DATE: 20021223

DOCKET: C36939

COURT OF APPEAL FOR ONTARIO

RE: DAVID GEORGE and CLARA L. GEORGE (Plaintiffs/ Respondents) –and– IMAGINEERING LIMITED and SEYMOUR EPSTEIN ENTERPRISES INC. (Defendants/Appellants)

BEFORE: LASKIN, SIMMONS and GILLESE JJ.A.

COUNSEL: P. David McCutcheon and Eric Hoffstein, for the appellant

Peter L. Biro and Chris Foulton, for the respondent

HEARD: December 17, 2002

RELEASED ORALLY: December 17, 2002

On appeal from the judgment of Justice William J. Festeryga of the Superior Court of Justice dated August 10, 2001.

E N D O R S E M E N T

[1] The appellant raises four issues.

[2] First, the appellant contends that the trial judge erred in finding that Mr. George was constructively dismissed. We disagree. In our view, the February 1995 correspondence and the respondent’s evidence of his subsequent telephone call with Mr. Epstein reasonably support the trial judge’s finding. In substance, the appellant unilaterally changed the terms of the respondent’s employment contract from one of indefinite hiring to a fixed-term contract, terminable after one year.

[3] Second, the appellant submits that the trial judge erred in holding that it was required to assign the keyman insurance policy. On this issue, we agree with the reasoning of the trial judge in paragraph 80 of his reasons.

[4] Third, the appellant makes two points on damages. First, it contends that we should calculate the dismissal damages on the basis of Mr. George’s reduced salary. But, as the trial judge stated at paragraph 64 of his reasons, because there was no new agreement, Mr. George’s damages must be calculated on the basis of his previous employment contract as company president. Second, the appellant attacks the Wallace extension. However, the trial judge’s award of an extension is fully justified on the record.

[5] Finally, the appellant asks to be reimbursed for the lieu time payments made to the respondent. We think it is too late for the appellant to assert this claim. The appellant condoned the payments and cannot now be heard to reclaim them.

[6] One final matter arose during oral argument and that is whether the respondent should be required to account for the pension payments he has received after September, 1995. We do not think he should be because paragraph 5 of the policy required the appellant to assign the policy on the date of his termination. Only following the assignment was the appellant discharged from further liability. As the appellant did not do so, it would now be inequitable to require the respondent to account for these payments.

[7] Accordingly, the appeal is dismissed. The respondent is entitled to his costs. However, we see no basis to award these costs on a substantial-indemnity basis. We think the appropriate scale is partial indemnity. Taking into account not only the preparation and argument of the appeal, but as well the fees incurred in connection with the stay, a fair figure for costs is that proposed by the appellant – $35,000 plus disbursements and G.S.T. That money will be paid out of the money in court to the credit of the solicitors for the respondent. The remaining money in court will be paid out to the credit of the solicitors for the appellant. Finally, an order shall also issue in accordance with paragraph 55(c) of the respondent’s factum.

Signed: “John Laskin J.A.”

“Janet Simmons J.A.”

“E.E. Gillese J.A.”