COURT FILE NO.: CV-19-2121-00 DATE: 20200717

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

KEVIN SEWELL Stephen J. Moreau, for the Plaintiff Plaintiff

- and -

PROVINCIAL FRUIT CO. LIMITED Landon P. Young, for the Defendant Defendant

HEARD: July 15, 2020 via video conference

REASONS FOR JUDGMENT

MANDHANE J.

INTRODUCTION

[1] The plaintiff brought a motion for summary judgment to determine the notice payable as a result his termination by the defendant. The defendant consents to the matter proceeding by way of summary judgment, and I agree with the parties that this is an appropriate case for summary judgment per Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87.

[2] I have reviewed the complete record and was assisted by counsel’s able submissions.

[3] For the following reasons, I award the plaintiff damages equivalent to four months of notice plus applicable benefits, less amounts already paid to the plaintiff and less amounts the plaintiff earned during this notice period in mitigation of his damages.

FACTS

[4] The plaintiff was employed by the defendant in a senior sales role from approximately October 9, 2018 until he was terminated on April 17, 2019. His total annual compensation was $126,200 and he was eligible to receive a discretionary bonus of 10% and 15% of his salary.

[5] The plaintiff was contracted by a head-hunter and eventually attended an interview with the defendant. At the interview, the defendant encouraged the plaintiff to accept their employment offer in the hopes that the parties would enjoy a long relationship.

[6] The defendant did not “induce” the plaintiff to leave his existing employment. Rather, the arrangement was mutually beneficial as the plaintiff had tried to change jobs prior to accepting the defendant’s employment offer and seemed ready for a change. The plaintiff in his submissions admitted that he does not have a strong case to support a finding of inducement.

[7] The plaintiff signed an employment contract that included the following termination clause:

b) Termination by the Company for Just Cause

The Company is entitled to terminate your employment at any time and without any notice or any further compensation for just cause and the Company will not have any further obligations to you whether at contract, under statute, at common law or otherwise.

c) Termination by the Company without Just Cause

(A) The Company will be entitled to terminate your employment at any time without just cause by providing you with the following:

(ii) a payment, or at the Company’s sole option, notice or combination of notice and pay in lieu of such notice representing termination pay and, if applicable, severance pay, as may be required under the Employment Standards Act, 2000, as amended from time to time (the “Separation Period”);

It is agreed that upon compliance with the above provisions, the Company will be release from any and all obligations to you, whether statutory, under contract, at common law or otherwise.

[8] I accept the plaintiff’s evidence that he signed the contract expecting that it would accurately set out the main terms of his employment as discussed with the defendant, as well as comply with employment standards legislation. I also accept that he did not understand the full implications of the “termination” clauses and that they were never explained to him.

[9] Given the power differential between the parties and the good faith basis upon which they had established their relationship, I accept that it was reasonable for the plaintiff to sign the contract without parsing out the potential meaning of the termination provisions or seeking independent legal advice.

[10] The plaintiff was eventually terminated without cause. The defendant paid the plaintiff two weeks’ salary and benefits (approximately $4,853.85 less statutory deductions), consistent with the employment contract and the requirements of the Employment Standards Act, 2000, S.O. 2000, c. 41 (“ESA”).

[11] The plaintiff mitigated his damages by accepting a new position with an annual salary of $92,000 on or around August 9, 2019.

POSITIONS OF THE PARTIES

[12] The plaintiff seeks:

• a declaration that he was wrongfully dismissed;
• a declaration that the termination provision set out in the employment contract is null, void and unenforceable;
• a declaration that the defendant breached an implied term of the employment contract which required reasonable notice;
• damages in the amount of $84,133.40, representing eight months of income payable during the period of reasonable notice, less amounts already paid to the plaintiff and less amounts the plaintiff subsequently earned during this notice period in mitigation of his damages;
• damages in the amount of $18,930.00, representing the bonus the plaintiff would have received;
• damages for the loss of benefits during the notice period;
• damages representing the value of accrued and unused vacation;
• pre-judgement and post-judgement interest pursuant to ss. 128 - 129 of the Courts of Justice Act, R.S.O 1990, c. C.43, as amended;
• costs; and
• such further and other relief as this Honourable Court may deem just.

[13] The defendant submits that the employment contract between the parties is enforceable such that no damages are owed. In the alternative, its position is that a common law notice period of three to four months is reasonable.

ANALYSIS

[14] Based on the following recent Court of Appeal for Ontario decisions, I find that the employment contract at issue violated the minimum standards set out in the ESA and is therefore illegal and unenforceable: Waksdale v. Swegon North America Inc., 2020 ONCA 391; Wood v. Fred Deeley Imports Ltd, 2017 ONCA 158, 134 O.R. (3d) 481; and Rossman v. Canadian Solar Inc, 2019 ONCA 992, 444 D.L.R. (4th) 131.

[15] These cases make it clear that courts should exercise their discretion in favour of protecting employees and must look at the employment agreement as a whole, over its entire expected duration, to determine whether it satisfies the minimum requirements of employment standards legislation.

[16] The contract at issue in this case violates the ESA for two reasons. First, a plain reading of the contract supports the plaintiff’s argument that it combines notice and severance pay entitlements in violation of the ESA requirement to pay both notice and severance. The provision states:

The Company will be entitled to terminate your employment at any time without just cause by providing you with ... a payment, or at the Company's sole option, notice or a combination of notice and pay in lieu of such notice, representing termination pay and, if applicable, severance pay

[17] Indeed, this provision is substantially similar to the one deemed illegal by the Court of Appeal for Ontario in Wood. The Wood termination clauses stated:

[The Company] is entitled to terminate your employment at any time without cause by providing you with 2 weeks’ notice of termination or pay in lieu thereof for each completed or partial year of employment... The payments and notice provided for in this paragraph are inclusive of your entitlements to notice, pay in lieu of notice and severance pay

[18] The only substantial difference between the provisions is that the Wood clause specified a notice and severance period of 2 weeks per year, whereas the contract in this case left the amount of notice and severance open. This difference is not significant in terms of the Court’s reasoning in Wood and I find that the contract at issue in this case is void.

[19] Second, applying Waksdale, I find that the “Termination for Just Cause” provision of the contract was illegal insofar as it contracted around the ESA requirement to provide notice except in cases where an employee engaged in “willful misconduct.” Based on the Court of Appeal’s reasoning, I must read the contract as a whole and set it aside if one or more of the terms are illegal, even if the offending term is not at issue in the instant case.

[20] Based on this analysis, the employment contract is void and the plaintiff is entitled to common law reasonable notice.

[21] Setting the length of notice is an art not a science and requires the court to consider the factors set out in Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.), namely:

• the character of the employment;
• the length of service of the servant;
• the age of the servant; and
• the availability of similar employment, having regard to the experience, training and qualifications of the servant.

[22] Here, the following facts are relevant to the Bardal analysis:

• That the plaintiff was employed in a senior sales position with long-term growth potential;
• That the plaintiff was not induced to leave his existing employment insofar as there was no extended negotiation of the employment terms and the plaintiff was already motivated to make a move;
• That the plaintiff was 45 years old and had approximately seven to eight years of experience in the industry prior to joining the defendant’s company;
• That the plaintiff was terminated after a short period of service (six months); and
• That the plaintiff was eventually able to find suitable employment, albeit at a lower salary.

[23] Bearing in mind these factors and the numerous cases relied upon by counsel, I find that the defendant owes the plaintiff four months of common law notice, plus benefits and minus approximately two weeks of mitigation.

[24] I reject the plaintiff’s submission that he is entitled to between six and eight months’ notice based on his previous long term employment and inducement. My findings of fact do not support the notice period sought by the plaintiff.

[25] A four-month notice period is consistent with case law provided by the parties. The defendant provided comparable cases with notice periods ranging from three to five months: see, e.g., Shaham v. Airline Employee Travel Consulting Inc., 2018 NSSM 18; Avelin v. Aya Lasers Inc., 2018 BCSC 2313; and Saalfeld v. Absolute Software Corp., 2009 BCCA 18.

[26] In Avelin, a 47-year-old senior sales representative employed for seven months was awarded four months’ notice after being wrongfully dismissed. As in this case, the plaintiff was unemployed for four months before finding employment at a lower salary.

[27] The plaintiff provided cases with notice periods ranging up to one year. However, by the plaintiff’s own submission, the general range is around six months where there is no inducement.

[28] The plaintiff relies on Beglaw v. Archmetal Industries Corp., 2004 BCSC 1369, in which the court awarded six months’ notice to a 49-year-old plaintiff who was discharged after four months of service. However, unlike the facts in this case, that plaintiff was hired as a manager and was described by the court as having “major supervisory responsibilities as well as major reporting obligations.”

[29] The plaintiff also relies on Antunes v. Limen Structures Ltd., 2015 ONSC 2163, aff’d 2016 ONCA 509, in which Brown J., in obiter, noted that he would have awarded eight months’ notice to a 50-year-old plaintiff with 20 years of experience who has worked for five months as a senior project manager. However, Antunes is distinguishable insofar as Brown J. found that the employment contract in that case was not negotiated in good faith and that comparable employment was not readily available.

[30] Considering the similar ranges proposed by the parties for a case without inducement (i.e. three to five months in the defendant’s submission and six months in the plaintiff’s submission) and the Bardal factors listed above, I find that a four-month notice period is reasonable.

[31] I decline to award damages in relation to the bonus. If find that the corporate bonus program was entirely discretionary and the plaintiff would not have received a bonus given the concerns about his sales performance.

CONCLUSION

[32] I rely on the calculations put forward by counsel that the damages owing amount to $35,356.19. The plaintiff is entitled to applicable pre and post-judgment interest.

[33] Both counsel made extensive submissions on costs, provided their Bills of Cost at the conclusion of the hearing and confirmed that there were no relevant offers to settle.

[34] Given his success at the hearing, the plaintiff is entitled to costs. He produced a substantial evidentiary record to support this motion and, on that basis, the plaintiff’s Bill of Costs is reasonable. While counsel should not be penalized for making novel arguments that are neither frivolous nor vexatious, I agree with the defendant that the plaintiff’s novel arguments in this case unnecessarily increased the complexity of the proceedings. On that basis, I would award costs on a partial indemnity basis.

[35] The plaintiff is entitled to $20,000. in costs, including HST and disbursements.

Mandhane J.

Released: July 17, 2020

COURT FILE NO.: CV-19-2121-00 DATE: 20200717 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: KEVIN SEWELL Plaintiff - and - PROVINCIAL FRUIT CO. LIMITED Defendant REASONS FOR JUDGMENT Mandhane J. Released: July 17, 2020