COURT OF APPEAL FOR ONTARIO
CITATION: Groves v. UTS Consultants Inc., 2020 ONCA 630
DATE: 20201002
DOCKET: C67641
Juriansz, Hourigan and Thorburn JJ.A.
BETWEEN
Wayne Groves
Plaintiff
(Respondent)
and
UTS Consultants Inc.
Defendant
(Appellant)
Casey M. Dockendorff and Giovanna Di Sauro, for the appellant
Kumail Karimjee and Mika Imai, for the respondent
Heard: September 28, 2020
On appeal from the judgment of Justice Sandra Nishikawa of the Superior Court of Justice dated September 27, 2019, with reasons reported at 2019 ONSC 5605
REASONS FOR DECISION
(1) Introduction
[1] This is an appeal from a judgment granting the respondent’s motion for summary judgment in his action for wrongful dismissal.
[2] The appellant raises several grounds of appeal, primarily arguing that the motion judge made extricable errors of law in her analysis of the appellant's employment contract. We are not persuaded that appellate intervention is warranted. Accordingly, for the reasons that follow, the appeal is dismissed.
(2) Background
[3] In November 2014, the respondent, Wayne Groves, executed a commercial agreement to sell the shares of 1223099 Ontario Limited o/a UTS Consultants ("122") to the appellant, UTS Consultants Inc. ("UTS"). Before the transaction, Mr. Groves had been a shareholder, officer, and director of 122 for many years.
[4] Under the terms of the share sale, Mr. Groves signed a resignation stating that he resigned as an officer and director of 122. Mr. Groves also executed a release in connection with the transaction. On the same day, Mr. Groves entered into an employment agreement with UTS.
[5] On September 26, 2017, UTS terminated Mr. Groves without cause. Mr. Groves commenced an action for wrongful dismissal and brought a motion for summary judgment in that action. UTS brought a cross-motion for summary judgment.
[6] In granting Mr. Groves’ summary judgment motion, the motion judge found that he resigned as an officer and director of 122, but never resigned as an employee. She further found that both the termination provision in the employment contract and the release were void because they breached Employment Standards Act, 2000, S.O. 2000, c. 41, (“ESA”). The motion judge concluded that a reasonable notice period was 24 months and that Mr. Groves was entitled to damages, including bonus pay, which was an integral part of his compensation.
(3) Grounds of Appeal
[7] UTS raises the following grounds of appeal:
(a) The motion judge erred by failing to interpret the resignation, release, and employment contract in the context of the share sale;
(b) The motion judge erred in finding that Mr. Groves had not resigned as an employee of 122;
(c) The motion judge erred in her interpretation of the release;
(d) The motion judge erred in her conclusion that a reasonable notice period was 24 months; and
(e) The motion judge erred in including bonus payments as part of the entitlements to which Mr. Groves would be entitled throughout the notice period.
(4) Analysis
[8] Before analyzing the grounds of appeal, it is essential to consider the applicable standard of review. Issues of contractual interpretation of non-standard form contracts of the sort at issue in this appeal are generally questions of mixed fact and law and are reviewable on the standard of palpable and overriding error. Only extricable questions of law are reviewed on a correctness standard: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 50-52.
[9] An extricable question of law includes the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor. In Sattva, the Supreme Court directed courts of appeal to be cautious in identifying extricable questions of law in disputes over contractual interpretation. The court recognized that it is often difficult to extricate a legal issue from the factual matrix, and in such cases, the alleged error is a question of mixed fact and law: Sattva, at paras. 53-54.
[10] Many of UTS’ arguments advanced on this appeal endeavour to categorize the motion judge’s findings of mixed fact and law as extricable errors of law, in an attempt to have this court review the alleged errors on a correctness standard.
(a) Commercial Context
[11] UTS’ principal argument is that the motion judge made an extricable error in law by failing to interpret Mr. Groves’ employment contract in the context of the commercial agreement between the parties. UTS submits that the motion judge erred in applying the principles enunciated in Wood v. Deeley, 2017 ONCA 158, 134 O.R. (3d) 481, without considering that the factual matrix at hand, being a commercial transaction, differs from a typical employment contract.
[12] Relying on the Supreme Court’s decision in Payette v. Guay Inc., 2013 SCC 45, [2013] 3 S.C.R. 95, a case about the enforceability of a non-competition clause, UTS argues that the motion judge should have interpreted Mr. Groves’ employment contract according to the intention of the parties as part of their commercial transaction.
[13] This argument is not persuasive. A fair reading of the motion judge's reasons makes plain that she repeatedly averted to the share transaction and took into account the factual matrix in her analysis. To the extent that UTS is advancing an argument that in the context of a commercial contract, the ESA provisions do not apply, we disagree. There is nothing in the ESA that indicates that it is inapplicable in employment relationships connected to commercial transactions.
(b) Resignation
[14] UTS submits that the motion judge erred in fact in finding that Mr. Groves resigned as a director and president of 122 but not as an employee. UTS further submits that the motion judge's failure to apply this court's decision in Cosentino v. Sherwood Dash Inc., 2014 ONCA 843, constituted an extricable error of law. We do not accept these submissions.
[15] The motion judge’s finding that Mr. Groves did not resign was well rooted in the evidence, including an admission by UTS’ affiant on cross-examination that Mr. Groves did not resign.
[16] We also see no error in the motion judge’s finding that Cosentino is distinguishable on the basis that, in that case, the share purchase agreement contemplated continued employment only if requested by the purchaser and then only for one month.
[17] Given these conclusions, it is unnecessary to consider Mr. Groves’ alternative argument that s. 65(2) of the ESA renders the issue of resignation irrelevant.
(c) Release
[18] UTS’ position is that the motion judge erred in her consideration of the release. Specifically, it is submitted that the motion judge failed to properly construe the document as releasing only Mr. Groves’ common law entitlements and not his ESA rights. Further, UTS argues that the motion judge erred in law in not following Kerzner v. American Iron & Metal Company Inc., 2018 ONCA 989, leave to appeal to S.C.C. refused, 38503 (May 23, 2019), where this court set aside a waiver of ESA rights but did not interfere with the release of common law rights.
[19] We note that UTS’ position on this issue has changed on appeal. Previously it submitted that the parties intended for Mr. Groves to waive all of his claims arising from his termination under the release, including ESA claims. Now it asserts that the release was intended to waive common law claims only.
[20] Leaving aside the issue of the inconsistency in UTS’ position, this ground of appeal is fully answered by the motion judge’s finding at paragraph 66 of her reasons, where she states:
In Kerzner, however, the release did not specifically waive the employee’s ESA entitlements. In this case, the language of the release is broader than the provision in Kerzner. The release states that it releases and discharges "any claims" for "termination or severance pay" which are not common law entitlements, but rather entitlements under the ESA. Given that this violates the ESA, it is null and void for all purposes: Cormier, at paras. 87-88.
[21] This was a finding of mixed fact and law that was open to the motion judge. We see no basis for appellate interference and would therefore dismiss this ground of appeal.
(d) Notice Period
[22] This submission may be dealt with summarily. Given our conclusions on the other grounds of appeal, Mr. Groves was not limited to notice based only on his post-sale employment period. Therefore, we see no error in the motion judge's conclusion that Mr. Groves, as a 65-year-old with over 25 years of service, was entitled to a notice period of 24 months' notice.
(e) Bonus
[23] The motion judge awarded Mr. Groves damages for a pro-rata bonus for the period in 2017 when he was employed and for lost bonuses during the notice period from September 26, 2017 to September 26, 2019.
[24] In so doing, the motion judge applied the two-step process mandated by Paquette v. TeraGo Networks Inc., 2016 ONCA 618, 352 O.A.C. 1 to determine whether an employee is entitled to compensation for a bonus. She first found that Mr. Groves had a common law entitlement to a bonus and then concluded that nothing in the bonus plan removed that common law entitlement.
[25] With regard to the common law entitlement, UTS submits that there was no evidence that the parties entered into a bonus plan after 2015. We disagree. There was ample evidence to support the motion judge’s finding that the bonus plan continued beyond 2015, including Mr. Groves’ termination letter drafted by UTS, which references a bonus program during 2017.
[26] We also see no error in the motion judge's finding that the bonus was an integral part of Mr. Groves’ compensation. The evidence established that the bonus was 30 percent of his salary and was an incentive to ensure that Mr. Groves remained with and grew the business.
[27] Regarding whether the terms of the plan disentitled Mr. Groves to a bonus, this was an issue of mixed fact and law. We are not satisfied that the motion judge made a palpable and overriding error in her analysis.
(5) Disposition
[28] The appeal is dismissed. Consistent with the parties’ agreement, UTS shall pay Mr. Groves his costs of the appeal in the all-inclusive sum of $15,000.
“R.G. Juriansz J.A.”
“C.W. Hourigan J.A.”
“J.A. Thorburn J.A.”