Court of Appeal for Ontario

CITATION: Gadbois v. Newcom Business Media Inc., 2016 ONCA 898

DATE: 20161129

DOCKET: C62152

Weiler, Rouleau and Roberts JJ.A.

BETWEEN

Marc Gadbois

Respondent (Plaintiff)

and

Newcom Business Media Inc.

Appellant (Defendant)

John A. Howlett, for the appellant

Daniel Chodos, for the respondent

Heard: November 8, 2016

On appeal from the judgment of Justice Sidney N. Lederman of the Superior Court of Justice, dated April 8, 2016, with reasons reported at 2016 ONSC 2310.

ENDORSEMENT

[1] Mr. Gadbois was terminated without notice from his employment. He brought an action for damages for wrongful dismissal and the trial judge determined the period of reasonable notice was 16 months. That determination is not at issue in this appeal. The issue is the amount that the appellant is entitled to receive in compensation as damages for the failure to give him reasonable notice of termination. Gadbois’ compensation had three components: base salary, commission income and bonus, if any. The commission income and bonus form the subject of this appeal.

[2] The following facts are relevant to the commission income issue.

[3] Gadbois was primarily responsible for selling advertising space in two magazines owned by Business Information Group (“BIG”), namely, Service Station Garage Management (“SSGM”) and L’automobile. Newcom acquired the assets of BIG in January 2015 and retained Gadbois. The parties signed a new employment contract on January 24, 2015, which essentially provided for the same salary, commission, bonus and benefits as Gadbois had been receiving from BIG.

[4] Newcom merged its pre-existing publication Canadian Technician (“CT”) with SSGM to form a new magazine: Canadian Auto Repair & Service (“CARS”). Upon merging, Newcom’s existing CT advertising contracts were handed over to Gadbois so that he could arrange with the clients to switch their ads into CARS. Emails from Newcom’s representative Joe Glionna to Gadbois, dated January 31 to February 27, 2015 indicated he was to make efforts to convince CT advertisers to switch their advertising into CARS and they would talk commission later. The parties agree that a new agreement on commission was never reached.

[5] Newcom submits that Gadbois did not “earn” commission on the CT sales because they were simply switched into CARS and the trial judge erred in awarding Gadbois commission based on the full amount of CARS advertising revenue.

[6] The fact is that for the first six months of the year preceding his termination, Gadbois was paid commission respecting advertising for CARS, including the CT sales, at the rate stipulated for SSGM in the contract. It was open to the trial judge to hold that as Newcom had continued to pay Gadbois for all CARS revenue at the commission rate under the SSGM contract this should be continued during the notice period. The trial judge did not commit any overriding and palpable error in this regard.

[7] With respect to the bonus, the appellant submits that the motion judge erred in awarding a bonus for 2015. Specifically, the appellant points to the evidence of its representative and submits that it did not support the motion judge’s conclusion that the appellant had promised the respondent he would receive a bonus regardless of the company’s profits.

[8] We agree.

[9] There is no question that a judge’s findings of fact are entitled to deference and cannot be disturbed on appeal in the absence of overriding and palpable error, such as a misapprehension of the evidence. In our view, the motion judge erred by misapprehending the evidence given by the appellant’s representative, which was the foundation for his conclusion that a bonus was promised and should be paid to the respondent.

[10] Mr. Glionna testified as follows:

Also, some people were compensated based on a bonus on profit, and obviously with bank debt and changes, there’s no profit in the company for the next couple of years, we honoured – we told Mr. Gadbois and other sales reps and other publishers that we would honour those bonuses, you know, despite the fact that there really would be no profit in the company.

So the basic message was we would guarantee nobody goes down after all the changes were taking place throughout transition.

[11] In our view, Mr. Glionna’s evidence about payment of bonuses ought to have been read in the context of the entirety of his evidence that qualified it. In the portion of the transcript immediately preceding this excerpt, Mr. Glionna explained that the company had given all sales representatives a guarantee that their total compensation for 2015 would not decrease relative to the previous year’s because of the change in ownership. He then went on to explain, as noted above, that the company understood that “some people were compensated based on a bonus on profit”. Those bonuses would be honoured so that compensation for those employees would not decrease in 2015. And again, in the portion following the above excerpt, Mr. Glionna confirmed that “we guaranteed Mr. Gadbois would not have a decrease in total compensation over the previous years is what was guaranteed.”

[12] Moreover, this evidence had to be considered in light of all of the evidence before the motion judge. Specifically, the evidence was that the respondent’s bonus was discretionary and that none had been paid to him in 2014. Further, because of the commissions he earned, his 2015 compensation, including the pay in lieu of reasonable notice awarded by the motion judge, greatly exceeded what he received in 2014. Even in the absence of any bonus, his income went from $88,605 in 2014 to well in excess of $130,000 in 2015.

[13] Finally, the respondent does not allege, in his affidavit, that he was promised a bonus regardless of the company’s profits. The respondent did not give any evidence that the appellant made a verbal commitment to pay a bonus regardless of the company’s profits. Indeed, on his cross-examination, the respondent testified that he could not recall having any conversation with the appellant concerning a verbal commitment that his 2015 compensation would not be less than his rate of compensation in 2014.

[14] As a result, we would therefore allow the appeal with respect to the bonus issue.

Disposition

[15] Accordingly, we dismiss the appeal with respect to the motion judge’s award of commission but allow the appeal with respect to the payment of a bonus to the respondent during the period of reasonable notice. We leave it to the parties to calculate the adjustment to the amount of damages otherwise payable to the respondent.

[16] The appellant argues that, in light of the reduction in the damages awarded to the respondent, the cost award in the court below should be revisited. Specifically, the costs awarded below were based on partial indemnity up to October 13, 2015, the date of the respondent’s offer to settle, and substantial indemnity thereafter. The reduction in the award has brought the award below the amount in the offer to settle.

[17] For his part, the respondent argues that the cost award of $28,000 plus HST was a negotiated figure and reflects a reduction in the amount that he could have properly claimed.

[18] In our view, a modest cost adjustment is appropriate in the circumstances. Significant costs will have been incurred after the date of the offer to settle and the inability to recover those costs on a substantial indemnity basis dictates a reduction in the amount awarded. As a result we would reduce the costs awarded on the motion to $22,000 plus HST.

[19] As for the costs of the appeal, the respondent was largely successful and is awarded costs fixed at $7,500 inclusive of disbursements and applicable taxes.

“K.M. Weiler J.A.”

“Paul Rouleau J.A.”

“Lois Roberts J.A.”