SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-12-456030
DATE: 2013/08/20

RE: Scott Benson
Plaintiff (Respondent)

v.

Bird Mechanical Ltd
Defendant (Moving Party)

BEFORE: Moore J.

COUNSEL:
Daniel R. McDonald, for the Defendant/Applicant
D. Jared Brown, for the Plaintiff/Respondent

ENDORSEMENT

[1] On this motion, Bird Mechanical Ltd. (“Bird”) seeks an order for partial summary judgment dismissing claims for unpaid amounts of money as bonuses alleged by its former employee, Scott Benson (“Benson”), to have been earned in years before his dismissal in 2010. Bird submits that these claims are statute barred in accordance with the Limitations Act, 2002.

[2] Bird employed Benson between July, 2007 and September, 2010. Bird paid bonuses to eligible employees in December of each year. By its employment contract with Benson, Bird agreed to pay Benson performance bonuses in addition to his employment earnings. Bird agreed to pay such bonuses in amounts of up to $10,000 based on his performance and company sales of up to $12,000,000; and, additional incentive bonuses of 1% based on his performance and company sales over $12,000,000.

[3] Benson was a project manager and estimator for Bird. His job duties did not include responsibility for sales or marketing. He was required to perform his duties to a level congruent with reasonable Bird expectations.

[4] On December 20, 2007 Benson was paid a bonus of $4,000. On December 24, 2009 he was paid a bonus of $5,000. He was paid no bonus in or for the years 2008 or 2010.

[5] In a meeting in early 2009, Benson asked Mr. Bird if he would get a bonus for 2008 and was told that he would not, as he had not performed well enough to deserve a bonus.

[6] In respect of the bonuses he did receive, Benson accepted each without protest or claim that he should receive more money and did not request information or documents relating to the financial performance of the company until May 3, 2012 when his counsel wrote Bird requesting, inter alia, additional bonus related payments. This action was commenced on June 13, 2012.

[7] Bird insists that Benson had reasonable knowledge of the material facts so as to understand that he had an actionable claim against Bird for payment of additional bonuses more than two years before he sued or otherwise claimed for such relief. Bird insists that Benson slept on his rights and cannot raise stale dated claims in this litigation.

[8] Although it is not contended that Benson possessed precise financial information regarding Bird sales in any of the nearly three and one half years of his employment at Bird, Bird asserts that he was positioned by his job functions, by having access to internet based information and access to information from fellow employees, to understand enough about Bird’s sales in order to appreciate that he may have an entitlement to bonuses based upon sales over $12,000,000 and that, Bird insists, supports the contention that the limitation period ought to run against him in this matter.

[9] Benson adopts an entirely opposite view. He, correctly, points out that the employment contract at issue in this matter is one drawn by Bird. As it addresses bonus entitlements, the language was drafted by Bird and not negotiated between the parties. In the result, Benson knew that he may receive annual bonuses based upon his performance and upon company wide sales. Benson expected significant bonus payments but did not delve, with his employer, into the frequency or regularity of when bonus payments would be made. The employment agreement did not specify when Benson’s bonuses would be paid and whether any bonus entitlements not paid would accrue during the term of his employment.

[10] The employment contract was silent on how and by whom Benson’s performance was to be judged and whether he had any right to input into the assessment of his performance and/or to contest any decision his employer made by factoring performance into the determination of bonus entitlements. Mr. Bird testified that he made all decisions as to bonus payments to any Bird employee. He added that an individual’s performance of his/her duties is central to his bonus decisions; beyond that, however, he added no explanation of the process as it applied to Benson except to state that he told Benson that his performance was poor and that he would receive no bonus for 2008 and that he can’t remember what else was said in that meeting.

[11] Benson accepts that he met with Mr. Bird and received criticisms regarding tasks that needed to be done on projects from time to time. He disagreed that “tasks” equal “performance”, as the word is used in the bonus provisions of the employment agreement. Even in years in which he was paid no bonus, Benson testified that he believes he was performing adequately and was entitled to his bonus. Mr. Bird did not explain to Benson or to this court whether or how he factored the tasks the latter did or failed to do in measuring his performance for bonus entitlement purposes nor what other components of performance he measured.

[12] The employment agreement did not define sales and so, while Benson managed up to 65 % of Bird’s projects, he was not aware of how, if at all, projects underway at any given time affected annual sales nor whether sales applicable to his bonus entitlement were sales as booked or sales on projects actually completed or funded in a given bonus period. Benson was neither offered nor given access to the financial information that Bird proposed to use in determining Benson’s entitlement to sales based bonuses. Mr. Bird testified that Benson did not ask for financial information; Bird did not say that he would have provided any if asked. Benson did not try to glean information about Bird’s sales from its website. He explained that he did not understand that information posted there to be an accurate statement of the financial affairs of Bird or that it was posted there by Bird to be used for the purposes of ascertaining the size of his bonus.

[13] I accept Benson’s uncontested testimony that the bonus clause in the employment agreement played a significant role in his decision to leave his previous employment and accept Bird’s offer of employment.

[14] Benson further testified and I accept that, although his bonuses were not what he expected them to be, given the power imbalance between him and his employer, it would not have been workable for him to have brought a claim for bonuses unpaid or short paid while employed by Bird and it was not until he had been terminated that he realized that no further bonus payments would be forthcoming.

[15] Mr. Bird testified that he has run the company since 1991. As of the time of his cross examination in July 2013, he was aware of no active Bird employee bringing a court claim against his company. He testified that he had not considered what he would do with Benson’s employment if he had brought a claim while still employed. Put another way, he stopped short of saying that Benson could have sued for bonuses with impunity while employed.

[16] Mr. Bird accepts that the maximum claim for unpaid bonuses in this matter could be at least $261,437.11 but testified that he did not think of that exposure in connection with his decisions to award bonuses to Benson and he did not consider the potential maximum size of his bonus in a given year if he deemed Benson’s performance to have been satisfactory and the company achieved the sales. This tends to demonstrate that the bonus award process was much more arbitrary than a fair reading of the language of the employment contract might suggest.

[17] Upon the basis of Bird’s productions made to date in the underlying litigation, Benson submits that his entitlement to bonus based damages may approach $300,000. He points out that examinations for discovery have yet to be held and that, therefore, the record available upon which to make the many determinations upon the issues that this partial summary judgment motion requires is incomplete and, in any event, insufficient to enable the court to acquire the full appreciation of the evidence necessary to support a summary judgment in lieu of engaging the forensic machinery of a trial.

Analysis

[18] An employment relationship is special and different from a commercial transaction. An employee is in a vulnerable situation and entitled to a subjective appreciation of his circumstances in connection with understanding his realistic and reasonable alternatives in responding to conduct and decisions affecting him or her. The balance of power often rests, as it did here, with the employer.

[19] The evidence does not permit of my achieving the full appreciation of the issues that is required in order to make dispositive findings.[^1] It is not plainly clear that the limitation period within which Benson was required to commence his claim had expired before this action was brought.

[20] In my view, upon the evidence before the court on this motion, it is impossible to find that Benson’s bonus payments actually made were fairly assessed according to the terms and spirit of the employment agreement. It is equally impossible to determine whether Benson should have been paid bonus in or for years that he received no bonus payments at all.

[21] The onus rests with the parties to put best foot forward on applications such as this; Benson has done so but Bird has not. Benson established that he always expected that he would receive the bonuses promised by the employment contract and that it was neither necessary nor wise for him to sue for bonus payments while actively employed at Bird.

[22] Bird has established that it applied the bonus provisions in the employment agreement in an arbitrary and unilateral fashion and that it failed to explain its decision making process to Benson or to arm him with sufficient information upon which he could come to an informed, reasonable understanding of his bonus entitlement for any of the years during which he was employed at Bird. Bird has not demonstrated that Benson knew or ought to have known that he had a claim for unpaid bonus that Bird would not honour and that he needed to sue to recover upon that claim at any time sooner than he did in fact sue.

[23] Had Bird been forthcoming in explaining Mr. Bird’s interpretation of the bonus provisions of the employment agreement, Benson may have treated the failure to pay bonuses as a repudiation of the employment contract and a constructive dismissal.[^2] Benson valued his job and believed that Bird would ultimately pay the bonus amounts fairly due him. He did not understand that Bird would do otherwise, nor upon the evidence on this motion, should he have.

[24] It would have been neither workable nor fair to expect Benson to have jeopardized his job by suing for bonus while still actively employed at Bird.[^3]

[25] In any event, I accept Benson’s submission that given the special nature of the employment relationship at issue in this matter and the clear language of the bonus provisions in the employment agreement that Bird drafted, the failure to inform Benson of Bird’s interpretation of the agreement and to provide him with the sales figures needed to appreciate his potential bonus entitlements amounts to a fraudulent concealment that prevents the running of the limitation period.[^4]

[26] Bird has failed to demonstrate that there is no genuine issue requiring a trial and I am not satisfied that it is appropriate to grant summary judgment. This motion is dismissed with costs payable to Benson, in the amount agreed to between the parties

Moore J.

DATE: 20 August 2013

[^1]: Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764

[^2]: Ilkay v. Acadia Motors Ltd., (2006), 2006 NBCA 103, 276 D.L.R. (4th) 762 (N.B.C.A.), Piron v. Dominion Masonary Ltd., 2013 BCCA 184 (B.C.C.A.), Landry v. 1292024 Ontario Inc., (2006) O.J. 1832.

[^3]: Novak v. Bond 1999 685 (SCC), [1999] 1 S.C.R. 808, at para 40.

[^4]: Halloran v. Sargeant (2001), 142 O.A.C. 286, aff’d at (2002), 2002 45029 (ON CA), 163 O.A.C. 138.