BACKGROUND

Nature of Dispute

[1] The Appellant started his employment with EMC Corporation of Canada in December 2012. In 2016, EMC and Dell Canada Inc. merged and the Appellant continued his employment with the Respondent, Dell Canada Inc.

[2] By a letter, dated August 2, 2016, EMC informed the Appellant that it was offering two cash incentive award (CIA) opportunities, which totalled US$8,000. There were certain conditions attached to the CIAs and I shall review those conditions below.

[3] On January 11, 2017, due to restructuring, the Respondent announced that some employees would be terminated and that the termination documents would be provided the next day. It is not disputed that on January 12, 2017, the Appellant received notice of the termination of his employment. It is also not disputed that on January 12, 2017, he was also provided with a termination letter, an acknowledgement and a final release. It is not disputed that the Appellant’s termination was effective January 25, 2017.

[4] It is also not disputed that the termination letter outlined the severance package which was being offered to the Appellant and that the Appellant was requested to return the signed documents within two weeks. It is not disputed that on January 17, 2017, five days after receiving the documents, the Appellant accepted the severance offer and signed the acknowledgement for the termination letter, signed the final release and returned both documents to the Respondent.

[5] The Appellant initiated proceedings in the Small Claims Court. By an amended Plaintiff’s Claim, dated July 20, 2018, he claimed the amount of $14,001.78, pre-judgment interest from January 26, 2017, post-judgment interest, and court costs. In his amended Claim, the Plaintiff sought the following relief:

A declaration that the Plaintiff was wrongfully dismissed by the Defendant;
Damages as a result of the wrongful dismissal and breach of contract for the unpaid Cash Incentive Award in the amount of $8,100, unpaid annual bonus for the notice period in the amount of $4,077.37, and unpaid vacation pay for the notice period in the amount of $1,824.41, totalling $14,001.78;
Pre-judgement and post-judgment interest; and
Costs of the action.

[6] In its amended Defence, dated August 22, 2018, the Respondent disputed that the Appellant was entitled to any of the monies that he claimed and relied on the termination letter, the acknowledgement and the final release signed by the Appellant. The Respondent also relied on the conditions for payment of the CIA that were set out in the letter of August 2, 2016.

Findings of the Deputy Judge

[7] From a review of the transcript of the proceedings before the Deputy Judge, it is apparent that the only issues which were presented to him and adjudicated were whether the Appellant was entitled to US$6,000 as part of the CIA, unpaid bonus and vacation pay for the notice period. There was no evidence presented with respect to a claim for wrongful dismissal or inadequate notice.

[8] Before the Deputy Judge, the Appellant’s position was that the emails that he exchanged with the Respondent’s representatives following being informed of his termination demonstrated that the Respondent had promised to pay him US$6,000 for the CIA. The Appellant’s position was also that he was entitled to additional vacation and bonus pay during his notice period.

[9] The Deputy Judge dismissed the Appellant’s claim, without costs, and made the following findings (see transcript of proceedings, October 22, 2018, at pages 37 to 38):

a) The payment of US$2,000 on March 15, 2017, was in full satisfaction of the Respondent’s stated obligations under the employment contract.

b) The email exchange between the Appellant and his former employer following the presentation of the severance package was not a promise by the employer to pay an additional US$6,000.

c) The Appellant was not entitled to receive an additional payment of US$6,000.

d) The full and final release signed by the Appellant was a full answer to his claim.

e) The Appellant’s claim was dismissed without costs.

POSITION OF THE PARTIES

[10] The Appellant asserts that he was wrongfully dismissed and that the Deputy Judge erred in finding that the Appellant was not entitled to payment of US$6,000 and the monies he claimed as unpaid bonus and vacation pay.

[11] At this appeal, the Respondent advanced the same position it took before the Deputy Judge: the Appellant was terminated; he was offered a severance package and the opportunity to obtain independent legal advice before accepting the package; and he signed an acknowledgement and a final release with respect to the acceptance of the severance package. The Respondent requests that the appeal be dismissed without costs.

ISSUES

[12] The Respondent points out that the Appellant is raising new arguments on this appeal that were not raised before the trial judge (e.g. wrongful dismissal and inadequate notice). I agree with the Respondent and do not consider those grounds of appeal as they are not properly before this Court. (See Kaiman v. Graham, 2009 ONCA 77, 245 O.A.C. 130, at para. 18).

[13] In my view, the issues for this appeal are:

a) What is the standard of review?

b) Did the Deputy Judge make an error in finding that the Appellant was not entitled to US$6,000 as part of the CIA?

c) Did the Deputy Judge make an error in finding that the Appellant was not entitled to unpaid bonus and vacation pay?

ANALYSIS

Jurisdiction

[14] An appeal from a final order of the Small Claims Court lies to a single judge of the Divisional Court where the amount is in excess of $2,500. The amount claimed in this matter is $14,001.78, and therefore I have jurisdiction to hear this appeal: see s. 31 of the Courts of Justice Act, R.S.O. 1990, c. C.43.

[15] On an appeal, the appellate court has the following powers, as set out in s. 134(1) of the Courts of Justice Act:

Unless otherwise provided, a court to which an appeal is taken may,

(a) make any order or decision that ought to or could have been made by the court or tribunal appealed from;

(b) order a new trial;

Issue one – Standard of Review

[16] The standard of review for an error of fact is that the error made must be overriding and palpable. The standard of review for an error of law is correctness. There is a spectrum for the standard of review on an error of mixed fact and law. (See Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 8, 10, and 28).

[17] Contractual interpretation is a question of mixed fact and law as “it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix.” (Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 50). Therefore, the standard of review for the purported errors on a question of mixed fact and law falls on a spectrum between a palpable and overriding error and correctness. Further, “[d]eference should be given to first-instance decision makers on points of contractual interpretation” (Heritage Capital Corp. v. Equitable Trust Co., 2016 SCC 19, [2016] 1 S.C.R. 306, at para. 21). Unless there is an extricable question of law, the standard of review is an overriding and palpable error.

Issue two - Did the Deputy Judge make an error in finding that the Appellant was not entitled to US$6,000 (the CIA)?

[18] The letter of August 2, 2016 must be reviewed in order to determine this issue. With respect to the CIA, the relevant portion of the letter stipulates the following:

In light of the anticipated Dell merger, EMC’s executive management team has decided to offer you two incentive award opportunities in the total amount of USD $8,000 to be comprised of the following

First, you will be eligible to receive a lump sum cash payment in the amount of USD $2,000 payable on or about March 15, 2017, subject to your continued employment at that time.
Second, subject to your continued active employment and being in good standing, you will be eligible to receive a long-term performance award in March 2017 with a target amount of USD $6,000 which will vest ratably [sic] over three years based on corporate performance and will be subject to the terms and conditions of the long-term incentive program which will be provided to you at the time of the grant. [emphasis in the original]

[19] It is not disputed that the Appellant did not receive US$2,000 on March 15, 2017 but did receive it on May 25, 2017. It is the Respondent’s position that this payment was made from goodwill and not because the Appellant was entitled to receive this as part one of the CIA. To be eligible for part one of the CIA, the Appellant had to continue to be employed on March 15, 2017. It cannot be disputed that on March 15, 2017, the Appellant was not employed by the Respondent as he was terminated effective January 25, 2017.

[20] With respect to the second part of the CIA (the long-term performance award), there are two barriers to the Appellant’s claim to entitlement to US$6,000. First, the letter of August 2, 2016 clearly sets out that eligibility to receive the long-term performance award in March 2017 required the Appellant’s “continued active employment”. There can be no dispute that in March 2017, the Appellant did not have “continued active employment” with the Respondent as he was terminated effective January 25, 2017. Second, the sum of US$6,000 was not payable in one lump sum – it would vest rateably over three years. The Appellant acknowledged in argument of this appeal that he would not have been employed with the Respondent in 2018 or 2019 given his termination in 2017. He also acknowledged in cross-examination in the trial before the Deputy Judge that he was not employed with the Respondent in May 2017. Therefore, even if he had qualified for the long-term performance award as of March 2017, which he did not, the Appellant would not have qualified to receive the rateable portions payable in 2018 and 2019.

[21] The Appellant also argues that the emails exchanged between the Respondent’s representatives in the human resources department and himself established that a promise was made that he would receive US$6,000 despite his termination. After a careful review, the emails that were exchanged from January 12, 2017 to May 26, 2017 do not demonstrate that the Appellant was promised this additional money despite his termination, his acceptance of the severance package, and his execution of the final release. At most, there was an agreement to look into his inquiry.

[22] On January 16, 2017, in response to the Appellant’s question of when he would receive the CIA, Lillian Alilovic, of the Respondent’s human resources department, reminded him that “the cash incentive is calculated and paid out only after March 2017. Do you have a copy of this letter?” The Appellant confirmed that he did have a copy of the CIA letter.

[23] Further, Ms. Murphy, also from the Respondent’s human resources department, in an email, dated May 26, 2017 stated to the Appellant:

Hi Peter,

As per your letter, the $6000 USD portion is subject to you continuing to be actively employed which you are not since your termination date was in January 25, 2017. …

[24] The emails which the Appellant relies on do not establish that the Respondent promised to pay him the CIA of US$6,000 even though he was terminated.

[25] I also note that the Appellant claimed the sum of $8,100 for the CIA. However, the Appellant did not provide any evidence before the Deputy Judge which explained how he arrived at that figure.

[26] I do not find that the Deputy Judge made an overriding and palpable error in his interpretation of the August 2, 2016 letter or the emails exchanged between the Appellant and the Respondent’s representatives. It is clear that in order to be eligible to receive the US$6,000 as part of the CIA, the Appellant had to be in continued active employment in March 2017. He was not. He was terminated effective January 25, 2017.

Issue three – Did the Deputy Judge make an error in finding that the Appellant was not entitled to bonus and vacation pay?

[27] The Appellant argues that he is entitled to unpaid bonus and vacation pay. He claims $4,077.37 and $1,824.41 respectively. It should be noted that the Appellant did not present evidence in the trial as to how he arrived at those two amounts. The Appellant argues that the final release that he signed should be set aside on the grounds of unconscionability. The Respondent argues that the Appellant’s acceptance of the severance offer; and his signing of the acknowledgement and final release is a bar to the Appellant advancing this claim.

[28] The terms of the severance offer are captured in the letter, dated January 11, 2017, which the Appellant received. This letter included the following:

the Appellant would receive a lump sum payment in lieu of notice and “[t]his payment includes any contractual, common law and statutory entitlement to pay in lieu of notice, and severance pay, where applicable, consistent with the ESA.”
The notice would be the equivalent of 17 weeks of his salary, less applicable and necessary deductions;
During the 17 weeks following his termination date (January 25, 2017), the Appellant’s medical, dental and drug benefits and life insurance coverage would continue;
The Appellant would receive all outstanding wages owed to him up to his termination date;
The Appellant would receive vacation pay for vacation days accrued and not used;
The Appellant would receive all expenses owed to him up to and including his termination date;
The Appellant would receive two months of outplacement counselling to assist him with securing alternate employment;
The Employment Assistance Program would be extended for a period of two months following the Appellant’s termination date;
The Appellant would execute a final release;
The Appellant was to advise by January 25, 2017 at 6:00 p.m. if he accepted the terms of the severance offer; and
If the Appellant did not accept the severance offer, then he would receive his “entitlement on termination in accordance with his employment agreement or as required by the applicable employment standards legislation.”

[29] It should be noted that as the Appellant had completed four years of employment, he was entitled to four weeks of notice pursuant to the Employment Standards Act, 2000, S.O. 2000, c. 41.

[30] As stated above, it is not disputed that the Appellant accepted the severance offer and that he signed the acknowledgement and final release. The acknowledgment states:

I understand and agree with the terms set out above and I accept the compensation and benefits offered herein as full satisfaction of any and all claims and entitlement that I may have arising out of my employment and termination from employment with Dell Canada Inc. [emphasis added]

[31] The acknowledgement was dated January 17, 2017, signed by the Appellant and his signature was witnessed.

[32] The final release was signed by the Appellant on January 17, 2017 and his signature is witnessed. The final release includes several provisions, including the following, by which the Appellant:

… hereby release[d] and forever discharge[d] Dell Canada Inc., its parent subsidiaries and affiliates and each of its and their respective officers, directors, employees, servants and agents, and their successors and assigns (hereinafter collectively referred to as the “Releasee”) jointly and severally from any and all manner of actions, causes of action, suits, debts, contracts and covenants, whether express or implied, claims and demands for damages, indemnity, costs interest, loss or injury of every nature and kind whatsoever arising, which I may heretofore have had, may now have or may hereinafter have in any way relating to or arising out of the hiring, employment or termination of employment of the Releasor by the Releasee, which specifically includes but is not limited to any claims for notice of termination of employment, pay in lieu of notice, termination pay, severance pay, damages for wrongful dismissal, wages, bonus, overtime pay, entitlements, benefits of every kind whatsoever, or any claims under applicable employment standards, human rights, pay equity, occupational health and safety and workplace safety and insurance legislation [emphasis added].

I ACKNOWLEDGE that I have had the opportunity to seek independent legal advice with respect to the terms of this Release and that I fully understand all of the terms and am executing this Release freely, voluntarily and without duress.

[33] The Appellant did not lead any evidence before the Deputy Judge that the final release should be set aside on the grounds of unconscionability. Further, he did not plead it in his Amended Claim. Therefore, this ground of appeal is not properly pleaded.

[34] In my view, the Deputy Judge did not make an overriding and palpable error in his interpretation of the acknowledgment and final release signed by the Appellant. The Appellant had the opportunity to seek independent legal advice before he decided to accept the severance offer. The Appellant acknowledged in cross-examination that after he accepted the severance offer and executed the acknowledgement and final release, he received everything he was supposed to receive from the Respondent pursuant to the accepted terms of severance. That is, the Respondent fulfilled its obligations. The acknowledgement and final release are clear – upon the Respondent fulfilling its obligations under the terms of the severance offer, the Appellant agreed not to make any further claims which included further claims for vacation pay, bonus, and wrongful dismissal. The terms of acknowledgement and final release are a bar to the Appellant’s action.

DISPOSITION

[35] After carefully considering the material filed and considering the submissions of the parties and for the reasons outlined above, the appeal is dismissed without costs.

Kumaranayake J.

Released: January 3, 2020

CITATION: Zhang v. Dell Canada, 2020 ONSC 48

COURT FILE NO.: DC-18-0099

DATE: 2020 01 03

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

B E T W E E N:

AIJUN ZHANG

Appellant

and -

DELL CANADA INC.

Respondent

REASONS FOR JUDGMENT

[On appeal from a Decision of Deputy Judge S. Pettipiere of the

Small Claims Court at Burlington delivered October 22, 2018]

KUMARANAYAKE J.

Released: January 3, 2020

Aijun Zhang v. Dell Canada Inc., 2020 ONSC 48

Case Summary

BACKGROUND

Nature of Dispute

Findings of the Deputy Judge

POSITION OF THE PARTIES

ISSUES

ANALYSIS

Jurisdiction

Issue one – Standard of Review

Issue two - Did the Deputy Judge make an error in finding that the Appellant was not entitled to US$6,000 (the CIA)?

Issue three – Did the Deputy Judge make an error in finding that the Appellant was not entitled to bonus and vacation pay?

DISPOSITION

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 3

Legal Tests 2

Legislation 3