Court of Appeal for Ontario

Date: 2017-07-05 Docket: C62529

Judges: LaForme, Hourigan and Paciocco JJ.A.

Between

Mark Couper Plaintiff (Respondent and Appellant by way of cross-appeal)

and

Nu-Life Corp., Nu-Life Nutrition Ltd., Vitaquest International LLC and Keith Frankel Defendants (Appellants and Respondents by way of cross-appeal)

Counsel

John J. Pirie and Jennifer R. Bernardo, for the appellants and respondents by way of cross-appeal

John J. Adair, for the respondent and appellant by way of cross-appeal

Heard: Thursday, June 29, 2017

On appeal from: the judgment of Justice John A.B. MacDonald of the Superior Court of Justice, dated April 29, 2016.

Reasons for Decision

[1] This appeal and cross-appeal concern a contractual dispute between two friends and their respective companies.

[2] Mark Couper was the president of the appellant Nu-Life Corp., which was affiliated with Nu-Life Nutrition Ltd ("Nu-Life"). He was friends with Keith Frankel, the senior executive officer of Vitaquest International LLC ("Vitaquest"). Nu-Life was a vitamin retailer based in Ontario and Vitaquest was a vitamin manufacturer based in New Jersey.

[3] For a period of time, Vitaquest supplied Nu-Life with vitamins for the purpose of sale. Vitaquest eventually became the primary financier of Nu-Life.

[4] Nu-Life became insolvent in 2002, requiring it to make a restructuring proposal. As a result of the restructuring, Vitaquest held a 90 per cent equity interest in Nu-Life. Mr. Couper's employment contract with Nu-Life was terminated. Discussions between Mr. Frankel and Mr. Couper ensued about an employment contract for Mr. Couper with Vitaquest. The trial judge found that an oral agreement was reached in October 2003 (the "employment agreement"). His findings about the terms of the contractual arrangements between Mr. Couper and Vitaquest are the subject of this appeal and cross-appeal.

[5] The issues on the appeal and the cross-appeal were narrowed considerably by the parties. On the appeal brought by Nu-Life, Vitaquest and Mr. Frankel, the only issue is whether the trial judge erred in finding that Mr. Couper was entitled to damages equivalent to base pay for the period October 2003 to March 2005. On the cross-appeal brought by Mr. Couper, the only issue is whether the trial judge erred in finding that Mr. Couper was not entitled to a US$5 million payment from Vitaquest. For the reasons that follow, we dismiss the appeal and the cross-appeal.

Base Pay Issue

[6] On the issue of the base pay, Vitaquest submits that, because the trial judge found that Mr. Couper's employment was one of indefinite duration, the only basis to calculate damages is by conducting an analysis of the appropriate amount of pay in lieu of reasonable notice, having regard to the factors enunciated in Bardal v. The Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.). Vitaquest submits that the trial judge erred in not adopting this approach. It further submits that the employment agreement came to an end on November 14, 2013, when counsel for Vitaquest repudiated the employment agreement by proposing alternative employment terms that Mr. Couper rejected.

[7] Mr. Couper submits that damages principles from wrongful dismissal cases have no application to the present case because he never sued for wrongful dismissal; his claim was for unpaid base wages under the employment agreement. In Mr. Couper's submission, the trial judge found that the employment agreement was repudiated in early March 2005. Accordingly, Mr. Couper says that the correct measure of damages is a straightforward calculation of unpaid base wages from October 20, 2003 to March 2005.

[8] We accept the submissions made by Mr. Couper on this issue. The claim he asserted was for unpaid base salary and not wrongful dismissal. In written submissions to the trial judge, counsel for Mr. Couper argued that the employment agreement was repudiated in early March 2005. Vitaquest made a tactical decision to take the position at trial that no employment contract ever existed. It declined to make an alternative argument that, if an agreement existed, it was repudiated in November 2003.

[9] On a careful review of his reasons, we are of the view that the trial judge found that the employment agreement was repudiated by Vitaquest in early March 2005. That finding is entitled to deference. There was an evidentiary basis for it, including the clear breakdown in the parties' relationship resulting from dealings with a private equity firm interested in purchasing part of Vitaquest and the evidence of Mr. Couper that he began looking for alternative employment in March 2005.

[10] As noted above, a November 2003 repudiation defence was never posited at trial by Vitaquest and, accordingly, there was no finding to this effect. It would be unfair to Mr. Couper to permit Vitaquest to advance alternative arguments such as a November 2003 contractual repudiation defence and wrongful dismissal for the first time on appeal. In any event, we are not satisfied that it was clear from the evidence regarding what transpired in November 2003 that there was a repudiation at that time.

[11] We conclude, therefore, that there is no basis to interfere with the trial judge's finding regarding base pay.

US$5 Million Payment Issue

[12] With respect to the issue raised on the cross-appeal of whether the employment agreement or any other agreement contained a term entitling Mr. Couper to a US$5 million payment, we also see no basis to interfere with the trial judge's conclusion that no such term was included either in the employment agreement or in any separate agreement.

[13] The trial judge held that an October 14, 2003 email from Mr. Frankel to Vitaquest's in-house counsel was the most reliable evidentiary support for his findings as to the content of the employment agreement. The contractual terms outlined in that email did not contain any reference to the US$5 million payment from Vitaquest to Mr. Couper, and the trial judge did not find that any other communication between the parties evidenced an agreement on such a payment.

[14] The trial judge was in the best position to consider the evidence regarding the US$5 million payment. In doing so, he drew upon his assessments of the credibility of Mr. Couper and Mr. Frankel, choosing not to place significant weight on Mr. Couper's testimony on this issue. He also chose not to place significant weight on surrounding facts that might support an argument that the disputed term was intended to be included in either the employment agreement or a separate agreement. These were highly fact-sensitive choices that the trial judge had to make.

[15] Mr. Couper has not identified any extricable legal error in these choices. He points to elements of the factual matrix surrounding the October 14, 2003 email that he says support the existence of the disputed term. However, given the appropriate division of labour between trial and appellate courts, Mr. Couper must demonstrate something more than facts that support findings contrary to those made by the trial judge. In the absence of a palpable and overriding error in the trial judge's choices as to which facts to rely on to make his findings, this court must defer to those factual findings: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23, at paras. 35-37. We see no such palpable and overriding error.

Disposition

[16] The appeal and cross-appeal are dismissed. The parties agreed that the winner of the main appeal would be entitled to costs of $20,000 and that the winner of the cross-appeal would be entitled to costs of $15,000. In the result, there will be a cost order in favour of Mr. Couper in the amount of $5,000, inclusive of fees, disbursements and taxes.

"H.S. LaForme J.A."

"C.W. Hourigan J.A."

"David M. Paciocco J.A."