CITATION: Fraser v. Canerector Inc., 2015 ONSC 7519

DIVISIONAL COURT FILE NO.: 432/15 DATE: 20151207

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

BETWEEN:

STUART FRASER Plaintiff/Appellant

– and –

CANERECTOR INC. Defendant/Respondent

Tim Gleason, for the Appellant Wm. Mark Fryer, for the Respondent

HEARD at Toronto: November 18, 2015

M.A. Sanderson J.

REASONS FOR DECISION

Introduction

[1] The Plaintiff/Appellant, Stuart Fraser (hereinafter “Fraser”), seeks leave to extend the time to file his notice of Appeal from the order of Dunphy J. dated April 7, 2014.

[2] Fraser is a former employee of the Defendant/Respondent, Canerector Inc. (hereinafter “Canerector”).

[3] On June 30, 2014, Fraser commenced a wrongful dismissal action against Canerector, seeking damages in lieu of reasonable notice and damages in lieu of bonus payments that he would have received but for his wrongful dismissal.

[4] Fraser moved for summary judgment on March 24, 2015, before Dunphy J.

[5] In his Reasons dated April 7, 2015, Dunphy J. awarded damages in lieu of reasonable notice period of 4.5 months, but denied Fraser’s claim for damages in lieu of bonus payments. Fraser had claimed damages in lieu of bonus payments exceeding $200,000.00. The motion judge determined that the bonus was discretionary and did not award any damages in lieu of bonus payments. He then noted that if he had found that Fraser had any entitlement to damages in lieu of bonus, he would have awarded $37,187.50.

[6] Fraser seeks an extension of time to appeal the determination of Dunphy J that he was not entitled to any damages in lieu of bonus.

The Evidence Relevant to the Request to Extend the Time to Appeal

[7] Fraser deposed at paragraph 4 of his affidavit sworn August 17, 2015 “I have always intended to bring an appeal, since I received the motion judge’s reasons on April 7, 2015”. He was not cross-examined on his affidavit.

[8] The plaintiff’s lawyer erroneously believed that the time for filing a notice of appeal was 30 days following the date that the judgment was issued and entered with the court. This was incorrect. The time for filing a notice of appeal expired on May 6, 2015.

[9] Fraser’s lawyer did not discover his error until August of 2015 when he was preparing the notice of appeal. In the interim, he and counsel for Canerector had been discussing outstanding issues related to the form of the order.

[10] Once he discovered his error, Fraser’s lawyer immediately took steps to correct it by retaining counsel. The motion record was served and filed on August 19, 2015.

The Test to be Applied

[11] The decision to extend time the time for filing a notice of appeal is discretionary.

[12] In Rizzi v Mavros 2007, ONCA 350 at 16, Gillese JA identified five factors to be considered by the court in exercising this discretion:

(a) whether the appellant formed an intention to appeal within the relevant period;

(b) the length of the delay and explanation for the delay;

(c) any prejudice to the respondent;

(d) the merits of the appeal; and

(e) whether the "justice of the case" requires it.

[13] The Court of Appeal explained in Enbridge Gas Distribution Inc. v Froese 2013 ONCA 131 that "The overarching principle is whether the ‘justice of the case’ requires that an extension be given. Each case depends on its own circumstances, but the court is to take into account all relevant considerations”.

Application of the Test

Whether the Moving party had formed a bona fide intention to appeal

[14] Counsel for Fraser submitted that Fraser immediately formed an intention to appeal the motion judge's rulings on the bonus payment.

[15] Counsel for Canerector submitted that Fraser did not form a bona fide intention to appeal the Decision before May 7, 2015.

The Length of and the explanation for the Delay in Filing

[16] This motion was brought on August 19, 2015 roughly three and a half months after the deadline to serve and file a Notice of Appeal, May 7, 2015.

[17] Counsel for Fraser relied on Byers (Litigation guardian of) v. Pentex Print Master Industries Inc., 2003 Carswell Ont 18.

[18] Counsel for Canerector attempted to distinguish the facts in that case on the basis that in Byers, the court was dealing not with a simple lawyer’s error, but rather a lawyer’s error made in the context of a new legal regime.

Is there any Prejudice to the Defendant Caused by the Delay

[19] Canerector did not assert that it would suffer any prejudice as the result of the lawyer’s error.

The Merits of the Proposed Appeal

The Motions Judge Erred in Characterizing the Bonus as Discretionary

[20] Counsel for Fraser submitted that Dunphy J. erred in holding that Fraser was not entitled to any damages in lieu of bonus because the bonus was discretionary.

[21] Counsel for Fraser intends to submit on the appeal if an extension is granted that contrary to the motion judge's conclusion, this was not a case like Rawlley v Coretec Inc, in which the employee was told that bonuses were paid "when and where applicable".

[22] He intends to submit that Fraser was told, and understood, that participation in the bonus plan was an entitlement and that the bonus itself was non-discretionary, even if the quantum of bonuses was discretionary.

[23] He will submit that in Turner v Canadian Admiral Corp, [1980] OJ No 3002 at 12 (H Ct J) , the Court held that a dismissed employee was entitled to a bonus on the grounds that it was non-discretionary and an integral part of the employee's salary structure:

If the bonus or salary increase were purely ex gratia payments, I would agree with the defendant's contention. But those payments were not made by the company on that basis... [P]ersons at the plaintiff's level received an annual increase and bonus as a matter of course. Historically, increases and bonuses were forthcoming every year. . As I view the pattern, they formed an integral part of the applicable salary structure, and as far as the plaintiff and others in comparable positions were concerned, they were 'money in the bank' so to speak. The defendant is not entitled to deny the plaintiff the salary increase and bonus that would have accrued to him during the notice period. While technically there may be a discretion, as the defendant argues, as to whether these payments should be made to a particular employee, that discretion has never been exercised against an employee and it would be unfair here, in my opinion, to deprive the plaintiff of these salary payments.

[24] Counsel for Fraser intends to submit on the appeal if the extension is granted that as in Turner, the evidence in the case at bar was that Fraser’s bonus was an integral part of his remuneration, even if the defendant retained discretion with respect to its quantum. He and other employees in his position received a bonus annually as a matter of course, and his bonus (like that of similarly situated employees' bonuses) increased annually. The evidence of the other employees in his position was that the defendant had never exercised its discretion to give them a nil bonus.

[25] Counsel for Fraser intends to submit that it was an error in principle for the motion judge to conflate the quantification of bonuses with Fraser’s contractual right to participate in the bonus plan. .As a result of this conflation, the motion judge held that the bonus plan itself (rather than merely decisions with respect to quantum of bonus under the plan) was discretionary. Given the motion judge's conclusion that the moving patty was contractually entitled to participate in the bonus plan, he should have held it was non- discretionary and considered the evidence of what other employees in comparable positions received in the same time frame and the evidence related to his performance and the performance of the company. His denial of the moving party's claim for any damages in lieu of bonus amounted to an arbitrary determination that the quantum of Fraser’s bonus should be nil. This quantum cannot be reconciled with the evidence of bonuses paid to the other employees in Fraser’s position.

[26] Counsel for Fraser intends to submit on the Appeal if the extension is granted that that determination was contrary to the evidence , including the following:

(a) Fraser had been repeatedly told during his recruitment that employees in his position received bonuses in the range of 100% of base salary. In paragraph 13 of his affidavit sworn on January 9, 2015 and paragraph 7 of his affidavit sworn on February 13, 2015, Fraser deposed that Paul Tuzi (hereinafter “Tuzi”) and Jonathan Puddy (hereinafter “Puddy”) were the ones to whom he had spoken about bonuses;

(b) These representations were consistent with an internal email dated January 1, 2014 sent by Cecil Hawkins, Canerector’s owner, to one of Fraser’s supervisors, containing the following: “My sense of the Liaison position is a base salary of $200,000, and a bonus in a ‘typical’ year of $200,000, which could go up or down as much as 50 per cent based on performance ...”; After that memo was sent Fraser had received a bonus of $175,000;

(c) Fraser’s employment contract specifically referred to his eligibility to participate in Canerector’s bonus program;

(d) Fraser had received bonuses in each year and partial year of his employment at the defendant, and these bonuses, ranging from $50,000 (for his partial year of work in 2011) to $175,000 (for 2013), constituted a significant portion of his remuneration;

(e) Contrary to the motion judge's findings that bonuses “were capable of being assessed at nil” and that the defendant had “numerous examples of nil bonus being awarded”, there was no evidence of any employees in the plaintiff's position receiving a zero bonus.

[27] Counsel for Canerector submitted that: (1) the evidence of Puddy was that when he discussed bonuses with Fraser, he did not tell him he could expect any particular bonus amount or a bonus at all; he did not tell Fraser that anyone at Canerector had received a bonus in excess of 100% of their base salary; he told Fraser that some people could conceivably receive bonuses of as much as 100% of their salaries and that he had personally received a bonus when he closed a deal; and, he warned Fraser that people could also get lower bonuses or no bonus at all; (2) the evidence of Tuzi was that he never discussed bonuses at Canerector with Fraser.

[28] Counsel for Canerector submitted that Dunphy J. considered the January 1, 2014 email from Cecil Hawkins in detail at paragraphs 49, 50 and 51 of his Reasons and made findings of fact leading to the following conclusion: “I cannot attach undue importance to the January 1, 2014 email”. The motions judge wrote at par 52:

The Division Liason position is one that he occupied less than a year prior to his termination and the musings about what the bonus policy towards Mr. Fraser in that new position might have become in future cannot be mutated into findings that such musing had already become an integral part of Mr. Fraser’s contractual entitlements…

Treating the email as any part of Mr. Fraser’s contract would transform the court’s role from an objective search for the terms of an actual agreement…based upon the evidence regarding their reasonable expectations into an unguided tour of hopes and aspirations anchored by no more than personal opinions.

Obviously, it cannot inform me as to the terms of the contract as regards bonus entitlement at the time Mr. Fraser was originally hired in 2011."

[29] Counsel for Canerector submitted that although Fraser’s employment contract specifically referred to his eligibility to participate in the bonus program, it did not provide that he was entitled to be paid a bonus.

[30] Furthermore, the evidence of Puddy and of Ms. Amanda Hawkins (hereinafter “Ms. Hawkins”) was that, before signing his employment contract, Fraser asked for further discussion and clarification with regard to his eligibility to participate in the bonus plan. Before the employment contract was signed, Puddy clarified the bonus plan at Canerector was completely discretionary and based on employee performance. Puddy also informed Fraser that there was no formula, no cap and no minimum as to a bonus entitlement.

[31] The evidence of Ms. Hawkins was that, in the previous four (4) years, at least four (4) executives did not receive bonuses.

[32] In summary, counsel for Canerector submitted that there was sufficient evidence upon which Dunphy J. could find that that the bonus plan was discretionary. He held: “There is no question that the plaintiff fully appreciated that the bonuses were discretionary ...”.

The Motions Judge Erred in Failing to Assess Damages Because it was too Difficult

[33] Counsel for Fraser also submitted that a claimant ought not to be denied damages simply because they are difficult to quantify. The fact that damages are difficult to estimate or assess to the point where they are little better than a guess does not relieve the wrongdoer from paying damages for breach of contract...Multi-Malls Inc v Tex-Mall Properties Ltd, 1981 1780 (ON CA), [1980] OJ No 3093 at 127 (H Ct J), aff'd 1981 3012 (ON CA), [1981] OJ No 2872 (CA) [Multi-Malls], citing Wood v Grand Valley R Co (1915), 51 SCR283 Chaplin v Hicks, [1911]2 KB 786 (Eng CA)Webb & Knapp (Canada) Ltd v City of Edmonton, 1970 173 (SCC), [1970] SCR 588 [Webb & Knapp].

[34] He cited Martin v Goldfarb, 1998 4150 (ON CA), [1998] OJ No 3403 at p.175 (CA) for the principle that where damages are difficult to assess, the court must do the best it can in the circumstances… [W]here the assessment is difficult because of the nature of the damage proved, the difficulty of assessment is no ground for refusing substantial damages even to the point of resorting to guess work.

[35] Counsel for Canerector submitted that Dunphy J. did not deny Fraser’s bonus payments because they were difficult to quantify. Rather, Dunphy J. responded to Fraser's argument that there must be an objective assessment of the bonus by reiterating that the bonus plan, “...was fundamentally and by its nature discretionary and thus subjective” and by explaining that discretionary bonuses do not entitle an employee to damages.

[36] Counsel for Canerector submitted that once Dunphy J made the finding that the bonus was discretionary, he correctly applied the law that an employee is only entitled to recover, by way of damages, a bonus he was entitled to receive under the contract of employment. Where a bonus is discretionary, the employee is not entitled to any damages for the bonus.

The Motion Judge Erred In Holding That an Employee Must Be a Continuing Employee to Qualify For a Bonus

[37] Counsel for Fraser submitted that without a written agreement restricting bonuses or any evidence that such a term was communicated to the moving party during his employment it was a palpable and overriding error for the motion judge to conclude that “only employees who were still active, contributing employees after year end had any rights to be considered for bonus”?

[38] He cited Grace v Reader's Digest Assn (Canada) Ltd, 1995 7287 (ON SC), [1995] OJ No 2671 at 64 (Gen Div), quoted in Poole, supra at 32 where Sharpe J. (as he then was) explained that if there was a condition to payment of a bonus, that precondition must be communicated by the employer:

where there is a non-discretionary bonus and where the employer seeks to rely on a term requiring the employee to meet certain conditions such as being on the pay­ roll as of a certain date, the employer must communicate that requirement to the employee. If the employer has failed to do so, then the employee is entitled to claim the bonus.

[39] In Poole v Whirlpool Corporation, the Court of Appeal wrote:

The appellants contend that to be eligible for a bonus under the applicable Bonus Plan, the respondent was required to be actively employed on December 31st of the year for which the bonus was claimed. As the respondent was fired in March 2010, he did not qualify for a bonus in 2010 or 2011.

The motion judge was correct to reject this contention. The bonus eligibility precondition relied on by the appellants was not incorporated in the respondent’s 2007 letter of employment; nor was there any evidence that the precondition was otherwise drawn to the respondent’s attention at any time, whether orally, in writing, or by means of the appellants’ internal intranet communication system, or what he ever agreed to it…

The appellants’ failure to lead evidence or otherwise establish through cross- examination of the respondent that they had communicated the bonus eligibility precondition to the respondent or obtained his assent or agreement to it precludes any reliance by the appellants on the precondition to defeat the respondent's bonus claim.

[40] Counsel for Fraser referred to the following information furnished by Canerector in satisfaction of its undertakings: “Employee C” received a bonus in 2013 and was not employed in 2014, which he submitted suggested that the year-end precondition did not apply to Employee C, unless he or she was terminated on December 31, 2012.

[41] Counsel for Canerector submitted that the need to communicate bonus eligibility precondition relied on by Fraser were not applicable. In each of the decisions to which counsel for Fraser has referred on this issue, the Court was dealing with non-discretionary bonuses, not discretionary bonuses. Dunphy J. relied on the facts set out in paragraph 59 of his Decision and he did not err in holding that only employees who were actively employed at year end had any entitlement to be considered for a bonus.

The Trial Judge Erred in His Quantification of the Bonus

[42] Fraser also seeks to appeal the motion judge's alternative determination of the quantum of the bonus to which he would be entitled. Counsel for Fraser intends to submit that there were ample reliable metrics on which to determine the quantum of bonus, which were not given due weight by the motion judge.

[43] For example, the motion judge ought to have relied on the January 1, 2014 internal email from Cecil Hawkins, the owner of Canerector to Fraser’s supervisor, which indicated that the typical bonus for a Division Liaisons was around 100% of base salary, with an adjustment of up to 50%, upward or downward, based on performance. Subsequent to this email exchange, the defendant awarded the moving party a bonus of $175,000 for 2013, and increased his salary for 2014.

[44] Counsel for Fraser submitted that a quantum of bonus in this range would have been consistent with the pre-employment representations made to the plaintiff, as well as with the history of bonuses Fraser received and those received by other employees at his level. These reliable indicators of Fraser’s entitlement were not properly considered by the motion judge.

[45] He also failed to consider that Fraser had asked Canerector for particulars pertaining to the performance issues referred to Canerector’s materials, and it had failed to provide any evidence of any warnings given to Fraser, or any unfavourable comparisons of Fraser’s work to relevant targets.

Conclusions

[46] In all the circumstances here, I am of the view that it is in the interests of justice to extend the time for Fraser to file his Notice of Appeal.

[47] I have accepted Fraser’s sworn statement that from April 7, 2015, the date he received the Reasons of Dunphy J., he intended to appeal.

[48] His lawyer made an inadvertent error with respect to the date on which the Notice of Appeal needed to be filed. As soon as he discovered the error, he immediately took steps to correct it. This motion to extend the time to appeal was brought shortly thereafter on August 19, 2015. In my view a reasonable explanation has been provided for the three and a half month delay.

[49] Counsel for Canerector does not allege any prejudice as the result of the delay.

[50] On the merits issue, in considering the merits of the proposed appeal on a motion to extend the time for filing a notice of appeal, the test is not to “determine whether the appeal will succeed, but to determine whether it has so little merit that the court could reasonably deny the important right of an appeal”. Issasi v Rosenzweig, 2011 ONCA 112 at 10 Duca Community Credit Union Ltd v Giovannoli, 2001 24017 (ON CA), [2001] OJ No 36 at 14 (CA).

[51] The court will not refuse an extension of time simply because the motion judge is entitled to deference with respect to the issues that the appellant seeks to appeal. The Court of Appeal explained in Denomme v McArthur, 2013 ONCA 694 as follows:

...The respondents on this motion submit that there is no merit to the appeals. The appeals appear to challenge the trial judge's appreciation of the evidence and his factual conclusions.

As this court is required to accord a high degree of deference to a trial judge's findings of fact, it is difficult to see the merit in the appeals. However, a party is entitled to appeal and should not be deprived of that entitlement where there is no real prejudice to the other side.

[52] While I accept the submissions of counsel for Canerector that many of Fraser’s grounds of appeal are largely fact-based, and that on appeal, trial judges are accorded significant deference regarding findings of fact, my task is not to determine whether the appeal will succeed but rather to determine whether the potential appeal has so little merit that the Court could reasonably deny Fraser’s appeal. Counsel for Fraser has raised a number of issues set out above that in my view merit consideration on an appeal. The right to an appeal is an important right. I cannot say the potential appeal has so little merit that the important right to appeal should be denied.

[53] In my view the justice of the case requires this extension of time to appeal. Clients should not be irrevocably prejudiced by reason of the inadvertence of their lawyers, especially in cases such as this where no prejudice from the delay is being asserted and where issues have been raised that merit consideration on appeal.

Disposition

[54] In the result, leave is hereby granted to the Plaintiff to extend the time to file his notice of appeal until 10 days from the release of these Reasons.

[55] The parties have agreed on costs of this motion of $7,000 payable by the unsuccessful party, here Canerector.

___________________________ M.A. Sanderson J.

Released: December 7, 2015

CITATION: Fraser v. Canerector Inc., 2015 ONSC 7519 DIVISIONAL COURT FILE NO.: 432/15 DATE: 20151207

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

BETWEEN:

STUART FRASER

Plaintiff/Appellant

– and –

CANERECTOR INC.

Defendant/Respondent

REASONS FOR DECISION

M.A. Sanderson J.

Released: December 7, 2015