Court of Appeal for Ontario
Judges: Strathy C.J.O., Doherty and Sharpe JJ.A.
Between
Larry O'Reilly Plaintiff (Respondent/Appellant by way of cross-appeal)
and
IMAX Corporation Defendant (Appellant/Respondent by way of cross-appeal)
Counsel
For the Respondent/Appellant by way of cross-appeal: M. Catherine Osborne and Justin Tetreault
For the Appellant/Respondent by way of cross-appeal: Trevor Lawson and Brandon Kain
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.
Reasons for Decision
[1] Introduction
1This 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.
2In this case, the employer, IMAX, contended that the terms of the employee's 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.
3The 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 employee's options had been cancelled as a result of his dismissal.
4The employee cross-appeals, claiming the motion judge erred in calculating his damages for the loss of the options and RSUs.
5For the reasons that follow, I would dismiss both the appeal and the cross-appeal.
I. Factual Background
6The respondent, Larry O'Reilly, 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.
7His 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.
8After unsuccessful attempts to negotiate a severance package, IMAX extended the effective termination date from March 31, 2016 to July 8, 2016. It advised Mr. O'Reilly 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."
9Mr. O'Reilly brought an action for wrongful dismissal. The parties agreed that the issues could be dealt with by summary judgment.
II. The Motion Judge's Reasons
10The 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 respondent's 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.
11None of these conclusions is subject to appeal.
12The remaining issue was the respondent's 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.
13The motion judge concluded that the respondent's 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.
14The motion judge found that the language of the relevant awards was not sufficient to cancel the respondent's 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.
15The appellant appeals this aspect of the judge's order.
16Having 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 respondent's 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.
17This determination is the subject of the cross appeal.
III. The Contractual Provisions
18The 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 Participant's 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 Participant's employment with the Company terminates as a result of the Participant's 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 Participant's 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 Participant's 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.
19A 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 Participant's 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
20The respondent concedes the appellant's 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.
21I begin with the governing principles applicable to the issue on this appeal.
B. The Governing Principles
22The principle underlying an award of damages for wrongful dismissal "is that the terminated employee is entitled to compensation for all losses arising from the employer's 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.
23It 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).
24In this court's decision in Taggart, Sharpe J.A. articulated the approach to be taken by courts in determining an employee's claim. At para. 12 of his decision, he stated:
In my opinion, the proper way to analyze the respondent's 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.
25With 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 employer's 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 employee's compensation: Paquette, at paras. 17, 30; Lin v. Ontario Teachers' Pension Plan, 2016 ONCA 619, 402 D.L.R. (4th) 325, at para. 86.
26If 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 employee's 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 [employee's] 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.
27A 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.
28In 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 holder's 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.]
29Goudge J.A. rejected the appellant's 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 employee's 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.]
30Similarly, 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.
31Finally, 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 employee's 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.
32A 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:
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.
This principle applies to bonuses, stock options, or incentives that are an integral part of the employee's compensation, as well as pension benefits that would have accrued or been earned during the reasonable notice period.
In considering whether the loss of such benefits is recoverable, the court undertakes a two-step analysis.
The first step requires a determination of the employee's 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.
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.
33Before applying these principles to the facts of this case, I will address the appellant's 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.
34The 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.
35For the reasons that follow, I would not accept the appellant's submission that Kieran is dispositive of this case. The contractual language is not substantially the same.
36Mr. Kieran was a Senior Vice President of Ingram Micro Inc. This court reversed the trial judge's 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 judge's 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 court's 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.
37In 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.
38The Restricted Plan provided:
If Participant's 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 participant's 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].
39The Equity Plan provided:
Except as the Committee may at any time otherwise provide or as required to comply with applicable law, if the Participant's employment with Micro or its Affiliates is terminated for any reason other than death, disability, or retirement, the Participant's 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].
40The 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).
41The Rollover Plan provided:
Except as the Committee may at any time otherwise provide or as required to comply with applicable law, if the Participant's employment with the Participant's Employer or any of its Subsidiaries is terminated for any reason other than death, permanent and total disability, retirement or Cause, the Participant's 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].
42The 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.
43The trial judge found that the provisions of the plans dealing with the employee's 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.
44This court affirmed the trial judge's 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.
45First, the plans unambiguously stated that Mr. Kieran's 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.
46Second, the Restricted and Equity plans "specifically provided that Mr. Kieran's 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.
47And 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.
48In 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 employee's 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.
49But 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 employee's common law right.
50Mr. 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.
51The 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 respondent's awards should be found to have ceased to vest on the effective date of his termination.
52I would not accept the appellant's submission that Kieran is dispositive of this case. While the language in all the plans at issue in this case extinguish the respondent's 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.
53While 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.
54I would therefore reject the appellant's 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
55The 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 respondent's 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.
56In 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.
57The 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.
58I would therefore dismiss the appeal.
V. The Cross-Appeal
59The thrust of the respondent's cross-appeal is that, having accepted the plaintiff's 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 plaintiff's 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."
60The 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 judge's conclusion that he would have retained his shares in a falling market amounted to a palpable and overriding error.
61I 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.
62Nor did the motion judge make a palpable and overriding error in his assessment of the evidence concerning damages. He rejected IMAX's 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-appellant's actual sales during the reasonable notice period. This was an appropriate approach to take. As for the cross-appellant's 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
63For these reasons, I would dismiss both the appeal and the cross appeal.
64There 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: December 17, 2019
"George R. Strathy C.J.O."
"I agree. Doherty J.A."
"I agree. Robert J. Sharpe J.A."
Footnotes
1That 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).
2The 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.
3In 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.
