COURT FILE NO.: CV-09-378679

DATE: 20120507

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

DAWN LOYST

Plaintiff

– and –

CHATTEN’S BETTER HEARING SERVICE

Defendant

Yan David Payne and Andrew D. Pelletier, for the Plaintiff

Gordon A. Meiklejohn, for the Defendant

HEARD: January 30, 31, February 1 and 2, 2012

T. Mcewen j.

REAsons for decision

Overview

[1] Dawn Loyst (“Loyst”) brings this action for wrongful dismissal against her former employer, Chatten’s Better Hearing Service (“Chatten’s”).

[2] Chatten’s carries on business as a provider of hearing aid services. In approximately 1997, Loyst began assisting the then owners, Jamie (“Jamie”) and Robert (“Robert”) Chatten, on a sporadic basis with various bookkeeping chores without remuneration. Loyst testified that she and Jamie were best of friends and that was the reason she provided gratuitous services. Sadly, in May 2003, Jamie passed away. Her husband, Robert, who had another job, required assistance with Chatten’s. He hired Loyst to begin working for the company on a paid basis.

[3] Loyst commenced the employment in May 2003, running the small office which consisted of less than five workers, including her and Robert. Chatten’s had a particularly close relationship with Starkey Lab – Canada Co. (“Starkey”) which manufactures and supplies hearing aids and hearing aid accessories. Chatten’s and Starkey had a supply and loan agreement in place. The two companies still enjoy a close relationship and the agreement is still in place. As part of the agreement between Starkey and Chatten’s, Starkey provides some free trips to Chatten’s owners and employees (“the bonus trips”) and free travel to partnership meetings (“partnership meetings”). These are provided on a yearly basis. Prior to 2003, Loyst attended on some of these trips with Jamie and Robert. Thereafter, she continued to attend some of these trips up until the end of her employment at Chatten’s.

[4] In 2006, Robert was no longer interested in operating the company and ultimately, Chatten’s was purchased by Jim Maizis (“Maizis”) who was a Starkey employee. Maizis left his employment at Starkey once he purchased Chatten’s. He purchased Chatten’s for $1.3 million.

[5] Since Loyst had been operating the business, Maizis wanted to keep her on after he purchased Chatten’s. Loyst and Chatten’s entered into a written agreement on August 24, 2006, that provided as follows:

I, James Maizis, President of Chatten’s Better Hearing Service agree to a 5 year contract with 1608208 Ontario Ltd. (Dawn Loyst) for office management services. Particulars of the job will be jointly agreed upon by both parties and may vary from time to time but both scheduling and duties will be in the best interest of all parties and never to the detriment of the company’s well being.

The annual cost is $60528 plus GST and will be paid biweekly at a rate of $2328 plus GST.

At the end of the 5 years, August 24, 2011 I , James Maizis agree to turn over 15% ownership of Chatten’s Better Hearing Service to Dawn Loyst. The net worth of the business shall be determined in the same manner that was used to initially set the worth of the business by Starkey Canada in August 2006.

At this time, Dawn Loyst and James Maizis will negotiate and determine the future employment of Dawn Loyst.

[6] In April 2007, an addendum to the agreement was prepared to reflect the fact that Loyst would now be receiving her salary directly as opposed to having it paid to 1608208 Ontario Ltd.

[7] The addendum read as follows:

Addendum to August 24, 2006 Agreement between Dawn Loyst and Chatten’s Better Hearing Services (Jim Maizis)

As of April 10, 2007 payment to Dawn Loyst converts to a biweekly pay cheque with all government deductions at source. Payment to 1608208 Ontario Limited will cease at this time. All aspects of the original contract will remain intact.

[8] As of August 2006, therefore, Loyst continued working for Chatten’s which was now owned by Maizis. Loyst continued with her duties as office manager.

[9] Generally speaking, working in the Chatten’s office at any given time, were one to two specialists who tested, fitted and programmed hearing aids; one or two administrative workers; and Loyst and Maizis, who shared an office. Initially, all was well between Loyst and Maizis. Stresses in their relationship, however, began to develop as time progressed. These stresses lead, ultimately, to Loyst leaving the company on March 12, 2009.

[10] It was clear from the evidence at trial that although Loyst and Maizis continued to work together for the betterment of Chatten’s, they were growing increasingly uncomfortable with each other over time. Loyst’s evidence clearly demonstrated that she felt that she had to protect the legacy of her late friend Jamie and she felt that Maizis was not sufficiently committed to the day-to-day operations of the business. Maizis, on the other hand, expressed frustration as to what he saw as Loyst’s somewhat heavy-handed management style, particularly with employees and customers. Notwithstanding their differences, they continued to co-exist, but somewhat uneasily. There were never any warnings given by Maizis to Loyst about her performance as office manager.

[11] This changed quickly when matters came to a head on March 12, 2009. A few days prior to that date, Maizis was travelling with clients from Starkey. During that trip, he called the office to speak to Loyst to enquire as to how many appointments had been conducted on that day. Loyst responded that she did not know since she was not operating the program with that information on her computer at the time. Loyst claims that Maizis then indicated that he had to go and hung up the phone. Maizis recalls that Loyst simply indicated that she did not have that information and that she hung up the phone. In any event, Maizis was upset with how the telephone conversation was handled by Loyst.

[12] Maizis returned to the office on March 11, 2009. Both Loyst and Maizis generally agree on the conversation that took place on that day. Loyst was already at the office when Maizis arrived and indicated that he wanted to see her in his office. They went into his office. In response to a question from Maizis, Loyst told Maizis she had a problem with him. Maizis then told Loyst that she should take the rest of the day off and think about her future at the company.

[13] The next day, March 12, 2009, Loyst attended at Chatten’s. She and Maizis had another conversation. On this day, their version of what occurred differs. Loyst testified, generally, that she wanted things between them to go back to the way they were while acknowledging that there had been some rough spots in their relationship. She further testified that Maizis responded that this was not going to happen. As a result, she flippantly asked whether she could purchase the company. He replied that she could not purchase the company. Maizis then told her that from that point forward Loyst would attend at work using the rear entrance and would not talk to staff or patients or do any scheduling. Loyst testified that Maizis went on to state that she would work from approximately 9a.m. to 3p.m. every day and that she would not be representing the company in any way shape or form. He also stated that she would not be going on any bonus trips or partnership meetings. He indicated that her base pay would stay the same but she would not receive any monetary bonuses and she would be basically doing the bookkeeping from her office with a closed door. Loyst does not recall if the 15% interest in the company that she was to receive after five years was mentioned during this conversation. She advised Maizis that these terms were not agreeable and that she had a contract that stipulated that they had to mutually agree on the particulars of her job. He replied that they did not have such an agreement, advised her that she was discharged, and told her to clean out her desk.

[14] Maizis’ recollection of what occurred on that day is that Loyst attended at Chatten’s and advised him that she wanted to buy the company and he refused. She then asked where that left them. He responded that he could no longer have her as the office manager and have people reporting to her. Maizis advised that he wanted her to have very limited access to patients and that she would stay on as the accountant. He indicated that he further stated that he would keep her base salary the same and at the end of the five years he would honour the agreement to provide her with 15% of the company. He also indicated that there would be no more bonus trips or partnership meetings as he could not have her representing the company. He could not recall, however, what was said about her yearly monetary bonus. She responded that the bonus trips and partnership meetings were part of her remuneration package and that his proposition was not acceptable. He indicated that if her new position was not acceptable she could pack up her desk. She did so later that day and the parties did not speak after this date.

[15] Loyst subsequently commenced an action against Chatten’s for wrongful dismissal. Chatten’s delivered a Statement of Defence asserting that it had just cause to terminate Loyst.

[16] Of interest is the fact that, at trial, Maizis testified that in his view Loyst had quit her employment at Chatten’s during the March 12, 2009 conversation. Chatten’s, in its Statement of Defence and at trial, continued to maintain the position that Loyst had been dismissed for cause. Chatten’s, at trial, conceded, however, that it had no knowledge on March 12, 2009 that constituted just cause. Specifically, in closing submissions counsel for Chatten’s conceded that no conduct of Loyst with respect to her interactions with staff, Maizis, or clients constituted just cause. This was a significant concession since considerable time was spent at trial parsing through Loyst’s interactions with clientele, staff and Maizis.

[17] Instead, Chatten’s submitted at trial that it had just cause to terminate Loyst based on conversations Loyst had with Jason Toone (“Toone”), the Managing Director of Starkey. These conversations were not made known to Chatten’s until January of 2010 after discoveries had been completed. At that time, as a result of evidence that Loyst gave at her examination for discovery, Maizis telephoned Toone, his former boss. Toone told Maizis about certain conversations he had with Loyst in 2007 and 2008 in which she made remarks that were critical of Maizis.

[18] This raises the interesting issue that although Chatten’s claims just cause, it concedes that at the time of actual termination, it had no knowledge that would have justified a termination; this was information that came to it subsequently. That being said, however, the law is clear that an employer can rely upon information subsequently obtained to justify a termination and accordingly the conversations with Toone must be considered.

[19] In the last full year at Chatten’s, the Plaintiff earned a base salary of $60,528, plus a bonus. Her 2008 tax return disclosed a total income of $75,472.11 and the parties do not disagree that her bonus therefore would have been in the neighbourhood of $15,000. Over and above that, she received the benefit of two trips through Starkey, one being a bonus trip and one involving a partnership meeting.

Loyst’s Discussion with Toone

[20] Loyst and Toone testified with respect to the conversations between them. Loyst testified that she met Toone in Las Vegas in 2007, during one of the Starkey partnership meetings. Loyst testified that in that conversation Toone asked her how Maizis was doing as the new owner. Loyst testified that she told Toones that Maizis had promised to take a course to become a hearing aid specialist but had left the program and she did not know how to deal with it. She further testified that Toone responded with words to the effect that he was sorry that he had dumped Maizis on her. He said that he wanted Maizis out of Starkey and as a result, he assisted Maizis with the purchase of Chatten’s.

[21] Loyst further testified that in her discussion with Toone, she asked him how to make things work with Maizis due to the fact that Maizis was often changing his mind with respect to the running of the business, was not coming in regularly, and had quit the hearing aid specialist program. She was in essence asking for help since Toone had been Mazis’ superior at Starkey. She recalled crying during their conversation and that Toone empathized with her. She denied trying to undermine Maizis’ relationship with Starkey or with Toone. She did not recall another discussion in 2008.

[22] Toone was called as a witness by Chatten’s. Toone testified that he did discuss the matter with Loyst in Las Vegas in October 2007. He stated that during that conversation Loyst expressed displeasure with Maizis and stated that she did not like what he was doing at the company. Toone testified that he could not recall details but Loyst complained that certain things that Maizis was doing were causing friction and she did not like the way he was changing things at Chatten’s. He denied stating that he wanted Maizis out of Starkey and that he dumped Maizis on Loyst.

[23] Toone further testified that he also spoke with her in March 2008 in San Diego and that she was still displeased with Maizis. He could not provide any specific details.

[24] Toone also testified that he gave Loyst pointers as to how to deal with Maizis. He concluded his testimony by stating that he did not speak with Maizis after he spoke with Loyst. In his opinion the issues raised by Loyst were not significant and never affected his friendship with Maizis or Starkey’s business relationship with Chatten’s. He explained that the business relationship between Starkey and Chatten’s was good and that people complain every day. That was how he viewed Loyst’s complaint.

The Issues

[25] The following issues need be determined:

1. Did Loyst resign her employment?

2. Alternatively, did Chatten’s have just cause to terminate Loyst?

3. Did Loyst fail to take reasonable steps to mitigate her damages?

4. To what damages is Loyst entitled?

Did Loyst Resign?

[26] I have no hesitation in concluding that Loyst did not resign her position at Chatten’s. A resignation must be clear and unequivocal. To be clear and unequivocal, the resignation must objectively reflect an intention to resign, or conduct evidencing such an intention: see Skidd v. Canada Post Corp., [1993] O.J. No. 446 (Gen. Div.) var’d on other grounds [1997] O.J. No. 712 (C.A.)

[27] In my view, the evidence clearly demonstrated that Loyst, when faced with alterations to her job description and remuneration, objected to these alterations and clearly stated that the changes were not acceptable to her. She did not, however, resign her position or say or do anything that reflected an intention to resign. After voicing her disagreement, it is clear to me, that Maizis terminated her employment.

[28] My conclusion is bolstered by the fact that Maizis prepared the usual record of employment (“ROE”) after Loyst’s termination in which he clearly indicated that she was terminated and paid $4,934.62 in lieu of notice. At trial, Maizis testified that this was prepared in error, explaining that this was the first time he had prepared an ROE and he did not realize Loyst had resigned when he completed it. I do not accept this explanation. Not only is it inconsistent with Chatten’s Statement of Defence in which just cause is pleaded but is also inconsistent with what transpired on March 12, 2009 when Maizis told Loyst to pack up her things, or used words to that effect.

Did Chatten’s have Just Cause to Terminate Loyst?

[29] The onus is on the employer to establish just cause for dismissal. In this case, prior to March 11, 2009, Loyst had never been warned in any way that her performance or her attitude were unacceptable. As noted above, Chatten’s does not assert that any of her actions, known to Chatten’s prior to March 9, 2011, constitute just cause.

[30] Interestingly, it is the information that Chatten’s obtained subsequent to Loyst’s dismissal that it now relies upon to establish just cause, that being the discussion or discussions Loyst had with Toone.

[31] Counsel for Chatten’s, in closing argument, stressed that it was not the effect of what Loyst said to Toone that has to be considered but rather what in fact was said by Loyst. Chatten’s contends that Loyst’s complaints about how Maizis was running the business constituted just cause for her dismissal. I disagree. Although Loyst and Toone had different versions of what was said, in my view, it is immaterial which version I accept as evidence in this case since neither version demonstrates wilful disobedience that could result in the destruction of the relationship between an employer and employee: see McNaughton v. Sears Canada Inc., 1997 CanLII 9530 (NB CA), [1997] N.B.J. No. 79, (C.A.)

[32] It is clear that in either version, Toone viewed Loyst’s comments as a typical complaint and one that is common in the workplace. In my view, at worst, it was a comment deserving of sanction but it was not of sufficient gravity to warrant dismissal.

[33] What occurred in this case is that Maizis attempted to unilaterally change a fundamental term of the employment contract between Chatten’s and Loyst. There is no dispute between the parties that in the critical conversation of March 12, 2009, Maizis altered Loyst’s job description, changing it from that of office manager to that of accountant. There is also no disagreement that he unilaterally revoked her ability to attend Starkey sponsored bonus trips and partnership meetings. Maizis did not recall mentioning anything about the actual cash bonuses that Loyst had been receiving on a yearly basis. She testified that he stated that she would not be receiving any bonuses whatsoever. I accept her version given Maizis’ lack of memory and the fact that he admittedly took away other benefits of her job, being the bonus trip and partnership meetings.

[34] With respect to Loyst’s 15% ownership interest in the company after five years, Maizis testified that he told Loyst that she would receive a 15% ownership interest if she stayed in her new role. Loyst disagreed, stating that Maizis did not advise her that the 15% ownership interest would remain. Although her evidence was somewhat difficult to follow in this regard, Loyst testified that Maizis essentially told her that there was no agreement in this regard although that specific issue was not discussed.

[35] With respect to the discrepancy of the evidence between Loyst and Maizis on the ownership issue, I prefer the evidence of Loyst. Both Loyst and Maizis made good witnesses and there is little controversy between them as to what was generally said at the meeting. I prefer Loyst’s evidence, however, for the simple reason that I find it very difficult to accept that Maizis, while he was in the midst of severely curtailing Loyst’s role in the company, her bonus and access to bonus trips and partnership meetings, was still prepared to provide her with a 15% ownership interest in two and half years’ time. This is particularly so when one considers the fact that in the same conversation Maizis went on to terminate Loyst’s employment.

[36] In light of the above, I have come to the conclusion that Chatten’s, by changing Loyst’s job description and her remuneration, i.e. no more bonus trips, partnership meetings, bonus payments or ownership interest, unilaterally altered fundamental terms of Loyst’s employment contract. This constituted a repudiation of the employment contract. Even if I am incorrect with respect to the remuneration issue, I find that the changes to Loyst’s job description, in and of themselves, constitute unilateral changes to a fundamental term of the employment contract. The contract that was entered into between Chatten’s and Loyst was for office management services and the particulars of the job were to be jointly agreed upon by the parties. The agreement also provided that the duties could vary from time-to-time, but they were to be in the best interest of the parties and never to the detriment of the company’s well being. Based on what transpired, it cannot be said that the unilateral change was in the best interest of Loyst. Nor can it be said that keeping Loyst in her existing position would be to the detriment of Chatten’s given the fact that Chatten’s is not alleging that any of Loyst’s interactions with staff, Maizis or customers constituted cause for dismissal. Further, the evidence with respect to Loyst’s interactions with Maizis, other employees and customers illustrated that while she could be difficult to deal with on occasion given her management style there was no evidence that this was detrimental to Chatten’s.

[37] I also point out that in final submissions, counsel for Chatten’s pointed to paragraph 8 of the reply of the Plaintiff wherein the following is pleaded:

8. The Plaintiff states that when faced with the Employer sudden decision to fundamentally alter the terms of her employment agreement, she agreed to the changes in nature of her job responsibility but objected to the changes in her remuneration or compensation package.

[38] While the paragraph certainly states that Loyst agreed to changes in the nature of her job responsibilities, the evidence at trial was clear that she did not agree to alter the terms of her employment agreement. While it is odd that this admission is contained in Loyst’s own pleading, I find that it is immaterial to the issues that I must decide since it is not supported by the evidence. The fact is, in this action, the pleadings of both parties in several areas bore little or no resemblance to the evidence at trial. For example, in its Statement of Defence, Chatten’s alleged that Loyst was relieved of her duties of office manager for valid business reasons arising from the manner in which she interacted with Maizis, staff, customers and suppliers and because she attempted to undermine the relationship between Chatten’s and Starkey. In final argument, counsel for Chatten’s conceded that there was no conduct of Loyst, with respect to staff or clients, which constituted cause for dismissal with the exception of her discussion with Mr. Toone. Further, at the time Chatten’s Statement of Defence was prepared, it was not even aware of the discussions Loyst had with Toone.

[39] In any event, having concluded that Chatten’s unilaterally changed the fundamental terms of the employment contract with Loyst and, therefore repudiated the contract, I am guided in my analysis by the decisions of the Ontario Court of Appeal in Hill v. Peter Gorman Ltd., (1957) 1957 CanLII 393 (ON CA), 9 D.L.R. (2d) 124 (Ont. C.A.) and Wronko v. Western Inventory Service Limited, 2008 ONCA 327, 90 O.R. (3d) 547. In reviewing the decision in Hill, Winkler C.J.O. stated as follows:

31. The reasons of Mackay J.A. of this court in Hill v. Peter Gorman Ltd. (1957), 1957 CanLII 393 (ON CA), 9 D.L.R. (2d) 124, speak precisely to this situation. In Hill, the court dealt with the case of a commission salesman employed pursuant to an indefinite term contract, terminable on two weeks notice, that tied his remuneration to a commission based on net sales. The employer was concerned with delinquent accounts and on notice to the salesman it began to withhold ten per cent of his commissions in a reserve fund for bad debts. The salesman complained periodically about this arrangement, but remained in the employ of the company for over a year after the practice was initiated. Following the employee’s resignation from the company, he brought an action to recover the withheld commissions. The trial judge found as a fact that the salesman had never agreed to the variation and ordered the commissions to be paid at the originally agreed rate.

32. On appeal, Mackay J.A. held that mere continuance by an employee in employment does not amount in law to an acceptance by an employee of a unilateral variation of his contract by his employer.[1] The employee is entitled to insist on the employer’s adherence to the terms of the contract. The employer could have terminated the employee’s contract and offered him employment on the new terms, but it did not do so. This was fatal to its position. Mackay J.A. stated at 132:

Where an employer attempts to vary the contractual terms, the position of the employee is this: He may accept the variation expressly or impliedly in which case there is a new contract. He may refuse to accept it and if the employer persists in the attempted variation the employee may treat this persistence as a breach of contract and sue the employer for damages, or while refusing to accept it he may continue in his employment and if the employer permits him to discharge his obligations and the employee makes it plain that he is not accepting the variation, then the employee is entitled to insist on the original terms.

If the plaintiff made it clear…that he did not agree to the change…the proper course for [the employer] to pursue was to terminate the contract by proper notice and to offer employment on the new terms. Until it was so terminated, the plaintiff was entitled to insist on performance of the original contract. [Emphasis added.]

33. In the cited passage, Mackay J.A. identifies three options that are available to an employee when an employer attempts a unilateral amendment to a fundamental term of a contract of employment. They may be summarized as follows.

34. First, the employee may accept the change in the terms of employment, either expressly or implicitly through apparent acquiescence, in which case the employment will continue under the altered terms.

35. Second, the employee may reject the change and sue for damages if the employer persists in treating the relationship as subject to the varied term. This course of action would now be termed a “constructive dismissal”, as discussed in Farber, although this term was not in use when Hill was decided.

36. Third, the employee may make it clear to the employer that he or she is rejecting the new term. The employer may respond to this rejection by terminating the employee with proper notice and offering re-employment on the new terms. If the employer does not take this course and permits the employee to continue to fulfill his or her job requirements, then the employee is entitled to insist on adherence to the terms of the original contract. In other words, if the employer permits the employee to discharge his obligations under the original employment contract, then – unless proper notice of termination is given – the employer is regarded as acquiescing to the employee’s position. As Mackay J.A. so aptly put it: “I cannot agree that an employer has any unilateral right to change a contract or that by attempting to make such a change he can force an employee to either accept it or quit.”

37. On the facts of the present case, the trial judge erred in treating this case as though the employee had chosen to pursue the second option, an action for constructive dismissal as discussed by the Supreme Court in Farber. This error is understandable. In many cases, where an employer imposes a unilateral change of a fundamental term of an employment contract, the employee’s response will be to sue for constructive dismissal because the change will have an immediate and undesired impact on the employee. For example, a unilateral change may represent an immediate demotion of the employee, or it may amount to a significant reduction in salary or hours of work. [FN2]

38. In the present case, the unilateral change did not have an immediate impact on the employee. Wronko’s response to the attempted change and Western’s reaction to his response bring this case outside the constructive dismissal context and squarely into the third situation identified by Mackay J.A. in Hill.

[40] In my view, this case, like Wronko, falls within the third situation identified by Mackay J.A. in Hill. Chatten’s attempted a unilateral amendment to a fundamental term of the contract of employment. Loyst made it clear to Maizis that she was rejecting the new terms. Chatten’s failed to respond to the rejection by terminating Loyst with proper notice and offering reemployment on new terms. Instead, it simply terminated Loyst and provided approximately five weeks’ notice.

[41] As in Wronko, Chatten’s decision to terminate Loyst carried with it the consequence that Loyst was entitled to have Chatten’s honour its contract with her.

Mitigation

[42] Chatten’s submitted in closing submissions that the key issue with respect to Loyst’s claim involves her failure to mitigate her damages. In Chatten’s view, Loyst ought to have accepted the unilateral changes to her employment contract. Her failure to do so constituted a failure to mitigate her damages. In this regard, Chatten’s relies on the decision of the Ontario Court of Appeal in Mifsud v. MacMillan Bathurst Inc. (1989), 1989 CanLII 260 (ON CA), 70 O.R. (2d) 701 (C.A.). Based on the facts of this case, I do not accept this submission. As I have indicated above, the facts of this case are governed by the decisions of the Court of Appeal in Hill and Wronko. Chatten’s was required, once Loyst rejected the new terms to the employment contract, to terminate her with proper notice and offer employment on the new terms. Chatten’s did not do so, instead it simply terminated her. In any event, in Mifsud, the employee was offered the same salary, working conditions that were not substantially different, and the personal relationships were not acrimonious. In this case, the level of remuneration was changed, the change to the employment was a distinct demotion making it demeaning, and the personal relationship between Maizis and Loyst became acrimonious which is particularly important in a very small work setting as was the case in Chatten’s. It is entirely distinguishable from Mifsud.

[43] Chatten’s has the onus of showing that Loyst’s mitigation efforts were inadequate. It has failed to do so. I find that Loyst properly mitigated her damages by looking for employment elsewhere before ultimately obtaining employment on a part-time basis. She continues in this employment to date.

Assessment of Damages

[44] In the Statement of Claim, damages are sought not only for wrongful dismissal but also for mental distress; intentional infliction of mental distress; and punitive, aggravated and bad faith damages. Loyst did not pursue these claims at trial and specifically abandoned them in final argument.

[45] Loyst’s contract with Chatten’s provided for an annual salary of $60,528, plus G.S.T., and at the end of five years she would obtain 15% ownership in Chatten’s with the net worth of the business determined in the same manner that was used to initially set the worth of the business by Starkey.

[46] The contract did not provide an entitlement to a yearly bonus, bonus trips or attendance at partnership meetings. That being said, Loyst did enjoy these while at Chatten’s.

[47] In my view, these amounts were not an integral part of Loyst’s compensation and were not called for in the contract. They were discretionary in the sense that they were related to the company’s profits and its relationship with Starkey. Since Loyst and Chatten’s entered into a written contract, I cannot find that these bonuses formed a term of the contract, implied or otherwise. If I am wrong, with respect to this issue, I still would not be in a position to award Loyst any monies since no evidence was lead at trial with respect to yearly bonuses, bonus trips or partnership meetings after Loyst left Chatten’s or whether they would have been available to Loyst.

[48] In my view, Loyst is entitled to damages consistent with the contract that she entered into with Chatten’s, being the remainder of her salary of $60,528 plus G.S.T. per annum, plus 15% ownership in Chatten’s.

[49] The parties agree that at the time of her termination, Loyst had 29 months, 13 days remaining in the 5-year contract. Accordingly, using the annual rate of remuneration of $60,528 plus G.S.T., the amount owing is $129,372.38 under the contract.

[50] From that amount must be deducted the notice that Loyst received and the monies that she has earned from other sources since her termination up until the time her contract with Chatten’s would have expired.

[51] Loyst testified that she received the following monies after her termination:

(i) severance pay - $4,934.62;

(ii) income in 2009 - $8,333.33;

(iii) income in 2010 - $21,926; and

(iv) pro rata income earned from January 1, 2011 to August 24, 2011 (which is the end date of her 5-year contract with Chatten’s) - $17,275.50

[52] I accept her evidence in this regard, which was not contested.

[53] When these amounts are deducted from the amount owing ($129,372.38) Loyst is entitled to damages for loss of salary of $76,902.93.

[54] With respect to Loyst’s 15% ownership interest in the company, at trial, Loyst sought the monetary equivalent of that amount. Loyst’s contract with Chatten’s provided that her 15% ownership interest would be determined in the same manner that was initially used to set the worth of the business by Starkey in August 2006. Toone testified at trial that Starkey determined the worth of Chatten’s in August 2006 to be $1.2 million. Loyst’s counsel submitted that the amount should be $1.3 million which was the purchase price paid by Maizis. I disagree. Loyst’s contract with Chatten’s specifically stated that the amount should be determined in the same manner that was used initially to set the worth of the business by Starkey in August 2006. That amount was $1.2 million. 15% of that amount totals $180,000. Loyst is entitled to that amount. I should point out that although the Agreement is somewhat, arguably, ambiguous as to the valuation date, both parties submitted that the appropriate date for the valuation was when the Agreement was entered into in August 2006 as opposed to August 2011.

Disposition

[55] For those reasons, there will be judgment for the Plaintiff in the amount of $256,902.93 plus the appropriate prejudgment interest. If the parties are unable to agree with respect to costs or prejudgment interest, the Plaintiff will make written submissions not to exceed five pages within 21 days of the release of this decision, the Defendant shall have ten days thereafter to respond, and the Plaintiff five days thereafter to reply.

T. McEwen J.

Released: May 7, 2012

COURT FILE NO.: CV-09-378679

DATE: 20120507

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

DAWN LOYST

Plaintiff

– and –

CHATTEN’S BETTER HEARING SERVICE

Defendant

REASONS FOR DECISION

T. McEwen J.

Released: May 7, 2012