a requirement to sign a release of claims. Mr. Dawe refused to sign the release and payment of the Terminal Awards was withheld. However, despite his refusal to sign the release, Mr. Dawe was paid eight weeks of termination pay in lieu of notice, as well as twenty-six weeks of severance pay in accordance with the provisions of the Employment Standards Act, 2000, S.O. 2000, c. 41 ("ESA").

[22] Mr. Dawe was 62 years old when he was terminated. He had worked with Allstate/Equitable Life for 37 years – his entire career. As Mr. Dawe said in his affidavit, he planned to work until he turned 65 years old, roughly 30 months after his termination date.

C. Issues on Appeal

[23] The appellant raises the following grounds of appeal: (1) the motion judge improperly dealt with contested facts that were irrelevant to the issues before him; (2) the motion judge erred in finding that the appropriate notice period was 30 months; and (3) the motion judge erred in finding that Mr. Dawe was entitled to his full LTIP and STIP bonus payments during the notice period, instead of the Terminal Awards.

D. Analysis

(1) Consideration of Facts Irrelevant to the Issues

[24] As noted above, both parties moved for partial summary judgment, restricted to the issues of the notice period and Mr. Dawe's bonus entitlement. Mr. Dawe's other claims, including claims for punitive and moral damages were left by the parties for another day.

[25] In his reasons, the motion judge referred to facts that were arguably relevant to these other claims, but were irrelevant to reasonable notice and bonus entitlement. For example, in his description of the events that led to Mr. Dawe's dismissal, the motion judge was critical of Equitable Life. Referring to the cost to Equitable Life as a result of what he considered to be "such a minor dispute", the motion judge said, at para. 25: "The shareholders would not be impressed, assuming they were made aware of this case. The triggering event did not warrant a verbal reprimand. Management could have done better."

[26] At another point in his reasons, at para. 28, he referred to "serious issues regarding management's conduct" and questioned whether the "termination was a planned event over a period of time." However, he said, at para. 29: "This evidence will be relevant only to the remaining claims to be determined at trial. The events referred to have no part in this motion and are not considered in this decision."

[27] Equitable Life submits that these findings were unrelated to the issues at hand and "give the appearance of having influenced the decisions regarding notice and the STIP and LTIP incentive plans that followed."

[28] I agree that the motion judge's comments were not necessary to the issues he was tasked with deciding. Nevertheless, while these comments were better left unsaid, I am not persuaded that they had any influence on the motion judge's findings on the substantive issues before him.

[29] I would dismiss this ground of appeal.

(2) The Notice Period

[30] Equitable Life argues that the motion judge erred in determining that 30 months was the proper notice period and that, based on this court's authorities, the notice period should have been 24 months. I agree.

[31] The motion judge was aware of this court's jurisprudence on damages for wrongful dismissal. At para. 30, he referred to the leading decision of Lowndes v. Summit Ford Sales Ltd. (2006), 206 O.A.C. 55 (C.A.). Writing for the court, Cronk J.A. observed in Lowndes, at para. 11, that the determination of what constitutes reasonable notice is "case-specific" and, while there is "no absolute upper limit or 'cap' on what constitutes reasonable notice, generally only exceptional circumstances will support a base notice period in excess of 24 months". Cronk J.A. found, at paras. 13-16, that Mr. Lowndes had not established that his circumstances were exceptional, warranting a notice period exceeding 24 months.

[32] This court has followed the Lowndes approach over the years. The Lowndes approach was endorsed in Keenan v. Canac Kitchens Ltd., 2016 ONCA 79, 29 C.C.E.L. (4th) 33, at para. 30. In Keenan, the court declined to set aside an award of 26 months' notice, finding that the plaintiffs, who were husband and wife, had established exceptional circumstances, based on their ages at the time of termination (63 and 61 years old), their lengthy service (32 and 25 years), and the character of the positions they held.

[33] In Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520, 349 O.A.C. 360, at para. 42, the court cited Lowndes and Keenan in affirming that reasonable notice is determined on "a case-specific basis", and while there is no cap, "generally only exceptional circumstances will support a base notice period in excess of 24 months." The court refused to increase a base notice period of 20 months.

[34] In this case, the motion judge took a different approach. His conclusion that a notice period of 30 months was appropriate did not rest on the presence of exceptional circumstances; instead, it was based on his perception of broader social factors that led him to conclude that the "presumptive standards" discussed in Lowndes were inapplicable. The motion judge said the following, at para. 31:

Whether it is exceptional circumstances or recognizing a change in society's attitude regarding retirement, the particular circumstances of the former employee must be considered. For many years, the usual retirement age was considered to be 65. Pension plans improved as a result of the labour movement, introducing, for example, an 80 factor for most employees in the public sector and many in large companies in the private sector. That lead [sic] to some individuals retiring between the age of 50 and 60. But many were not ready to fully retire. They sought out additional employment or simply continued to work in their existing position. Further, mandatory retirement was abolished in 2006 in Ontario to protect against age discrimination. Many employees have continued past 65. In result, it is important to recognize that each case is unique. Presumptive standards no longer apply. See, for example: Filiatrault v. Tri-County Welding Supplies Ltd., 2013 ONSC 3091, at paras. 54 and 59. [Emphasis added.]

[35] The motion judge considered that Mr. Dawe was 62 years old when he was terminated from a very senior position, at a company he had served for 37 years. He said that Mr. Dawe "had made no decision as to when retirement would occur", adding that he was committed to working at Equitable Life until "at least age 65" and "it was more likely he would have worked there to a later age than an earlier one": at para. 35. The motion judge placed Mr. Dawe at "the extreme high end" of each of the factors set out in Bardal v. Globe and Mail Ltd., [1960] O.W.N. 253 (H.C.), and said, at para. 36, "I would have felt this case warranted a minimum 36 month notice period". In finding that Mr. Dawe was entitled to 30 months' notice, the motion judge ensured that Mr. Dawe would be fully compensated just beyond his 65th birthday.

[36] The motion judge's approach to reasonable notice was in error. First, he should have applied the Lowndes line of authority instead of relying on his own perceptions of the "change in society's attitude regarding retirement": at para. 31. There was no basis in the record for making such sweeping statements.

[37] As the motion judge observed, mandatory retirement was abolished in Ontario in 2006: see Ending Mandatory Retirement Statute Law Amendment Act, 2005, S.O. 2005, c. 29 (previously known as Bill 211). But this legislative initiative would have been known at the time of the Lowndes appeal, which was decided after Bill 211 was enacted, but before most of its provisions came into force.

[38] Further, more recent authorities from this court have not altered the approach in Lowndes. Keenan and Strudwick were decided a decade after Lowndes. Neither decision suggests that the end of mandatory retirement in Ontario ought to alter the traditional approach to determining reasonable notice. It was not open to the motion judge to chart his own course in light of these authorities.

[39] It is unclear why the motion judge chose to rest his reasonable notice determination on mandatory retirement considerations. It was irrelevant to Mr. Dawe's situation. In his affidavit, Mr. Dawe swore that he planned to retire at age 65. There was no basis in the evidence to find that he would have worked later.

[40] In any event, Mr. Dawe's plans regarding retirement are not determinative in ascertaining Equitable Life's obligations towards him. In Strudwick, this court rejected Ms. Strudwick's submission that in the circumstances, she was entitled to pay and benefits up to the age of 65, when she would retire. Epstein J.A. noted that absent a fixed term contract, "an employer does not guarantee employment to retirement": at para. 45. She further held that in entering the employment relationship, an employer cannot reasonably be seen as having accepted the risk that in dismissing an employee, it would be obligated to pay that employee until their retirement: see paras. 46-48.

[41] The motion judge's reasons suggest that he viewed this case as being "tantamount to forced retirement": see paras. 34, 36. However, the record is clear that, in the throes of a conflict with his senior executive colleagues, Mr. Dawe initiated the process of his own departure from Equitable Life. He requested an "exit strategy". While Mr. Dawe may have soon come to regret his decision, this factor ought to have weighed against a finding that this case involved "exceptional circumstances" justifying a notice period in excess of 24 months.

[42] I agree with the motion judge that Mr. Dawe's circumstances – including his senior position, career-long years of service at the same company, age at the time of termination, and his difficulty in finding new employment – warranted a substantial notice period. However, there was no basis to award Mr. Dawe more than 24 months' notice.

[43] Mr. Dawe's circumstances are similar to those of the employee in Lowndes. Mr. Lowndes was 59 years old at the time his employment was terminated. He had worked for the appellant employer for approximately 28 years, and held a management and director position at the time of termination. In concluding that exceptional circumstances had not been established, Cronk J.A. recognized Mr. Lowndes' status as a long-term employee who had exhibited loyalty and dedication to the employer's business over most of his working career. However, she noted that the base notice period of 24 months "recognizes" and "rewards" these factors, and constitutes the "high end of the appropriate range of reasonable notice for long-term employees in [Mr. Lowndes'] position": at para. 15.

[44] I would allow this ground of appeal and reduce the notice period to 24 months.

(3) Damages for Bonus Entitlement

[45] Equitable Life appeals the motion judge's finding that Mr. Dawe was entitled to damages as compensation for the loss of his bonus entitlements during the notice period. The motion judge determined that the bonus payments under the LTIP and STIP were an integral component of Mr. Dawe's compensation, giving rise to a common law right of payment during the notice period. The motion judge found that this common law right was not displaced by the terms of the plans for three reasons. First, he found that the terms of the plans that purported to limit entitlement to the payment of the bonuses were ambiguous and unenforceable. Second, he found that these terms were not brought to Mr. Dawe's attention and Equitable Life did not meet its obligation to communicate these terms of employment to Mr. Dawe. Finally, the motion judge was of the view that Equitable Life's requirement that Mr. Dawe sign a release contravened the ESA.

[46] In my view, when read in context, the terms of the bonus plans are unambiguous, and the termination provision would have been enforceable against Mr. Dawe had it been brought to his attention. However, as explained below, there was an evidentiary basis which entitled the motion judge to conclude that the termination provision had not been brought to Mr. Dawe's attention and was unenforceable for this reason.

(a) Common Law Entitlement to the Bonus Payments

[47] Before the motion judge, Equitable Life argued that its bonus plans were completely discretionary. This was offered as a reason for not paying Mr. Dawe what he would otherwise have been entitled to under the STIP and LTIP during the applicable notice period. The motion judge ultimately rejected this position, at para. 52 of his reasons. This finding was not specifically challenged by Equitable Life on appeal; nor was Mr. Dawe's common law entitlement expressly acknowledged.

[48] Damages for wrongful dismissal generally include all compensation and benefits that the employee would have earned during the notice period: Paquette v. TeraGo Networks Inc., 2016 ONCA 618, 352 O.A.C. 1, at para. 16. This amount may include bonus payments that the employee would have been entitled to had they continued to be employed during the notice period: at para. 17. In Paquette, at paras. 30-31, this court articulated a two-part test for determining whether a wrongfully dismissed employee is entitled to damages for the loss of bonus entitlement: (1) was the bonus an integral part of the employee's 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 specifically remove the employee's common law entitlement? See also: Lin v. Ontario Teachers' Pension Plan, 2016 ONCA 619, 352 O.A.C. 10, at paras. 84-86; Singer v. Nordstrong Equipment Limited, 2018 ONCA 364, 47 C.C.E.L. (4th) 218, at paras. 21-22; Bain v. UBS Securities Canada Inc., 2018 ONCA 190, 46 C.C.E.L. (4th) 50, at para. 9.

[49] The motion judge correctly applied the first part of the Paquette test in finding that Equitable Life's bonus plans were an integral part of Mr. Dawe's compensation package. The motion judge identified the relevant factors involved in making this determination, including Mr. Brown's evidence concerning the competitive objectives of the compensation scheme as a whole, and the integral nature of the LTIP and STIP to the compensation scheme. The motion judge was aware of Mr. Dawe's history of having received a bonus every year he was employed (except once in 2011 or 2012, the same year that Mr. Beettam did not receive a bonus). Moreover, as the motion judge observed, the purpose of the LTIP was described in the plan document as "…an integral component of Equitable's executive cash compensation strategy consisting of a base salary program, short term (annual) incentives and long term incentives." Similar language is also found in the STIP.

[50] On this record, the motion judge was entitled to conclude that the payment of bonuses was an integral component of Mr. Dawe's compensation, giving rise to a common law entitlement to damages in lieu of bonus. This conclusion leads to the second part of the Paquette test – whether the common law entitlement was altered or removed by the language of the bonus plans.

(b) The Termination Provision

[51] Equitable Life argued that, at the time of his termination, Mr. Dawe's entitlement to bonus payments was specifically limited by the terms of the LTIP and STIP. The motion judge considered the terms of the plans and found that "the language used in the LTIP and STIP does not meet the requirement of an unambiguous alteration of Mr. Dawe's common law entitlement. Simply put, the wording is unclear and confusing": at para. 62. As explained below, I disagree with the motion judge's conclusion on this issue. I agree with the appellant that, in reaching this conclusion, the motion judge failed to read the plan documents as a whole, and instead applied a piecemeal approach by considering each relevant provision sequentially without regard to their combined effect: see Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 47; Amberber v. IBM Canada Ltd., 2018 ONCA 571, 424 D.L.R. (4th) 169, at paras. 47-50.

[52] In order to determine whether the plans limited Mr. Dawe's common law entitlement, it is necessary to take a closer look at the terms of the plans individually and in combination. During their submissions, counsel focused on the wording of the LTIP provisions which are substantially similar to the parallel STIP provisions. I will do the same.

[53] The plan is eight pages long. It employs highly technical language in explaining how the bonus scheme works.

[54] The key part of the document for the purposes of this appeal is "IX. Administrative Processes". In this part, an "Eligible Participant" is defined as someone "employed by the Corporation on the date an award is paid in order to receive an award". Eligible Participants who resign or who are terminated with cause "forfeit all rights under the Plan including any awards earned but not yet paid … and no award or pro-rated awards shall be paid."

[55] The plan provides for "Terminal Awards" in circumstances of retirement, death, and termination for cause. Terminal Awards are essentially pro-rated awards, determined by a complicated calculation set out in term IX.C.(a)(iv).

[56] The provision at the heart of this appeal is IX.C.(a)(iii) (i.e. the "termination provision"), which provides for Terminal Awards in circumstances of termination without cause, as follows:

Termination without Cause: An Eligible Participant terminated without cause will be entitled to receive only Terminal Awards calculated in sub-paragraph (a)(iv) (below), pro-rated to the last day of active employment, regardless of whether notice of termination is given or not given and regardless of whether the termination is lawful or unlawful, and only if the Eligible Participant provides the Corporation with a Full and Final Release in the manner required in the Eligible Participant's termination letter. [Emphasis added.]

For greater certainty, term IX.D, titled "Restrictions", provides:

a) Awards earned and awards actually paid shall not be considered in determining any entitlement to termination, severance or common law notice or payments in lieu of notice. Upon termination without cause and with or without notice, the Eligible Participant's only entitlements under this Plan shall be the Terminal Awards set out in section IX C.(a)(iv) (above).

[57] In analyzing the combined effect of these provisions, I start with this court's decision in Paquette. Similar to this case, the issue in Paquette was whether the employee was entitled to claim wrongful dismissal damages for bonus payments he would have earned during the notice period following his termination without cause. In Paquette, the motion judge found that a term of the bonus plan that required that a person must be an "active employee" was clear and unambiguous and, therefore, disentitled the employee to any bonus entitlement upon being terminated without cause. I note that the "active employee" term in the bonus plan at issue in Paquette is similar to the definition of "Eligible Participant" in this case quoted in para. 54 above.

[58] This court allowed the appeal. Writing for the court, van Rensburg J.A. determined that the motion judge had taken the wrong approach. She held, at para. 21, that the issue was not whether the employee was entitled to access bonus entitlements in accordance with the terms of the plan upon termination; instead, the question was whether he was entitled to damages comprised of the compensation and benefits that he would have been entitled to had he not been wrongfully dismissed: see also Taggart v. The Canada Life Assurance Company (2006), 39 C.C.E.L. (3d) 48 (Ont. C.A.), at paras. 11, 16.

[59] Moreover, van Rensburg J.A. stated that, had the employee been permitted to work through the reasonable notice period, he would have been "actively employed" and, under the terms of the plan, entitled to bonus payments: Paquette, at para. 21. An employee who receives payment in lieu of reasonable notice stands in the same position: Paquette, at para. 26; Taggart, at para. 16. Accordingly, the employer was not permitted to exploit the "actively employed" term by not permitting the employee to work through the reasonable notice period.

[60] Mr. Dawe stands in the same position in this case. Kimberly Oliver, Senior Consultant, Executive Compensation at Willis Towers Watson, provided evidence on the summary judgment motion. Willis Towers Watson is regularly retained by Equitable Life to design competitive executive compensation packages. Ms. Oliver acknowledged that, had Mr. Dawe worked through his notice period, he would have been entitled to normal (i.e., non-Terminal Award) payments under the LTIP and STIP.

[61] Citing Paquette, the motion judge held, at para. 61, that the first provision reproduced above requiring that an "Eligible Participant" "must be employed by the Corporation on the date an award is paid in order to receive an award", was "unenforceable". The motion judge found the remainder of the provisions reproduced above (terms IX.C.(a)(iii) and IX.D) to be too imprecise to oust Mr. Dawe's bonus entitlements. I disagree.

[62] As van Rensburg J.A. said in Paquette, at para. 31, "[t]he question is not whether the contract or plan is ambiguous, but whether the wording of the plan unambiguously alters or removes the appellant's common law rights". See also Taggart, at paras. 12, 19-20. In my view the LTIP and STIP do so limit Mr. Dawe's entitlement.

[63] This case is similar to Kieran v. Ingram Micro Inc. (2004), 189 O.A.C. 58 (C.A.), a case dealing with an employee's entitlement to stock options upon termination. Mr. Kieran had been dismissed without cause. The stock option plans provided that he had 60 days from the termination date to exercise any option rights then vested. The plan defined "termination of employment" as the date the employee "ceases to perform services for" the employer "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." Among other things, the motion judge determined that the language of the plans prevented Mr. Kieran from exercising his stock options.

[64] This court dismissed Mr. Kieran's appeal. Lang J.A. wrote, at para. 58 of Kieran, that there were no ambiguities in the terms of the plans. Recognizing that prior cases had found that general language such as "cessation of employment" may create ambiguity, Lang J.A. was satisfied that the wording of the plans in question did not. In Paquette, van Rensburg J.A. referred to Kieran and observed, at para. 43, that there was no ambiguity because the plans in Kieran did not speak only of termination or cessation of employment generally, "[r]ather, the plans anticipated the very event that occurred – the termination of employment without just cause or notice."

[65] In this case, the LTIP and the STIP went well beyond stipulating "active employment" as a precondition for bonus entitlement. The terms reproduced above address, with great precision, what happens to an eligible participant's bonus entitlement upon termination without cause. To repeat the words of van Rensburg J.A. in Paquette, the LTIP and STIP "anticipated the very event that occurred" – Mr. Dawe's dismissal without cause. This language unequivocally restricted his common law rights upon termination. The motion judge erred in finding otherwise. However, this does not end the inquiry. It is necessary to determine whether Mr. Dawe was properly informed of the termination provision unilaterally imposed by Equitable Life.

(c) Was the Termination Provision Properly Communicated?

[66] Equitable Life acknowledges that it unilaterally imposed changes to its compensation plan over the years, leaving its employees with the choice of accepting any new terms, or deciding to leave the company. This is consistent with the legal implications of unilateral changes to employment contracts.

[67] The motion judge referred, at para. 56, to Wronko v. Western Inventory Service Ltd., 2008 ONCA 327, 90 O.R. (3d) 547, at paras. 33-36, leave to appeal refused, [2008] S.C.C.A. No. 294, in which Winkler C.J.O. spoke of the three options available to employees in these circumstances: (1) accept the change either expressly or implicitly through acquiescence, thereby continuing employment under the newly imposed terms; (2) reject the changes and sue for damages if the employer insists on enforcing the new terms; or (3) notify the employer that the new term is rejected, leaving the employer the option of terminating the employee with proper notice and offering the employee re-employment on the new terms. See also Lin, at paras. 72, 75.

[68] Equitable Life contends that, over the years, Mr. Dawe always acquiesced to the changes to the bonus plans. He readily accepted the bonuses that he received. As noted above, he received memos each year, explaining how his bonus had been calculated. Moreover, he always had access to the details of the plans, and the STIP plan was available on the company's intranet. Mr. Dawe denied ever having the termination terms of the LTIP and STIP brought to his attention. Importantly, Mr. Dawe's position was accepted by the motion judge.

[69] In Paquette, van Rensburg J.A. alluded to providing employees notice of adverse provisions in bonus plans. At para. 18, she said: "To the extent that there are limitations [on the payment of the bonus], the question may arise as to whether they were brought to the attention of the affected employees and formed part of their contract of employment." However, notice was not a live issue in Paquette.

[70] The issue of proper notice was squarely addressed in Poole v. Whirlpool Corporation, 2011 ONSC 4100, 92 C.C.E.L. (3d) 350, aff'd 2011 ONCA 808, 97 C.C.E.L. (3d) 20. Poole involved an "actively employed" condition that the employer attempted to rely upon to limit entitlement to bonus payments. On a motion for summary judgment, Hoy J. (now A.C.J.O.) held, at para. 33: "There is no evidence that Mr. Poole at any time assented to or agreed to this limitation. Nor is there evidence that Mr. Poole was given a copy of the 2005 Bonus Plan, or advised of this limitation. Simply posting the Plan on Whirlpool's Intranet, without more, is insufficient." This finding was upheld on appeal. This court affirmed that the failure to establish that the limiting condition was drawn to the employee's attention at any time, either orally or in writing, precluded any "reliance by the [employer] on the precondition to defeat the [employee's] bonus claim": Poole, CA, at paras. 5-6.

[71] In this case, the motion judge relied upon Poole to find that Equitable Life failed to bring the limiting terms of the LTIP and STIP to Mr. Dawe's attention. He observed that there was no documentation to support Mr. Beettam's claim that he delivered copies of both documents to Mr. Dawe. Nevertheless, the motion judge found that "it was more likely than not" that the documents were delivered to Mr. Dawe: at para. 45. But this was not the end of the matter. At paras. 46-47, the motion judge found:

However, the uncontradicted evidence is that Mr. Beettam, and others at Equitable made no effort to bring the forfeiture provisions to Mr. Dawe's attention. The various memorandums referred to only identify the positive aspects of the bonus plan, in particular the calculation that would result in payment in that particular year.

… [T]he requirement is communication of the term the employer seeks to rely on. I am not persuaded simply providing a copy of the plan document meets this standard. In essence, providing only a copy of the document transfers the onus to the employee of finding any negative terms of employment. These are complex documents, drafted by lawyers, and most difficult to read and understand. In my view, an employer has a duty to inform the employee of all expected terms of employment. That is particularly the case here as Equitable Life had changed the method of establishing bonus plans and was attempting to introduce a forfeiture clause that was not part of the prior system. [Emphasis added.]

[72] The motion judge's conclusions are consistent with this court's decision in Wronko. Where changes are imposed unilaterally by the employer, the essence of the problem is whether the employee accepted the newly imposed terms of employment. In order to rely upon the limits created by the termination provisions, Equitable Life was required to prove that Mr. Dawe accepted these adverse, unilateral changes to an integral part of his compensation package. A pre-condition to acceptance is knowledge of the changes. On the record before the motion judge, he was entitled to find that Equitable Life failed to prove that Mr. Dawe knew about these changes, or that these changes were effectively communicated by Equitable Life to Mr. Dawe. Given the appellant's obligation to put its best foot forward on this motion for summary judgment, the motion judge was entitled to assume that there would be no further evidence at trial that would have assisted Equitable Life on this issue: see Bergen v. Fast Estate, 2018 ONCA 484, 30 M.V.R. (7th) 49, at para. 11.

[73] I acknowledge that there was some evidence that may have supported a finding that Mr. Dawe might have been aware of the unfavourable terms in the bonus plans. After all, he was a Senior Vice President and was involved in the termination of other employees, signing termination letters that adverted to some of the same provisions at issue on this appeal. The motion judge found that he received copies of the plans. The STIP was available on the company's intranet. All of this evidence was before the motion judge.

[74] Notably absent from the record was any direct evidence that the terms in question were brought to Mr. Dawe's attention. As counsel for Mr. Dawe argued on appeal, had Mr. Beettam's memo of March 29, 2006 contained one further sentence that referred to the termination provisions, it is quite possible that this litigation would never have been commenced. Alternatively, Mr. Dawe may have objected to the inclusions of these limitations, leading to scenarios (2) or (3), discussed in Wronko (at para. 67, above). Given how the transition of the bonus plans was implemented by Equitable Life, we will never know how things would have played out had Mr. Dawe been informed that he would be forfeiting large sums of money even if his employment were to be terminated without cause.

[75] The motion judge's ultimate conclusion on this issue hinges on considerations that are largely factual in nature. The discipline of deference requires us to respect his conclusion.

[76] Accordingly, I would dismiss this ground of appeal. However, I would adjust the motion judge's award to the extent that Mr. Dawe's bonus entitlement is aligned with the notice period of 24 months, instead of 30 months, as explained above.

(d) The Employment Standards Act, 2000

[77] In addition to his conclusions about the ambiguity of the language in the plans and lack of notice, the motion judge also found that Equitable Life was precluded from relying on the termination provision because it violated the provisions of the ESA by insisting that Mr. Dawe sign a release as a precondition to receiving the severance package that he was offered. Given my conclusion that the termination provision is unenforceable due to the lack of notice, it is unnecessary to address this issue to dispose of the appeal. However, I make the following brief comments.

[78] In reaching his conclusion that Equitable Life breached the ESA, the motion judge acknowledged this court's judgment in McNevan v. AmeriCredit Corp., 2008 ONCA 846, 94 O.R. (3d) 458, in which Epstein J.A. stated, at para. 57: "an offer of severance conditional on the execution of a release is not only standard but also wise corporate practice." Nevertheless, the motion judge found that the release in this case "went too far" because it required "Mr. Dawe to give up his common law rights to receive his statutory rights": at para. 67. He also held that the release infringed ss. 60 and 62 of the ESA because Equitable Life refused to pay the bonus during the notice period: at para. 67.

[79] The motion judge provided very brief reasons for reaching these determinations that were largely conclusory. Assessing the correctness of both determinations would require reading in or assuming certain findings that were not explicitly made by the motion judge in his reasons. Given my conclusion on the notice issue, it is unnecessary to engage in such an analysis to dispose of the appeal. Accordingly, these reasons should not be taken as an endorsement of the motion judge's conclusions regarding whether the release requirement contravened the ESA.

E. Conclusion

[80] I would allow the appeal to the extent that the notice period is reduced from 30 months to 24 months. Mr. Dawe's bonus entitlement is adjusted accordingly.

[81] If the parties cannot agree on the costs of the appeal, or adjustments to costs awarded on the motion, if any, they may make written submissions no more than five pages in length. The appellant shall serve and file its submissions within 10 days of this decision. The respondent shall serve and file its submissions within 7 days of receiving the appellant's submissions. No reply submissions are to be filed.

Released: June 19, 2019

"G.T. Trotter J.A."

"I agree. S.E. Pepall J.A."

"I agree. A. Harvison Young J.A."

Footnotes

[1] There were memos dated as follows announcing bonus entitlements: February 15, 2008 ($179,756.15); February 17, 2010 ($236,726); February 15, 2011 ($183,509.37); and February 12, 2013 ($165,691.61).

[2] Being terminated on October 8, 2015, 30 months' notice took Mr. Dawe to April 8, 2018, a few weeks after his 65th birthday.

[3] Lowndes was decided on January 6, 2006. The Ending Mandatory Retirement Statute Law Amendment Act, 2005 was assented to on December 12, 2005, but by virtue of s. 8 of the Act, most of its provisions did not come into force until December 12, 2006.

[4] The STIP plan document provides that the STIP is "…an integral component of Equitable's cash compensation strategy consisting of a base salary program and annual variable incentives."

[5] The "active employee" term required that the employee be "actively employed" by the employer at the time the bonus was paid: see Paquette, at para. 10.