Court File and Parties

CITATION: Korn/Ferry v. Rosin, 2016 ONSC 4535 COURT FILE NO.: 200/16 DATE: 2016-07-12

SUPERIOR COURT OF JUSTICE – ONTARIO DIVISIONAL COURT

RE: Korn/Ferry Canada Inc., Plaintiff/Defendant by Counterclaim/ Responding Party AND: Jeff Rosin, Defendant/Plaintiff by Counterclaim/Moving Party

BEFORE: Conway J.

COUNSEL: Barbra H. Miller and Patrick Copeland for the Plaintiff/Defendant by Counterclaim Matthew P. Gottlieb and Andrew Winton, for the Defendant/Plaintiff by Counterclaim

HEARD: In Writing

Endorsement

[1] Mr. Rosin, the defendant and plaintiff by counterclaim, seeks leave to appeal the decision of Stewart J. dated April 13, 2016.

[2] Mr. Rosin was a long time employee of Korn/Ferry Canada Inc. (the “Company”). He became President and a director in May 2003 and remained in that position until his resignation in November 2014.

[3] When he resigned, the Company sued Mr. Rosin on various promissory notes that he had signed with respect to his bonuses. Mr. Rosin counterclaimed against the Company for payment of amounts that he alleged were owed to him under the Company’s supplementary employee retirement plan (“SERP”). The Company claimed that Mr. Rosin forfeited those amounts under the terms of the SERP when he engaged in a “detrimental activity” after his resignation, by operating a competitive business.

[4] The Company brought a motion to stay the counterclaim pursuant to the SERP’s arbitration clause. Mr. Rosin brought a cross-motion for summary judgment alleging that the forfeiture clause in the SERP is unenforceable and that the Company is required to pay all amounts owed to him under the SERP.

[5] The motions judge dismissed Mr. Rosin’s summary judgment motion. She held that the enforceability of the forfeiture clause was a largely fact-driven matter and could not be determined on a paper record, noting numerous factual issues that called for a trial. She held that since the summary judgment exception in section 7(2) of the Arbitration Act, 1991 did not apply, the counterclaim was required to proceed to arbitration pursuant to the dispute resolution provisions of the SERP.

[6] I do not accept Mr. Rosin’s argument that the motions judge’s decision conflicts with the case of Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200, affd 2014 ONCA 878. While that case states that legally and factually complex issues may be determined on summary judgment, it does not require a court to do so. It is clear from the motions judge’s decision that she was not prepared to find the forfeiture provision unenforceable in view of the conflicting evidence about, among other things, the nature of the compensation provided by the SERP, the reasonableness of the “detrimental activity” clause in light of the parties’ relationship, and the actions taken by Mr. Rosin following his resignation. Her conclusion that she could not make a “fair and just resolution” of this issue on the evidence before her is not inconsistent with the principles articulated in Sweda Farms.

[7] There is also no good reason to doubt the correctness of the motions judge’s decision to dismiss the motion for summary judgment. She was well aware of the summary judgment test in Hyrniak v. Mauldin, 2014 SCC 7, which she quoted in her decision. She identified ten key issues that were fundamental to a determination of whether the forfeiture clause is unenforceable – in particular, the issue of (i) whether the SERP was a “gratuitous benefit” or represented deferred compensation that Mr. Rosin had already earned by the time of his resignation; and (ii) whether the detrimental activity clause, in light of the parties’ relationship, could be characterized as a reasonable incentive to encourage employee loyalty or an unlawful restraint of trade. There is no good reason to doubt her decision that these issues were not amenable to summary judgment on the evidentiary record before her.

[8] The motions judge also recognized that under section 7(2) of the Arbitration Act, summary judgment is an exception to the presumptive stay of proceedings where the parties have agreed to arbitrate their disputes: see Ontario Hydro v. Denison Mines, [1992] O.J. No. 2948; Momentous.ca Corp. v. Canadian American Association of Professional Baseball Ltd., 2010 ONCA 722. I note that this exception is a discretionary one. Once the motions judge determined that summary judgment was not an appropriate means to resolve the forfeiture issue, she directed that the issue proceed to arbitration in accordance with the provisions of the SERP. There is no conflicting decision on this point, nor is there good reason to doubt the motions judge’s decision to hold the parties to their agreement.

[9] Finally, I see nothing in the motions judge’s decision that transcends the interests of the parties or raises an issue of public importance.

[10] The motion for leave to appeal is denied. Mr. Rosin shall pay costs of $4,000, all inclusive, to the Company on a partial indemnity basis.

Conway J.

Date: July 12, 2016