COURT FILE NO.: 06-CV-324616PD2
DATE: 20140402
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Robert Penteliuk, Plaintiff
AND:
CIBC World Markets, Inc., Defendant
BEFORE: Madam Justice L.B. Roberts
COUNSEL: Gary H. Luftspring and Sam R. Sasso, for the Plaintiff
John E. Callaghan and Benjamin Na, for the Defendant
REASONS FOR JUDGMENT
Overview:
[1] The plaintiff, Robert Penteliuk, was formerly employed as Managing Director, Canadian Investment Banking and Financial Institutions Group (“FIG”) of the defendant, CIBC World Markets, Inc. (“World Markets”). World Markets is an investment dealer and a wholly-owned subsidiary of the Canadian Imperial Bank of Commerce (“CIBC”), a Schedule 1 Bank. Mr. Penteliuk had worked for the CIBC from July 9, 1991 to November 3, 1997, when he became employed by World Markets. In June 2003, he was promoted to the position of Managing Director, a position he held until December 2004 when he left World Markets to join Genuity Capital Markets (“Genuity”).
[2] In this action, Mr. Penteliuk alleges that he was constructively dismissed from his employment by World Markets. In particular, Mr. Penteliuk maintains that World Markets breached an agreement to install Mr. Penteliuk as FIG Team Leader and to pay him a certain amount of compensation. Mr. Penteliuk argues that World Markets unreasonably delayed in promoting him to the promised position and that the compensation paid to him for fiscal 2004 was less than the agreed upon compensation.
[3] World Markets does not dispute that it agreed to promote Mr. Penteliuk to the position of FIG Team Leader and that, by the end of Mr. Penteliuk’s employment with World Markets, the promotion had not yet formally taken place. World Markets denies, however, that there was ever a fixed date for Mr. Penteliuk’s promotion to FIG Team Leader or that he was given a guarantee concerning the compensation that he would receive. World Markets submits that it was taking meaningful steps to carry out Mr. Penteliuk’s promotion and that it paid him generous compensation within the ranges discussed and in accordance with Mr. Penteliuk’s performance. World Markets denies that Mr. Penteliuk was constructively dismissed and argues that Mr. Penteliuk resigned prematurely from his position with World Markets before the promotion could be finalized, so that he could join Genuity, a competitor of World Markets.
Issues:
[4] The following are the issues to be determined in this action:
i. Was Mr. Penteliuk constructively dismissed or did he resign from his employment with World Markets?
ii. Is Mr. Penteliuk’s claim for constructive dismissal statute barred?
iii. If Mr. Penteliuk was constructively dismissed, what is the appropriate period of reasonable notice?
iv. If Mr. Penteliuk was constructively dismissed, what damages, if any, did Mr. Penteliuk incur? Did he take reasonable steps to mitigate his damages?
v. Even if Mr. Penteliuk was not constructively dismissed, should World Markets have exercised its discretion to grant him relief from the forfeiture of his unvested CIBC deferred equity; if not, is he entitled to payment of cash lost as a result of the change in the compensation grid in June 2004; and is he entitled in any event to payment of the dividend declared on December 29, 2004?
Analysis:
Issue No. 1: Was Mr. Penteliuk constructively dismissed or did he resign from his employment?
Overview
[5] This is a relatively uncommon case in that claims for constructive dismissal typically arise when an employee is demoted or another fundamental term of the employee’s contract, such as compensation, is unilaterally altered in a material way by the employer, without any or with inadequate notice or consideration in lieu of notice.[^1]
[6] Equally, however, the failure to promote an employee and to pay promised compensation within an agreed upon or a reasonable time frame, where the employee has relied on the promise of a promotion and increased compensation to his or her detriment, can amount to the employee’s constructive dismissal from his or her employment.[^2] According to Mr. Penteliuk, that is what occurred in his case.
[7] As admitted in paragraphs 6 and 7 of the Statement of Defence and in accordance with the evidence of Mr. Penteliuk, Don Lindsay and Phil Evershed, there is no issue that, in February 2004, World Markets offered to promote Mr. Penteliuk to the position of FIG Team Leader and increase his compensation in response to Mr. Penteliuk’s announcement that he was intending to leave World Markets and join Griffiths McBurney & Partners (“GMP”), an independent investment dealer, as its FIG Team Leader.
[8] According to Mr. Evershed, (a Co-Head of Canada Investment Banking and head of Mergers and Acquisitions with Dan Daviau until he left World Markets in April 2004[^3]), at that time, GMP was the top or second independent investment dealer in the financial services industry.
[9] The offer from GMP to Mr. Penteliuk included a very substantial compensation package with $1.5 million of guaranteed compensation payable to him over 18 months or two fiscal years, as well as incentive compensation on his revenue production in accordance with a sliding scale of between $100,000.00 and $150,000.00 per each million dollars in revenue generated. In addition, Mr. Penteliuk was offered 75,000 GMP shares that would fully vest upon the commencement of his employment and 75,000 unvested GMP shares that would vest a third each year over three years; and he was given the opportunity to participate in GMP’s share purchase plan.
[10] There is also no dispute that, in consideration of the promised promotion to FIG Team Leader with increased compensation, Mr. Penteliuk declined GMP’s offer of employment, and continued his employment with World Markets.
[11] As Mr. Lindsay confirmed, it was very important to Mr. Penteliuk to become FIG Team Leader and to earn more compensation. To achieve that position, Mr. Penteliuk was intending to leave World Markets and join GMP, a highly successful independent investment dealer. It was only by promising to promote Mr. Penteliuk to the FIG Team Leader position and increase his compensation that World Markets persuaded him to remain with World Markets. On the strength of World Markets’ promise, Mr. Penteliuk changed his position and declined the lucrative opportunity with GMP.
[12] In consequence, I find that Mr. Penteliuk’s contract of employment was amended to include the terms that he would be promoted to the position of FIG Team Leader with increased compensation and that these terms became essential terms of Mr. Penteliuk’s contract of employment with World Markets.
[13] The next question to be determined is whether there was a firm agreement between Mr. Penteliuk and World Markets that he would be promoted to FIG Team Leader by a certain date or at least within a reasonable period of time, and that he would receive a fixed amount or percentage of increased compensation. To answer these questions, it is necessary to examine in some detail the nature of the relationship and communications between Mr. Penteliuk and World Markets, the terms of the promised promotion and increased compensation, and the expectations created by these undertakings, within the context of the business environment in which Mr. Penteliuk worked and World Markets carried on its operations.
Mr. Penteliuk’s offer from GMP
[14] It is not disputed that on February 10, 2004, Mr. Penteliuk advised Mr. Evershed that he had received an offer to join another (then undisclosed) financial institution as its FIG Team Leader. Mr. Penteliuk testified that he told Mr. Evershed and subsequently Mr. Daviau and Mr. Lindsay (then Managing Director, Head of Canadian Investment and Corporate Banking, and Head of the Asia-Pacific Region, for World Markets) that he had accepted what was later identified as GMP’s offer and was resigning from World Markets. Mr. Evershed and Mr. Lindsay testified that they understood that Mr. Penteliuk had not yet accepted the offer.
[15] I do not accept Mr. Penteliuk’s evidence that he told Mr. Evershed, Mr. Daviau and Mr. Lindsay that he had accepted GMP’s offer for the following reasons.
[16] First, it is unlikely that, without notes to refresh his memory, Mr. Penteliuk would recall at trial precisely what he relayed orally in 2004 during discussions with Mr. Evershed, Mr. Daviau and Mr. Lindsay. Indeed, in relation to his September 7, 2004 notes at Tab 25 of Exhibit 2, Mr. Penteliuk frankly acknowledged that after these many years, he was giving his best recollection concerning what he thought the conversation was about on that day.
[17] Moreover, as explained in more detail below, Mr. Penteliuk’s evidence is inconsistent with contemporaneous written communications within World Markets and from Mr. Penteliuk on or after February 10th. In my view, it is clear from those communications that Mr. Penteliuk received an offer from GMP, which he had not yet accepted, when he spoke with Mr. Evershed, Mr. Daviau and Mr. Lindsay, and that he had not offered his resignation from World Markets. Further, as will be detailed later in these Reasons in relation to Mr. Penteliuk’s resignation in December 2004, CIBC had an elaborate and rigid protocol that was automatically applied once an employee resigns, which was not invoked in February 2004.
[18] Further, Mr. Evershed and Mr. Lindsay are neutral witnesses whose evidence was internally consistent and corroborated by other witnesses and exhibits. They have long departed from World Markets and had no reason to provide evidence favourable to one side or the other. In particular, and without going into details that are irrelevant to this matter, Mr. Evershed, a co-founder of Genuity, and Mr. Lindsay, who abruptly resigned from World Markets in November 2004, had no reason to be supportive of World Markets’ position in these proceedings, unless they were simply telling the truth, and I accept that they were.
[19] I turn now to examine the evidence in support of these conclusions.
[20] Mr. Evershed was called as a witness on behalf of Mr. Penteliuk. He testified that their conversation was that Mr. Penteliuk was intending to leave World Markets to accept a position as the head of a FIG at “a Canadian bank”. After Mr. Penteliuk told him of his intention to leave, Mr. Evershed said that he tried to assess where Mr. Penteliuk was in discussions with the other bank. Mr. Evershed said that the purpose of that was to see if World Markets could “counter bid” Mr. Penteliuk if, collectively, they at World Markets wished to do so. Mr. Evershed testified that there appeared to be an opportunity to counter bid, as Mr. Penteliuk had not given them a letter of resignation and Mr. Evershed had the impression that Mr. Penteliuk had not yet executed an agreement with GMP or accepted its offer. Mr. Evershed said that this was a fairly routine process with them.
[21] Mr. Evershed’s evidence was corroborated by Nina Krongold, the Human Resources consultant at World Markets who provided human resources services for the investment banking group at that time. Ms. Krongold testified that, in the financial services industry, it is not unheard of and relatively common for someone to come in with an offer and say, “I want more money if you want to keep me”. She said that it was not a resignation but a negotiation.
[22] Ms. Krongold also testified that if Mr. Penteliuk had resigned in February 2004, she would have been advised and CIBC’s protocol would have been instigated. Among other things, Mr. Penteliuk’s access to CIBC and client confidential information would have been terminated, as it was in December 2004, but that was not the case here. In that respect, it is significant that Mr. Penteliuk did not tender a letter of resignation in February 2004, as he later did in December 2004, which did invoke CIBC’s protocol, as will be discussed in more detail later in these Reasons.
[23] Ms. Krongold explained that, in her email transmission, marked “MD bid”, sent on February 10, 2004, at 5:23 p.m., she forwarded information to others within World Markets, which she testified that she had received from Mr. Lindsay and Mr. Evershed, indicating that Mr. Penteliuk had received “an offer from one of our competitors (undisclosed)”. While Ms. Krongold cannot obviously attest to what was said by Mr. Penteliuk to Messrs. Lindsay and Evershed, as she was not present during their discussions, her email confirms the understanding that Messrs. Lindsay and Evershed communicated to her at that time.
[24] Mr. Evershed’s evidence is also consistent with the email transmission that he sent to Mr. Lindsay and Mr. Daviau at 3:05 p.m., just minutes after his initial conversation with Mr. Penteliuk on February 10, 2004, and marked, “Asap”: “Penteluk [sic] bid by another bank – Head of FIG – hasn’t accepted – we need to counter – let me know availability” [emphasis added]. At 3:06 p.m. on February 10, 2004, Mr. Lindsay responded to Mr. Evershed by his email transmission: “On my way”.
[25] Mr. Lindsay testified that he treated the matter with priority and spent considerable time talking to Mr. Penteliuk, in particular, while he was in Florida over the Valentine’s Day weekend with his wife, because he understood that Mr. Penteliuk was under some pressure because he had “a competing offer”.
[26] Most significant is the email transmission that Mr. Penteliuk sent to Kevin Sullivan, the then CEO of GMP on February 11, 2004 at 12:39 a.m., in which, Mr. Penteliuk testified, he asked for a few points of clarification with respect to the employment terms with GMP. In his email, Mr. Penteliuk was still asking questions about and negotiating the position that he had been offered but which he noted in his email he had not yet accepted. In particular, he wrote: “…if you were in my position is there anything else you would want to know before signing on” [emphasis added]. Similarly, in his February 18, 2004 email transmission that Mr. Penteliuk sent to Mr. Lindsay at 7:47 a.m., he writes, “I ant [sic] to get back to kevin asap he has been hanging for a week” [emphasis added]. These emails indicate to me that Mr. Penteliuk had not given a definitive answer to GMP’s offer of employment.
[27] As a result, I find that Mr. Penteliuk told Mr. Evershed and Mr. Lindsay or at least led them to understand that he had received an offer that he had not yet accepted.
Issues of witness credibility and reliability
[28] Why does this discrepancy matter? It matters because it relates to Mr. Penteliuk’s ability and willingness to recall and recount accurately relevant events. As noted by several witnesses, including Mr. Penteliuk, Mr. Lindsay, and his successor, David Leith, it is not common practice in the financial services industry to reduce all conversations and meetings to written form although, as acknowledged by Mr. Penteliuk and evidenced by the documents produced at trial, email communications were convenient. In consequence, with respect to the issues of World Markets’ offer of promotion and increased compensation to Mr. Penteliuk, the credibility and reliability of the witnesses’ evidence about what was said and agreed upon are important.
[29] As a result, the testimony of each witness at this trial must be assessed for its credibility and for its reliability. A witness’ credibility relates to the witness’ honesty or sincerity and the witness’ willingness to speak the truth as he or she believes it to be. The reliability or accuracy of a witness refers to a witness’ ability to observe, recall and recount accurately the events about which he or she testifies.
[30] The assessment of a witness’ evidence is not an “all or nothing” proposition. A witness may testify on numerous points. On any particular point, a witness may be truthful, a witness may be deliberately lying, or a witness may be honestly mistaken. I may, therefore, believe all of the evidence given by a witness, part of the evidence, or none of it.[^4]
[31] Issues of credibility arise in this case from the parties’ opposing versions of material events and discussions. In assessing the credibility of the witnesses in this case, I find helpful the following well-known guidelines articulated by O’Halloran, J.A. in Faryna v. Chorny[^5]:
The credibility of interested witnesses, particularly in cases of conflict of evidence, cannot be gauged solely by the test of whether the personal demeanour of the particular witness carried conviction of the truth. The test must reasonably subject his story to an examination of its consistency with the probabilities that surround the currently existing conditions. In short, the real test of the truth of the story of a witness in such a case must be its harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions.
[32] Additional factors to take into account when assessing a witness' credibility and reliability include the presence or absence of internal contradictions or consistencies within a witness’ own evidence, of evidence contradicting a witness' statements, and of corroborative evidence.[^6]
[33] When a witness says one thing in the witness box at trial, but has said something quite different on an earlier occasion, common sense indicates that the fact that the witness has given different versions may be important in deciding whether or how much to believe of or rely upon the witness’ evidence.
[34] However, not every difference or omission will be important. It is necessary to consider the fact, nature and extent of any differences in determining their importance in order to decide whether to believe or rely upon the witness’ evidence. Any explanation the witness gives for the differences must also be considered.
[35] In this case, where witnesses are trying to remember events and discussions from times long past, there is a risk that the witnesses’ evidence will be an inadvertent or deliberate reconstruction or rationalization of what must or should have happened, rather than the product of an actual and accurate memory of what did happen. As a result, contemporaneous documents, where they exist, are of critical importance in considering what happened and why.[^7]
[36] World Markets did not make a formal written offer to Mr. Penteliuk to promote him to the FIG Team Leader position and to increase his compensation. The terms of the negotiations and the offer ultimately made to Mr. Penteliuk, which convinced him to stay at World Markets, must be gleaned from the evidence of the witnesses and the references in contemporaneous documentation to the various meetings and communications that were taking place during that period of time in February 2004.
Negotiations between Mr. Penteliuk and World Markets
[37] Returning to the chronology of relevant events concerning Mr. Penteliuk’s promotion to FIG Team Leader and increased compensation, between February 10, 2004, when Mr. Penteliuk first announced to Mr. Evershed that he had received an offer to join a competitor, to February 18, 2004 at 2:34 p.m. when Mr. Penteliuk confirmed that he was staying with World Markets, there was a flurry of activity, meetings, conversations, and email transmissions concerning World Markets’ counter-offer to Mr. Penteliuk, which he ultimately accepted.
[38] Mr. Penteliuk testified that in the negotiations and discussions between him and World Markets, Mr. Lindsay agreed to his demand for compensation of $1.5 to $1.75 million on his gross investment revenue booked to that date of about $9 million, plus further compensation on any revenues that he generated in the balance of the fiscal year, as well as a $1.5 million bonus from the Merchant Banking group for his work on the Assante Financial transaction. He testified that Mr. Lindsay would not put the agreement in writing but said to Mr. Penteliuk that he had never failed to live up to his undertakings.
[39] With respect to his promotion, Mr. Penteliuk testified that he requested that he be appointed to the position of FIG Team Leader near or not later than the beginning of the fourth fiscal quarter of World Markets, namely, August 2004[^8]. Mr. Penteliuk said that he felt it was important going into the new fiscal year that he was part of the 2004 evaluation process of FIG as the Team Leader and that he was involved in setting the compensation for his team. He said that he understood Mr. Lindsay to say that he would try to make the promotion happen as close as possible to the beginning of the fourth fiscal quarter and that Mr. Lindsay talked about it happening in the fourth fiscal quarter. Mr. Penteliuk admitted that while Mr. Lindsay said that he would try to have his promotion occur by the fourth fiscal quarter, he needed some flexibility as opposed to a hard date.
[40] I do not accept Mr. Penteliuk’s evidence concerning the undertakings about the increase in his compensation that he said were made by Mr. Lindsay. Moreover, even on Mr. Penteliuk’s evidence, there was no commitment to promote Mr. Penteliuk to the position of FIG Team Leader by a fixed date.
[41] Mr. Penteliuk’s version at trial about his discussions with Mr. Lindsay is inconsistent with the version pleaded in paragraph 7 of his Statement of Claim and his evidence from his examination for discovery[^9] that Mr. Lindsay had promised to pay, not a range, as Mr. Penteliuk said at trial, but a minimum incentive of $1.75 million to retain him at World Markets.
[42] Again, after the passage of so many years, without contemporaneous notes to refresh his recollection, it is unlikely that Mr. Penteliuk would be able to recall the minute details of his discussions with Mr. Lindsay. Mr. Penteliuk had no handwritten notes of his discussions with Mr. Lindsay; the closest to a contemporaneous written record by Mr. Penteliuk is the February 17, 2004 email that he sent to Mr. Lindsay. Moreover, as discussed in detail below, Mr. Penteliuk’s evidence at trial about his discussions with Mr. Lindsay is in certain respects at variance with his own email of February 17, 2004.
[43] I prefer Mr. Lindsay’s evidence of his discussions with Mr. Penteliuk. Aside from Mr. Lindsay’s marked neutrality as a witness for the reasons that I have already noted, his evidence is more consistent with contemporaneous emails, including Mr. Penteliuk’s February 17, 2004 email to Mr. Lindsay. Mr. Lindsay’s evidence is also more consistent with the narrative of events to which Mr. Evershed, Ms. Krongold and Mr. Fox testified.
[44] Mr. Lindsay testified that he had several conversations with Mr. Penteliuk between February 10 and 18, 2004, and had talked to him for hours about the opportunities that he was being offered and the opportunities for him at World Markets. Mr. Lindsay said that Mr. Penteliuk was concerned that he was not going to be paid fairly for his major role in two investment banking transactions involving Assante and First Asset Management.
[45] Mr. Lindsay testified that Mr. Penteliuk and he discussed that Mr. Penteliuk would be paid between $1.5 to $1.75 million, provided that he generated between $15 and $20 million of gross investment banking revenue. As at February 2004, Mr. Penteliuk had already generated around $9 million of gross investment banking revenue and Mr. Penteliuk was confident that he would be in the $15 to $20 million range by the end of the fiscal year. Mr. Lindsay confirmed that it would not be unusual to allocate $1.5 million for Mr. Penteliuk’s key role in the Assante and First Asset deals, if these gains materialized and were booked in that fiscal year.
[46] In addition to his concerns about his compensation, Mr. Lindsay said that Mr. Penteliuk was concerned about his career path and wanted to be promoted. Mr. Lindsay testified that Mr. Penteliuk was already a key candidate to succeed Mr. Fox and that he was going to obtain that position.
[47] Mr. Lindsay testified that he wrote to Gerry McCaughey, the Chief Executive Officer of World Markets, by email on February 16, 2004, at 9:19 p.m., concerning his discussions with Mr. Penteliuk. In particular, as recorded in his email, Mr. Lindsay testified that he said to Mr. Penteliuk that the $1.5 to $1.75 million range was solely related to his gross investment banking revenue, which they understood was about $9 million and which they expected would end up in the $15 to $20 million range, and that it would not be unusual to add $1.5 million from the Merchant Banking pool if, in the year end review, it was found that Mr. Penteliuk was “absolutely the key guy behind $35 million of realized (in the books) gains”. Although he noted to Mr. McCaughey that Mr. Penteliuk and he had ended their conversation on “quite a positive note”, Mr. Lindsay was of the view that he may only have moved Mr. Penteliuk to a “50:50 position”.
[48] In his February 17, 2004 email transmission that Mr. Penteliuk sent at 10:44 a.m. to Mr. Lindsay, Mr. Penteliuk referenced the proposal that World Markets made to him, his concerns with the proposal, and his counter proposal. He summarized World Markets’ proposal, which confirms Mr. Lindsay’s evidence that compensation was discussed in terms of a range and that no compensation commitment was made, and his concerns with that proposal, as follows:
“Don, further to our discussions as you know I have expressed my concerns with the proposal to you.
compensation for revenue booked todate was expressed as a range as opposed to a specific value [my emphasis]
it was not a written hard commitment [my emphasis]
there being a perceived belief that my attaining Team Leader comp of $3mm plus this year could not be achieved regardless of production over the balance of the year (your comments to the contrary on this point were important and noted)”
[49] In his February 17, 2004 email, Mr. Penteliuk proposed the following counter-offer:
“As you are well aware of the following: my IB revenue booked todate, the significant gain on the assante [sic] position, the FIG pipeline for the remainder of 04, my long term track record of revenue production, and in an effort to resolve these discussions on an [sic] reasonable basis I would propose the following:
FIG Team Leader status no later than the beginning of Q4 F04
bonus comp for production todate of $1.75mm plus additional comp for revenue booked during the remainder of 04 (all thru the present defered [sic] grid)
As you mentioned, there is the reasonable expectation for further organizational change, as such I would appreciate your written confirmation of the above.”
[50] On February 17th at 10:17 p.m., Mr. Lindsay forwarded Mr. Penteliuk’s February 17th email transmission to and asked if Mr. McCaughey had any comments on Mr. Penteliuk’s “new position” in the negotiations. As Mr. Lindsay and Mr. Evershed confirmed, while Mr. Lindsay had the authority to install Mr. Penteliuk into the position of FIG Team Leader, no guarantee or commitment about compensation could be made without Mr. McCaughey’s agreement.
[51] As is clear from Mr. McCaughey’s response to Mr. Lindsay’s email, he expressly prohibited any guarantee about compensation. Mr. McCaughey responded on February 18th at 8:51 a.m., as follows:
“Written is difficult
We need to stay within historic philosophy.
We need to assume this becomes broadly known and can defend as being within historic norms of management handling
Etc
Cannot be a guarantee [emphasis added]
You must be comfortable”
[52] Mr. Lindsay testified that he noted Mr. McCaughey’s instructions not to give a guarantee about compensation in his email transmission of February 18, 2004, at 10:38 a.m. to Mr. Evershed and Mr. Daviau, as follows: “About to talk to Rob Penteluk [sic] again. He has increased his ask substantially and some aspects we will not be able to meet ie a firm written number. I think he is preparing to resign today. Do either of you have any further information.”
[53] Mr. Evershed testified that Mr. Lindsay and he discussed compensation for Mr. Penteliuk. He was aware of special compensation amounts being discussed in general and gave his views on what he thought was fair given the transactions on which Mr. Penteliuk had worked to that point. Mr. Evershed responded to Mr. Lindsay in his February 18, 2004 email sent at 11:53 a.m.: “Don – that is consistent with my conversation with him yesterday – we encouraged him to relax the written confirmation as we didn’t think it got him anything. On the $$ he said that he wanted the $1.75 plus ups (which I think we should do). We also were persuading him that in a big year a $3M plus year is achievable for high performing TL’s. I think we should table the $1.75 in the form we already provided i.e. no guarantee – tell him under our platform he will make more than at GMP – and have him stare us down. If he walks on that I will feel we did everything.”
[54] Mr. Evershed testified that Mr. Evershed’s February 18th email to Mr. Lindsay was consistent with the conversation that Mr. Evershed had with Mr. Penteliuk on February 17th. He understood that Mr. McCaughey would not guarantee compensation. He said that CIBC was not in the habit of handing out guarantees regarding compensation. He looked at what Mr. Penteliuk’s generated revenues were to that point and thought “$1.75M plus ups” was a reasonable figure and that it should be offered to Mr. Penteliuk.
[55] In telling Mr. Penteliuk, as noted in his February 18th email to Mr. Lindsay, that “in a big year a $3M plus year is achievable for high performing TL’s”, Mr. Evershed testified that his point was that it was possible for top bankers to make $3 million and that in time, Mr. Penteliuk would make that kind of money in a successful year. I note that he did not say that Mr. Penteliuk would make that kind of money in fiscal 2004, which, if Mr. Lindsay had agreed to pay Mr. Penteliuk bonuses of between $1.5 and $1.75 million and $1.5 million from Merchant Banking, would have been the case.
[56] I also note that, while Mr. Lindsay sought input concerning Mr. Penteliuk’s “ask” from Messrs. Evershed and Daviau, both of them reported to Mr. Lindsay and, regardless of their views, it was not their decision to make, as Mr. Lindsay testified and Mr. Evershed confirmed.
[57] Mr. Penteliuk and Mr. Lindsay testified that they had a final long telephone conversation after 10:38 a.m., the morning of February 18th, as indicated in the email transmissions sent on that day.
[58] Mr. Lindsay testified that he did not agree to Mr. Penteliuk’s proposal as set out in his February 17th email. He said that he relied on his own track record for paying for production, if achieved, and this is what he conveyed to Mr. Penteliuk during their discussions. His discussions with Mr. Penteliuk were one on one. He did not recall doing a note to file and likely relied on his above-referenced long email to Mr. McCaughey of February 16th, which he described as an unusually long email for their business.
[59] Mr. Lindsay testified further that, as he later advised Mr. McCaughey in his February 18th email transmission that he sent at 5:10 p.m., when he spoke to Mr. Penteliuk, he “stuck to the script” of his long February 16th email transmission to Mr. McCaughey. Mr. Lindsay also wrote, “He is clearly counting on being paid for Assante and First Asset Management and expecting to end up in the $3 million range. I used all sorts of cautionary words but at the same time if he really was the “guy” and we really do clear $35 million on top of his IB revenue I would have no problem paying those numbers.” [emphasis added]
[60] Mr. Lindsay said that they wanted to keep Mr. Penteliuk at World Markets. They thought that Mr. Penteliuk had done a pretty good job of generating revenue for World Markets: Assante was a very lucrative transaction for World Markets; the First Asset transaction was also very good, and if it had closed, they would have paid Mr. Penteliuk more compensation. Mr. Lindsay testified that no compensation guarantee was communicated to Mr. Penteliuk. He explained that a guarantee was difficult because it was unknown how much revenue would be there at the end of the fiscal year or if World Markets would determine to pay on a different scale. He said that lots of things could change by the end of the fiscal year.
[61] With respect to the FIG Team Leader position, Mr. Lindsay testified that all that was expressed to Mr. Penteliuk was that the promotion was something that he wanted or hoped to do by the fourth quarter of the fiscal year. Mr. Lindsay testified, and it makes sense, that he could not agree on a fixed date because of the steps that had to be taken to achieve the promotion, not the least of which was to find the incumbent, Mr. Don Fox, another position within World Markets or to provide him with a severance package. Mr. Fox was a senior and well respected member of management who had been with World Markets as FIG Team Leader since 2000. As Mr. Lindsay testified, it was not a question of simply moving Mr. Fox into another position; a position would have to be created for him, which would take some time to accomplish.
[62] Mr. Evershed testified that while he was not involved in the conversations between Mr. Lindsay and Mr. Penteliuk, he understood that the general view was that Mr. Penteliuk would be made head of FIG during the compensation season at the end of the year but that they did not have an explicit “this is the date certain” that Mr. Penteliuk would have the position.
[63] Moreover, Mr. Lindsay’s evidence was that promotions are usually done directly at the end of the fiscal year or more commonly towards January 1st because people want to be in place at October 31st, the end of the fiscal year, otherwise they would lose cash and deferred equity. To Mr. Penteliuk’s knowledge, Mr. Fox was working on a large transaction for ING, which was not set to close before the end of the fiscal year and he would want to be in place to receive his compensation for his work on the transaction.
[64] At trial, Mr. Penteliuk would not agree that it was customary practice at World Markets that promotions would be given during one year and would start in January of the next year. However, his position at trial appeared contrary to his evidence given during his examination for discovery. In response to a question about his promotion to the position of Managing Director, Mr. Penteliuk made the following admission:
Q.9 Just so I’m clear, I think what your evidence is is that it’s customary that you would get your promotion during one year and it would start the January of the next year?
A. I think…I believe that’s how it worked and, yes, it was following customary practices, yes.[^10]
Agreement between Mr. Penteliuk and World Markets
[65] I accept Mr. Lindsay’s evidence of the terms that were proposed to Mr. Penteliuk, namely, promotion to FIG Team Leader without a fixed date and increased compensation in accordance with certain conditions that Mr. Penteliuk had to realize in his performance. While only Mr. Lindsay and Mr. Penteliuk can say what occurred between them in their discussions, it is frankly incredible that Mr. Lindsay would say one thing to Mr. McCaughey, Mr. Evershed and Mr. Daviau, and then, contrary to Mr. McCaughey’s instructions, make promises to Mr. Penteliuk that he knew he could not keep.
[66] Further, there was no reason why Mr. Lindsay would change the offered position of a range of compensation tied to Mr. Penteliuk’s performance, as Mr. Lindsay indicated in his emails to Mr. McCaughey, to the enormous increase proposed by Mr. Penteliuk. It could not have been done in order to keep Mr. Penteliuk at World Markets. Mr. Lindsay and Mr. Evershed expressed the views in their February 18, 2004 emails that, notwithstanding their efforts, they believed that Mr. Penteliuk might leave World Markets. If Mr. Lindsay had agreed to all of Mr. Penteliuk’s demands, there would have been no reason for him to believe, as he stated to Mr. McCaughey in his February 16th email, that he had only moved Mr. Penteliuk to a “50-50 position”, or, as he opined to Mr. Evershed and Mr. Daviau in his February 18th email, that Mr. Penteliuk was poised to resign.
[67] While Mr. Penteliuk was pushing to be promoted on a fixed date and to be guaranteed certain compensation, the evidence establishes that World Markets did not agree to those terms. Mr. Penteliuk admitted during his examination in chief that Mr. Lindsay stated that he would try to have the promotion in place by the beginning of the fourth quarter of the fiscal year but that he needed some flexibility rather than a hard date.
[68] Mr. Penteliuk also agreed on cross-examination that Mr. Lindsay would not give him a written guarantee with respect to compensation. As Mr. Lindsay testified and as noted in his emails, the farthest that World Markets was prepared to go regarding increased compensation was to tell Mr. Penteliuk that if he realized certain revenues, it was likely he would be paid in the ranges discussed with Mr. Penteliuk, because World Markets had done so in the past.
[69] I find that Mr. Penteliuk agreed to stay at World Markets on the terms that were proposed to him by Mr. Lindsay, as I have just reviewed. On February 18, 2004, at 2:34 p.m., Mr. Penteliuk wrote to Messrs. Lindsay, Evershed and Daviau, “you’ve got your new head of FIG”, to which Mr. Evershed responded at 3:05 p.m., “welcome back”, and Mr. Lindsay wrote at 5:04 p.m., “Just got out of a meeting and saw this email. Great news! I look forward to working with you on great things to come.”
[70] Although I have concluded that World Markets did not agree to promote Mr. Penteliuk to the FIG Team Leader position by a fixed date, I find that it was fair in the circumstances for Mr. Penteliuk to have the expectation that he would be formally installed into the FIG Team Leader position within a reasonable period of time. In the face of a firm offer from GMP to be FIG Team Leader, where Mr. Penteliuk expected to be earning a comparable amount of compensation, it makes no sense that Mr. Penteliuk would turn down that opportunity if he was not given the understanding that he would be installed into the FIG Team Leader position within a reasonable amount of time.
[71] What then was a reasonable period of time in the circumstances of this case?
[72] I find that Mr. Penteliuk did not make any objection when he was not promoted to FIG Team Leader at or near the beginning of the fourth fiscal quarter of 2004. As he testified, other than an email that he sent to Mr. Lindsay in July, which is referenced below, Mr. Penteliuk did not communicate with Mr. Lindsay at all about the timing of Mr. Penteliuk’s promotion to FIG Team Leader during the month of August when, as Mr. Penteliuk testified, Mr. Lindsay and he were respectively away on vacation.
[73] Indeed, according to my review of the evidence, as set out below, I find that Mr. Penteliuk raised no clear objection to the timing of his promotion to FIG Team Leader until December 17, 2004, when he tendered his letter of resignation. This suggests to me that Mr. Penteliuk had no fixed expectation that he would be made FIG Team Leader before that date.
[74] As Mr. Penteliuk admitted, Mr. Lindsay said that he needed flexibility on the date of his promotion because of the steps that had to be taken to find Mr. Fox, the incumbent FIG Team Leader, a comparable position within World Markets, or to prepare a severance package for him.
[75] It also makes sense and is reasonable that the formal or official change in the FIG Team Leader would not occur at the earliest before the completion of what the witnesses called “the compensation season” at World Markets, so that Mr. Fox would receive his compensation for that fiscal year and complete his work on the ING transaction, which was scheduled to close on December 15th.
[76] All witnesses agreed that the month of November was consumed with compensation discussions and decisions among the members of management, and the Board, who were involved in that process. In 2004, the compensation decisions were relayed to the employees on December 2nd. On December 16th, bonuses were directly deposited to employees’ bank accounts. Mr. Penteliuk did not expect to receive any promised increased compensation before then.
[77] The timing of Mr. Penteliuk’s promotion to FIG Team Leader at the end of the calendar year or the beginning of the new calendar was also in keeping with the general practice of when World Markets’ promotions were made, as indicated by Mr. Lindsay at trial and by Mr. Penteliuk on his examination for discovery.
[78] As a result, I find that a reasonable period of time in the circumstances of this case, which I have just reviewed, was that Mr. Penteliuk would be promoted to FIG Team Leader by the end of 2004 or at the beginning of 2005, and that Mr. Penteliuk would receive his increased compensation at the beginning of December 2004.
Did World Markets breach the agreement with Mr. Penteliuk?
i. Undertaking regarding promotion to FIG Team Leader
[80] Starting first with the issue of his promotion, Mr. Penteliuk argues, however, that, after promising him the FIG Team Leader position, World Markets took no meaningful steps to move him into that position as promised. Moreover, Mr. Penteliuk submits that he had to follow up constantly with World Markets in an effort to compel World Markets to fulfill the promised promotion.
[81] As is apparent from my review of the evidence that follows, while it is true that Mr. Penteliuk was following up from time to time about the status of his promotion, it is not fair to say that World Markets was taking no meaningful steps to carry out his promotion. On the contrary, Mr. Penteliuk’s expected promotion into the FIG Team Leader position was no secret to World Markets’ most senior management, to Human Resources, or to the incumbent FIG Team Leader. Sincere efforts were ongoing to find Mr. Fox a new position within the organization. Mr. Penteliuk’s promotion was also acknowledged by his participation in FIG’s evaluations and the payment to him of significant compensation at fiscal year end. None of these things would have occurred if he were not going to become FIG Team Leader.
July/August to November 8, 2004
[82] As I just noted, there was no expectation or commitment that Mr. Penteliuk would be installed in the position of FIG Team Leader by the beginning of the fourth fiscal quarter of 2004. In consequence, there were no communications between Mr. Penteliuk and Mr. Lindsay concerning the timing of his promotion during the summer months.
[83] Mr. Penteliuk’s only email communication in the summer months that references his promotion is significant in that it is evidence that Mr. Penteliuk’s promotion was no secret to senior management at World Markets. On July 6, 2004, Mr. Penteliuk asked Mr. Lindsay in an email whether he had an issue with him asking James McSherry, then Managing Director and Executive Vice President and Head of World Market’s Commercial Banking business, about his experience as former FIG Team Leader in relation to Mr. Penteliuk taking over as a Team Leader and to FIG relationships in general. Mr. Lindsay responded that a very general conversation was fine and asked him to call for more background.
[84] Further, Mr. Penteliuk testified that, after Labour Day, Dick Falconer, a Vice-Chair of World Markets, and a member of the CIBC Executive Team, Canadian Investment and Corporate Banking, approached him and told him that he could not wait to work with him as FIG Team Leader.
[85] Mr. Penteliuk testified that, after Labour Day, he had two or three discussions with Mr. Lindsay regarding the timetable around his promotion and, when he asked when it was going to happen, Mr. Lindsay responded that it was something that he needed to deal with.
[86] Mr. Lindsay said that he had conversations with Mr. Penteliuk from time to time in August or September about starting to look for a position for Mr. Fox. Mr. Lindsay said that he had hallway discussions with Mr. Penteliuk and had started to canvass what he was going to do to keep Mr. Fox and where he was going to put him. His hope and his suggestion to Mr. Penteliuk were that he would try to make the promotion to FIG Team Leader happen by the end of the fiscal year. Mr. Lindsay said that he could not do it on a specific date and that the exact date was not certain but that the target was that in the new fiscal year it would be in place.
[87] Mr. Lindsay testified that he spoke informally with Mr. Fox on two occasions in August or September of 2004 and that he could have spoken to Mr. Fox in late September 2004, at the Atlantic Canada meeting, before he spoke to him on October 28th at his performance review to advise him that Mr. Penteliuk would be taking over his position and about Mr. Fox doing something else.
[88] Mr. Lindsay testified that from August or September 2004, he started looking for a position for Mr. Fox: he spoke to Richard Venn in Corporate Development about obtaining a position there for Mr. Fox; he spoke to Jill Denham in Retail; he spoke to Mr. McCaughey on more than one occasion; and to other parties “at the bank”.
[89] On September 8, 2004, Mr. Penteliuk sent an email to Mr. Lindsay in which, among other things, he asked to discuss the performance evaluations of FIG members with him. He sent a reminder of this to Mr. Lindsay on October 4, 2004. By his email dated September 15, 2004, Mr. Fox asked Mr. Penteliuk and others for feedback on the performance of all FIG members. On September 17 and October 5, 2004, Mr. Penteliuk sent emails to Mr. Fox and Mr. Lindsay with his thoughts about the FIG team, to which Mr. Lindsay commented that it was important that he received Mr. Penteliuk’s views. Mr. Penteliuk acknowledged during cross-examination that ordinarily, he would not have given his comments regarding his team and their performance evaluations.
[90] Mr. Penteliuk testified that, on September 24, 2004, he noted in his diary with respect to his performance review that he spoke to Mr. Lindsay who was speaking to Mr. McCaughey regarding Mr. Penteliuk’s situation, and that he had to make it happen.
[91] In his October 4, 2004 diary entry, Mr. Penteliuk noted and he testified that he spoke with Ms. Krongold who advised that she knew that Mr. Lindsay was working on his promotion and it would happen soon. As also indicated in his October 4, 2004 note, Mr. Penteliuk testified that he had expressed to Ms. Krongold his concern that Mr. Fox was conducting his performance evaluation and that Mr. Penteliuk had a reasonable expectation that Mr. Fox would show a bias or a grudge against him.
[92] Ms. Krongold testified that she learned in the fall of 2004 that Mr. Penteliuk would become FIG Team Leader. She said that she learned this before the compensation calibration session at the beginning of October which all Team Leaders attended and that Mr. Penteliuk contacted her about attending the session. She testified that she had regular discussions with Mr. Lindsay about Mr. Penteliuk becoming FIG Team Leader. Ms. Krongold testified that Mr. Lindsay and she were looking at opportunities for Mr. Fox to see if they could find him a role to transition into another business line.
[93] Ms. Krongold confirmed Mr. Penteliuk’s evidence of their October 4th conversation concerning Mr. Penteliuk’s promotion to FIG Team Leader. She testified that Mr. Penteliuk never told her when he expected to become FIG Team Leader. She also confirmed that he expressed his concern about Mr. Fox conducting his performance evaluation. As Mr. Penteliuk confirmed, she assured him that Mr. Fox would be impartial.
[94] In my view, Mr. Penteliuk’s expression of concern about Mr. Fox’s impartiality further indicates that he was aware that steps were being undertaken to promote him to FIG Team Leader and that these steps were being undertaken with relative urgency.
[95] Mr. Fox testified that he first learned from Mr. Lindsay that Mr. Penteliuk would be assuming his role of FIG Team Leader in late summer or early fall of 2004 when Mr. Lindsay indicated to him that the plan was to have Mr. Penteliuk become FIG Team Leader. Mr. Fox said that he was somewhat disappointed to learn of the change but also had discussions of other roles within the organization and was resigned about the transition happening at some point in time.
[96] Mr. Lindsay testified that he spoke to Mr. Fox again about Mr. Penteliuk becoming FIG Team Leader on October 28, 2004 at Mr. Fox’s performance review. He told Mr. Fox that Mr. Penteliuk would be moving into his position and that Mr. Fox would be getting another job in the next couple of months; and that, if there was no job for Mr. Fox by January 1st, they would give him a severance package. Mr. Lindsay also told Mr. Fox that the transition of FIG Team Leader was going to happen sooner than he had thought. Mr. Lindsay testified that the message relayed to Mr. Fox was that if he was given a severance package, Mr. Fox’s work on ING and other transactions would be considered on top of any package. Mr. Lindsay said that Mr. Fox was in a difficult situation personally because his wife was very sick at that time.
[97] Mr. Fox testified that, during his discussion with Mr. Lindsay on October 28, 2004, which was part of the year end performance review process, Mr. Lindsay told him that Mr. Penteliuk would become FIG Team Leader. Mr. Lindsay told him that an undertaking had been made to Mr. Penteliuk that he would be made FIG Team Leader, and that the transition would happen in a relatively short period of time. Mr. Fox’s understanding was that it would happen by the end of the calendar year. Prior to his review on October 28th, Mr. Fox was not aware of a firm date on which the transition was to take place but understood from Mr. Lindsay that something would happen over the next couple of months, and that there was now some urgency to address his future at World Markets.
[98] Mr. Fox confirmed that his email of November 1, 2004 to Mr. McCaughey reflects the fact that Mr. Lindsay had told Mr. Fox that Mr. Penteliuk was going to move into the position fairly imminently: in his email, Mr. Fox referenced that an undertaking about the FIG Team Leader position had been made to Mr. Penteliuk; and he also wrote that, “This raises the urgency for me to see if I can find a role elsewhere in CIBC. I was hoping I could speak to you about this at your convenience.”
[99] By “urgency”, Mr. Fox testified that he meant that the transition was happening sooner than he had thought it would happen and that there was therefore an increased sense of urgency to find another role within the organization. Following his email, he spoke to Mr. McCaughey. As he testified, Mr. Fox took notes of their telephone conversation, indicating that there was no immediate operating role. Mr. Fox understood from Mr. McCaughey that optimally, he would stay on with the organization, perhaps in an interim role, and was asked if he had flexibility regarding compensation levels. They discussed various options, including working with Mr. McCaughey in relation to privately-run wealth management and also in a larger role within the organization.
[100] After speaking with Mr. McCaughey, as is also reflected in his notes, Mr. Fox testified that he had a further conversation with Mr. Lindsay. Mr. Fox was working on a large transaction for ING that was taking up quite a bit of his time. He understood from Mr. Lindsay that the transition would take place after the ING transaction closed on December 15th. Mr. Fox testified that the ING transaction was very important and that any transition before the closing could have had an impact on client relations. Mr. Fox testified that he did speak subsequently to Mr. Lindsay on a couple of occasions about finding a role in Corporate Development.
[101] Mr. Fox confirmed that, through to the end of 2004, Mr. Fox had never found another role and that it was becoming a higher probability that he would be packaged out. He hoped that there might be an interim role, but that no one told him that there was one. Mr. Fox did not look for work outside of World Markets. He was focusing on the ING transaction at that time. He understood that a role would be found or he would be packaged out. He thought that it would look good to have the ING transaction on his résumé if he had to look for work and that his work on ING would be taken into account if his employment was terminated.
[102] On October 29, 2004, Mr. Penteliuk met with Mr. Lindsay. Interpreting his notes of their meeting, Mr. Penteliuk testified that Mr. Lindsay confirmed to him that he had reviewed the investment banking revenue that Mr. Penteliuk had generated and that Mr. Penteliuk’s bonus would be between $1.5 and $1.75 million, plus a bonus in relation to the Assante transaction. Mr. Penteliuk testified that Mr. Lindsay queried and confirmed that Mr. Penteliuk’s “footprints” were “all over” the Assante transaction and that the “exact dollars” of his bonus in relation to the Assante transaction were still to be confirmed. He said that Mr. Lindsay also advised him that Mr. Fox’s choices for a new position were in Corporate Development or to leave, that he might need a week to deal with Mr. Fox, and that he would get back to Mr. Penteliuk within that time frame. Mr. Penteliuk agreed that compensation season was coming on and that it was a busy time of year.
[103] Mr. Lindsay confirmed the accuracy of Mr. Penteliuk’s October 29, 2004 note that he had generated around $10 million in investment banking revenue at that time. He was trying to tell Mr. Penteliuk that he played a key role in the Assante transaction and that David Kassie, the then Chair and CEO of World Markets, knew of his involvement. Mr. Lindsay testified that he did not tell Mr. Penteliuk that he would receive compensation of between $1.5 and $1.75 million on about $10 million in generated revenue because that would be a very high number for this revenue.
[104] Mr. Lindsay testified that he would have said to Mr. Penteliuk on October 29, 2004, that he was moving Mr. Fox out and Mr. Penteliuk into the position. He told him that he had spoken to Mr. Venn in Corporate Development about Mr. Fox and that it would likely take Mr. Venn a week to respond to him. Mr. Lindsay denied saying to Mr. Penteliuk that it would take a week to deal with Mr. Fox.
[105] I accept Mr. Lindsay’s evidence that he did not say that he would need a week to deal with Mr. Fox or that Mr. Penteliuk’s bonus would be between $1.5 and $1.75 million based on about $10 million of investment banking revenue generated by Mr. Penteliuk. Again, there was no reason why Mr. Lindsay would deviate from the undertaking and information previously given to Mr. Penteliuk about the timing of his promotion and the range of his bonus subject to Mr. Penteliuk achieving a certain level of gross investment banking revenue.
[106] As confirmed by Mr. Lindsay, Mr. Penteliuk never protested about not having the position at that time and that in fact he understood that moving Mr. Fox out would take some time. Contrary to his allegations in paragraph 11 of his Statement of Claim, Mr. Penteliuk did not testify that he told Mr. Lindsay at their October 29th meeting that “he had lost patience and unless he became the Team Leader as promised, he would be leaving”, which allegedly prompted Mr. Lindsay to ask him for a further week to accomplish his promotion. For the reasons already given, I conclude that Mr. Lindsay made no such promise to Mr. Penteliuk.
[107] It is also significant that Mr. Penteliuk did not testify that he objected when Mr. Lindsay said that the dollars in relation to the bonus from the Merchant Bank group were to be determined. If Mr. Lindsay had previously promised him $1.5 million as additional incentive compensation from the Merchant Bank group, I would have expected Mr. Penteliuk to have protested when Mr. Lindsay apparently resiled from that undertaking by telling him that the amount of the Merchant Banking bonus was to be determined.
[108] I find that Mr. Penteliuk did not protest because, as Mr. Lindsay testified, Mr. Penteliuk knew that his compensation depended on his performance. Further, as Mr. Lindsay also testified, Mr. Penteliuk knew that Mr. Fox had been told about the transition and, as a result, Mr. Penteliuk had confidence that it was happening. Nothing had changed from their previous discussions and there was no need for Mr. Lindsay to make new undertakings to Mr. Penteliuk.
[109] Mr. Lindsay testified that Mr. Venn replied to Mr. Lindsay within a week and told him that there was no position for Mr. Fox at that point. Mr. Venn and Mr. McCaughey wanted to keep Mr. Fox at World Markets and there were discussions about creating a position for him. Mr. Lindsay continued to speak to Mr. Venn about Mr. Fox, and he also talked to Ken Gilgour, Brian Shaw, and to Steve McGirr on the Executive Committee about Mr. Fox needing a job. Mr. Lindsay testified that he was in “full swing” to find Mr. Fox a job because he was moving out and Mr. Penteliuk was moving in as FIG Team Leader.
[110] Mr. Lindsay added that he knew that Mr. Penteliuk wanted to make the transition happen as quickly as possible. If Mr. Lindsay had remained with World Markets after November 8th, he said that he would have been “beating the same bushes” to make it happen. He had made a commitment to Mr. Penteliuk and was in “implementation phase”. As a motivator and as the person in charge of Mr. Penteliuk and the other members of the group, Mr. Lindsay said he wanted that kind of enthusiasm: Mr. Penteliuk was aggressive and impatient and would likely help them win more mandates. Mr. Lindsay just could not do the transition by a fixed date.
[111] The evidence that I have just reviewed establishes that while Mr. Penteliuk may have wished to be promoted to the FIG Team Leader position as quickly as possible, World Markets did not agree to do that and, moreover, to Mr. Penteliuk’s knowledge, could not do that because of the steps necessary to achieve the transition. As already noted, Mr. Penteliuk did not object to the timing of his promotion at that time. Further, the evidence establishes quite clearly that World Markets was not dragging its heels on this issue but was taking important steps to put the promotion into place.
[112] In particular, if there were no clear definitive plans, known by the most senior management at World Markets, including the CEO, Human Resources, and the incumbent, to move Mr. Penteliuk into the FIG Team Leader position, there would have been no urgency for Mr. Fox to find a role elsewhere within World Markets and no need to enlist the CEO’s assistance in this regard.
[113] In sum, the evidence establishes that, as Mr. Lindsay testified, when he said to Mr. Penteliuk that they would try to make it happen at the end of fiscal 2004, he was proceeding with some urgency.
[114] By the time that he left on November 8, 2004, Mr. Lindsay said that he had complied with his promise to Mr. Penteliuk: his compensation was done, subject to Board approval - as noted in the November 8, 2004 emails between Ms. Krongold and Bob McGarity, Mr. Penteliuk was to receive $2.3 million total compensation, including $1 million from Merchant Banking; Mr. Fox was told that he was exiting the position as FIG Team Leader; and Mr. Lindsay had made broad inquiries to “various and sundry senior people” to find Mr. Fox a position.
[115] Nothing had come of those inquiries by the time Mr. Lindsay had left; however, if Mr. Lindsay had not left World Markets, he would have continued those inquiries and, if nothing had transpired for Mr. Fox, he would have packaged him out by January 1st. He would have continued to talk to Mr. Fox until the end of the calendar year about it. Mr. Lindsay testified that he felt they were on track to meet the commitment to Mr. Penteliuk.
[116] I agree. Although it would have been equally in accordance with the commitment to Mr. Penteliuk to install him into the FIG Team Leader position by the beginning of the new calendar year, based on the steps that World Markets was taking in the fall of 2004, it is likely that had matters continued at the same pace, Mr. Penteliuk would have been installed as FIG Team Leader before the end of the calendar year. This shows that World Markets was in the process of implementing the promotion. However, Mr. Lindsay abruptly and unexpectedly resigned from World Markets on November 8, 2004.
November 9 to December 16, 2004
[117] Mr. Leith was installed into Mr. Lindsay’s position on November 8, 2004. By all accounts, he faced an enormous workload and immense responsibilities when he started work on November 9, 2004, and took over Mr. Lindsay’s position during compensation season.
[118] As Mr. Lindsay testified, the President of World Markets and Head of the Asia-Pacific Region were responsible for 300 large corporate clients, all of their credit equity and bond issues, mergers and acquisitions, and general coverage. He was the responsible member of the senior executive team for the Canadian Corporate Investment Banking Area and Asia-Pacific Region. He would choose Team Leaders for that group and would be involved in relationship management and deals as well.
[119] Ms. Krongold testified that, when Mr. Leith took over, he was also responsible for 300 to 400 employees globally, about 15 Team Leaders, and 30 to 40 Managing Directors. Mr. Leith came from the trading floor debt origination group so investment and corporate banking was a new business for him. He did not know people well and this was their busiest time of the year. There was a lot for him to pick up. The finalization of compensation was “a ton of work”. He was also in communication with clients because of the transactions that were ongoing at that time.
[120] Mr. Leith also testified that it was a particularly active time. There had been departures of senior people earlier in the year. Compensation tended to be a fairly lengthy process and 90% of it was completed by the time he took over the position. Mr. Leith testified that he had a lot to do in taking over the new role. There were a lot of other things that he was dealing with during that time including 300 people who had a new team head.
[121] While admitting that he understood that Mr. Leith had to take some time to get up to speed on operations and that Mr. Leith would have had a couple of hundred employees to deal with during an already busy period of time, Mr. Penteliuk maintains that World Markets was again doing little or nothing to implement his promotion and that he had to initiate discussions with Mr. Leith about his situation, first in a passing conversation and then, subsequently, when he sent him an email on November 22, 2004, at 10:04 a.m., asking Mr. Leith if he had time to get together with him.
[122] It is important to note that at no time did Mr. Leith resile from the previous assurances that had been made to Mr. Penteliuk that he would be promoted to FIG Team Leader. Rather, as the evidence that I review below establishes, Mr. Leith was immediately apprised of the undertakings made to Mr. Penteliuk, reiterated the undertakings to Mr. Penteliuk about his promotion and increased compensation, and took steps to put them into place, all in a timely fashion.
[123] Before he left World Markets, Mr. Lindsay testified that he spoke to Mr. Leith about the commitment to make Mr. Penteliuk FIG Team Leader, his conversations with Mr. Fox about moving him out of the position, and the conversations with Mr. Venn to find a job for Mr. Fox in Corporate Development. He said that he told Mr. Leith about all the efforts to find a job for Mr. Fox. He brought Mr. Leith up to date on the file concerning Mr. Penteliuk and his move into the FIG Team Leader position.
[124] Ms. Krongold testified that, within the first couple of days after Mr. Leith was appointed, Ms. Krongold met with him and discussed with him moving Mr. Penteliuk into the FIG Team Leader position and finding a new position for Mr. Fox. She said that Mr. Leith was already aware of this. Ms. Krongold did not speak to Mr. Fox because it was a very sensitive issue that was being handled at very senior levels.
[125] Mr. Leith testified that he had extensive discussions with Mr. Lindsay and Ms. Krongold about the commitment made to Mr. Penteliuk and his compensation, as well as the conversations with Mr. Fox and the attempts made to find him another position, and that Mr. Fox would receive a severance package if no role could be found for him.
[126] Mr. Leith testified that he met with Mr. Fox sometime between November 9 and 24, 2004, before he met with Mr. Penteliuk, and that it was quite clear to him that Mr. Fox was aware that the transition was happening. Mr. Leith told Mr. Fox that he was aware of the undertaking to Mr. Penteliuk and that he would honour that undertaking, and he also told Mr. Fox that he would try to get him a job very quickly or he would be packaged out. Mr. Leith agreed on cross-examination that when he spoke to Mr. Fox, Mr. Fox knew that the transition of Mr. Penteliuk into the Team Leader position was going to happen and all agreed that it had to happen quickly.
[127] Mr. Fox testified that Mr. Leith had met with him shortly after he assumed his new responsibilities, when Mr. Leith met with all of the Team Leaders about their businesses. Mr. Leith told him that he had been made aware of the undertaking to Mr. Penteliuk to promote him to FIG Team Leader and that he would honour that undertaking. He told Mr. Fox that the ING transaction was very important and that he hoped Mr. Fox would focus on that transaction and get it completed.
[128] Mr. Leith testified that he had some independent conversations with Mr. Venn about finding a position for Mr. Fox in Corporate Development. He did not speak to Ms. Denham or Mr. Gilmour and did not recall speaking to Mr. Shaw, but he was sure that he spoke with Mr. McGirr and that there was nothing in Debt Capital Markets for Mr. Fox. He testified, however, that they were all aware of the situation. Moreover, shortly after he assumed his new responsibilities, Mr. Leith had meetings with each of the Team Leaders about their businesses and he always interacted with all of them on a daily basis. Mr. Leith confirmed Mr. Lindsay’s testimony that they had to create a position for Mr. Fox, rather than move him into an existing position.
[129] Mr. Leith testified that the transition had to happen expeditiously because he understood that it had been agreed with Mr. Penteliuk that it should happen no later than very early in the new calendar year.
[130] Mr. Leith testified that, shortly after he took over the position, he probably bumped into Mr. Penteliuk coming out of the washroom on the 6th floor, the investment banking floor, and said to him that he knew that they needed to sit down and chat and that he would get to him very shortly. He said that Mr. Penteliuk was speaking to Ms. Krongold as he passed them.
[131] Ms. Krongold testified that Mr. Leith ran into Mr. Penteliuk and her in the hallway on the 6th floor between Mr. Penteliuk and Mr. Leith’s offices and said that he knew he had to speak with him. She also testified that she would likely have conveyed to Mr. Penteliuk the same day that she had debriefed Mr. Leith. She said that Mr. Penteliuk had already called her about it and that she advised him that she would make Mr. Leith aware of the plan, if he was not already aware of it.
[132] Mr. Penteliuk initially said during his examination in chief that he ran into Mr. Leith in the “hallway”, which I understood to mean in World Markets’ offices, as Mr. Leith and Ms. Krongold testified. However, when defence counsel suggested to Mr. Penteliuk that this meant that Mr. Leith proactively spoke to him, Mr. Penteliuk then testified that he remembered “vividly” that the meeting was accidental and fleeting because it occurred at the base of the elevators at BCE Place when he was standing there speaking with Ms. Krongold. While a small discrepancy, it indicates to me that Mr. Penteliuk changed his evidence in an effort to bolster his version of events.
[133] Notwithstanding that Mr. Leith was enormously busy, he responded to Mr. Penteliuk’s November 22, 2004 email on the same day at 6:04 p.m., suggesting a meeting on November 24, 2004, at 11:30 a.m.
[134] Mr. Leith and Ms. Krongold testified that Mr. Leith wanted to speak to Mr. Penteliuk about Mr. Leith’s expectations for FIG Team Leader because Mr. Penteliuk had some issues noted in his performance reviews about difficulties with his interpersonal and managerial skills.
[135] These difficulties were summarized in Mr. Penteliuk’s 2003 Performance Review, dated November 3, 2003, as follows: “Rob has many of the attributes to be a successful MD, but he must take seriously the negative views of his partners and team members regarding his teamwork and interaction. This has been an ongoing issue for Rob, although one which seemed to be improving over the last few years. However, it has arisen as a more significant problem again over the past 6 to 8 months. Rob must learn to build strong internal relationships and have others want to work with him”. Mr. Penteliuk’s key areas of development included that he was “to dramatically improve interpersonal/management skills internally – can be arrogant/dismissive/abusive with partners and team members” and become “more open to ideas and opinions of others”.[^11]
[136] Mr. Penteliuk’s 2004 Performance Review dated October 29, 2004, indicated that “Rob has made significant progress over the past year in improving his working relationships internally (and should continue to do so)”. Although much improved, one of his noted areas of development was to continue still “to work on internal relationships with juniors and partners in the firm. Ensure complete and effective communication to team members and others”.[^12]
[137] Mr. Leith was going to coach Mr. Penteliuk through the transition. Mr. Leith wanted to ensure that Mr. Penteliuk understood the duties of the position and was able to perform the duties of the position of FIG Team Leader given his past negative evaluations in dealing with colleagues. As Mr. Fox testified, an important part of his function as FIG Team Leader was guiding the team, managing the professionals, including providing performance feedback, and dealing with any other issues that might arise.
[138] Mr. Leith and Mr. Penteliuk testified that, on November 24, 2004, they had a lengthy discussion about the responsibilities of the FIG Team Leader position and that Mr. Leith assured Mr. Penteliuk that the promotion would still take place. Interpreting his notes of their meeting, Mr. Penteliuk testified that Mr. Leith thought his compensation expectations were within the $2 million range and told him that his total compensation would be greater than $2.25 million. He told Mr. Penteliuk that he expected Mr. Fox would have temporary residence in the senior coverage area. He told him that he was aware of his discussions with Mr. Lindsay.
[139] As noted by Mr. Penteliuk in his November 24, 2004 entry regarding their meeting, Mr. Leith and Mr. Penteliuk testified that Mr. Leith asked him for further patience and indulgence with respect to the timing of his installation as FIG Team Leader.
[140] Mr. Penteliuk testified that he was not satisfied with the continued deferral of the announcement of his promotion and that he was disappointed to hear for what he said was the first time that his compensation expectations might not be fully met. He testified that he felt “significant discomfort” because they were moving backwards from his dealings with Mr. Lindsay. Notwithstanding these feelings, Mr. Penteliuk testified that he did not express a view one way or the other to Mr. Leith. He agreed that Mr. Leith was non-committal regarding the timing; he still had to deal with Mr. Fox and he was less specific about when and how.
[141] Mr. Leith testified that the primary purpose of the November 24, 2004 meeting was to talk to Mr. Penteliuk about his new role and the responsibilities that he was taking on as FIG Team Leader. Mr. Leith understood that Mr. Penteliuk was a very effective deal maker, as also noted in Mr. Penteliuk’s performance reviews, but Mr. Leith wanted to ensure that he understood the skill sets and expectations for him, what was involved in hiring, firing, setting strategy for the team, and acting as the senior client representative for the group.
[142] Mr. Leith said that they also spoke about compensation and Mr. Leith said that he told Mr. Penteliuk that his compensation would be around $2 and 2.5 million. At the time that he took over, Mr. Leith said that he knew that Mr. Penteliuk’s compensation had been set into the system but not yet approved by the Board. He understood that special arrangements were made for Mr. Penteliuk because he played a material role in a transaction and that he would be given compensation from a different pool, the Merchant Banking pool, which was not common.
[143] Mr. Leith said that they also spoke about the timing of Mr. Penteliuk moving into the FIG Team Leader position. He told Mr. Penteliuk that he had just stepped into the role, that there were some “human issues” and he had to deal with senior people to try to find Mr. Fox a “home” or to terminate his employment, and that he needed a little bit of time to get this done very early in the new year. He was conscious that he had a lot to do and, with the holiday break coming, it was difficult to deal with everything he had to do. He said that Mr. Penteliuk did not have a particularly negative reaction. He was aware that Mr. Penteliuk was anxious to take over the role of FIG Team Leader and that he wanted the job as soon as possible. He asked him to exercise a little bit of patience and indulgence. Mr. Leith thought that he was working towards the timing of the promotion to be in the new calendar year, right after the Christmas holidays.
[144] Mr. Leith said that all of these issues were discussed with Mr. Penteliuk during their meeting of about 60 to 90 minutes, which was a lengthy one for their business.
[145] Mr. Leith agreed that he had not found a job for Mr. Fox by December 17, 2004 and that he would be packaging him out by the beginning of the New Year. Mr. Leith and Ms. Krongold agreed that by December 17th, Mr. Leith had taken no steps to ask someone from Human Resources prepare an announcement that Mr. Penteliuk would be promoted to the position of FIG Team Leader or to draft a severance package for Mr. Fox.
[146] All of this evidence establishes to my satisfaction that World Markets was acting in good faith to implement the promised promotion to Mr. Penteliuk either by the end of the calendar year or at the beginning of the new calendar year. This timing was in keeping with the information given to Mr. Penteliuk throughout the process about the steps that had to be taken in order to move Mr. Fox out of the position and to install Mr. Penteliuk. This timing was also reasonable given Mr. Lindsay’s departure and Mr. Leith’s taking over of his role.
[147] Mr. Penteliuk contends that the fact that Human Resources had not been instructed by this point to prepare a severance package for Mr. Fox, or to draft a promotion announcement for Mr. Penteliuk, undermines World Markets’ contention that it was taking steps in earnest to effect his promotion.
[148] The difficulty with Mr. Penteliuk’s argument is one of prematurity. December 17, 2004 was more than two weeks before the end of 2004 and the beginning of the new calendar year. As I have found, the undertaking was to install Mr. Penteliuk into the position by the end of the calendar or towards the beginning of the new calendar year. There was no evidence that Human Resources needed over two weeks to prepare an announcement concerning Mr. Penteliuk’s promotion or to put together a severance package for Mr. Fox.
[149] There was no question that Mr. Penteliuk was going to become the new FIG Team Leader; he had been told this many times and it was well known by the most senior members of management, Human Resources, as well as by the incumbent, Mr. Fox. As Mr. Leith testified, Mr. Penteliuk’s transition into the role of FIG Team Leader was an important issue and involved two senior people in his division. There was work to be done and a promise to be kept. Mr. Penteliuk testified that he considered himself a priority. However, as Mr. Leith succinctly and correctly put it, Mr. Penteliuk was a priority among other priorities.
[150] Although, as Mr. Leith testified, Mr. Penteliuk wanted the promotion to occur as quickly as possible, I find that, at no time before December 17, 2004, did Mr. Penteliuk expressly object to the proposed timing that his promotion would formally occur towards the end of the calendar year or at the beginning of the new year, or clearly reject Mr. Lindsay’s and then Mr. Leith’s requests for patience. Again, this indicates to me that he did not object because he did not have a fixed expectation that his promotion would definitely take place before that date.
[151] The timing of his promotion at the end of the calendar year or at the beginning of the new year caused no prejudice to Mr. Penteliuk and was reasonable in the circumstances of this case.
ii. Undertaking regarding increased compensation
[152] I turn next to the question of whether World Markets kept its promise to increase Mr. Penteliuk’s compensation for fiscal 2004. It is common ground that decisions respecting compensation were communicated to employees in meetings with their managers following Board approval after the conclusion of the fiscal year and compensation season.
[153] December 2, 2004 was the day that Mr. Penteliuk received the news of his compensation for fiscal 2004 in a meeting with Mr. Leith. They both testified that they did not discuss the issue of Mr. Penteliuk’s promotion to FIG Team Leader because they had thoroughly discussed it the week before on November 24, 2004.
[154] Mr. Penteliuk testified that in his compensation meeting with Mr. Leith on December 2, 2004, he advised him that his compensation of $2.3 million was “a little light”. He did not, however, advise Mr. Leith that his compensation was not in accordance with the agreement that he had with World Markets.
[155] In light of the evidence, it would have been very difficult for Mr. Penteliuk to make that argument. As he testified, Mr. Lindsay decided that Mr. Penteliuk would receive $1.3 million as compensation on the gross investment revenue that he had generated to fiscal year end. Mr. Lindsay explained that Mr. Penteliuk had only generated $9.8 million in gross investment revenue, instead of the anticipated $15 to 20 million. For that reason, Mr. Lindsay thought that $1.3 million was fair compensation. Mr. Lindsay testified that if Mr. Penteliuk had delivered $15 to $20 million in gross investment revenue, then they would have given him $1.75 million or more. Mr. Lindsay said that $1.75 million would be an extremely high payout for $9.8 million in generated revenue. Mr. McCaughey, Mr. Gilgour, Mr. Lindsay and others who were involved in the Assante deal made the decision to pay Mr. Penteliuk $1 million as a discretionary incentive bonus from the Merchant Banking group.
[156] Mr. Penteliuk’s total direct compensation, delivered in cash and equity, was $607,337.00 in 2002, and increased to $700,000.00 in 2003. In 2004, his total direct compensation more than tripled to $2,300,000.00. All of the changes in his compensation are set out in the following table:
Mr. Penteliuk’s compensation with World Markets:
2002
2003
2004
Base Salary
$100,000
$100,000
$ 150,000
Incentive paid in cash*
Total Cash Compensation
440,503
$540,503
472,500
$572,500
1,447,500
$1,597,500
Incentive delivered in equity*
66,834
127,500
702,500
Total Direct Compensation
$607,337
$700,000
$2,300,000
*Total Incentive Award Components $507,337 $600,000 $2,150,000
[157] Mr. Penteliuk’s cash incentive compensation was deposited to his bank account on December 16, 2004. Following his comment to Mr. Leith about his compensation being “a little light” during their December 2nd meeting, to the date of the bank deposit of his compensation, there is no evidence that Mr. Penteliuk voiced any concern or complaint about his compensation.
[158] Contrary to Mr. Penteliuk’s assertion that his 2004 compensation was “a little light”, I find that Mr. Penteliuk’s compensation in 2004 represented an enormous increase over prior years.
[159] Moreover, as I have found, the compensation granted was in accordance with the ranges discussed with Mr. Penteliuk and in accordance with the generation of gross investment revenue that Mr. Penteliuk actually achieved. The unusual $1 million bonus from the Merchant Banking pool recognized Mr. Penteliuk’s outstanding work on the Assante transaction.
[160] This evidence satisfies me that World Markets fulfilled its undertaking to increase Mr. Penteliuk’s compensation.
December 17 to 20, 2004
[161] The parties are not in complete agreement about what happened over the course of the next several days. Mr. Penteliuk asserts that his treatment by World Markets caused him to abandon any hope that he would be made FIG Team Leader. World Markets contends that Mr. Penteliuk abruptly resigned from his position in the company of numerous other senior World Markets colleagues to join Genuity.
[162] It is common ground that, on December 17, 2004, at around 9:00 a.m., Mr. Penteliuk met with Mr. Leith and gave him a letter of resignation dated December 17, 2004. In his letter of resignation, Mr. Penteliuk wrote that he was resigning because of World Markets’ failure to promote him to the position of FIG Team Leader and that his resignation would be effective on December 31, 2004. Mr. Penteliuk made no reference to or complaint about his compensation in his letter of resignation.
[163] Mr. Leith testified that in their December 17, 2004 meeting, Mr. Leith told Mr. Penteliuk that he was uncomfortable with his letter because they had talked about his getting the FIG Team Leader position during their meeting of November 24th. Mr. Leith testified that he told Mr. Penteliuk along the lines, “Rob, I told you you were getting the job. You know that’s not accurate.” He did not remember any reaction by Mr. Penteliuk.
[164] There is no dispute that Mr. Leith urged Mr. Penteliuk to reconsider his resignation over the weekend and asked him to hold his resignation in abeyance until Monday, December 20, 2004 and that Mr. Penteliuk agreed to do so.
[165] Mr. Penteliuk testified that Mr. Leith offered to make an announcement to appoint him to FIG Team Leader immediately if that is what it took to convince him to stay. He testified that he had a follow up meeting later that morning or early afternoon with Mr. Leith during which Mr. Leith reiterated that he would prepare to make an immediate announcement to retain him and see what he could do regarding his compensation. Mr. Leith apparently added that he did not hold out much hope regarding his compensation, but “in good faith” said that he would consider it. Mr. Penteliuk told Mr. Leith that there was a good chance he would end up at Genuity but that no decision or agreement had yet been made.
[166] Mr. Leith confirmed that he had absolute authority to make Mr. Penteliuk’s promotion happen, although not immediately. He did not know if he used the word “imminent” when he spoke with Mr. Penteliuk but he did not say that he would make an immediate announcement; he asked to have until the new calendar year. Mr. Leith testified that it was not in his capability to make the promotion happen immediately nor would it have been the right thing to do. He said that they did not discuss compensation.
[167] I accept Mr. Leith’s evidence that he did not promise to Mr. Penteliuk an immediate announcement of his promotion or a review of his compensation.
[168] First, on Mr. Penteliuk’s own evidence, his reaction to Mr. Leith in their December 2nd meeting was simply that this compensation was “a little light”, not that it was highly objectionable or contrary to his agreement with World Markets. Indeed, the subject of his compensation was not mentioned again to Mr. Leith by Mr. Penteliuk, not even in his resignation letter. Mr. Penteliuk did not testify that he raised it in his December 17th meeting with Mr. Leith. It therefore makes little sense that if Mr. Penteliuk voiced no objection, a review of Mr. Penteliuk’s compensation would have been unilaterally proposed by Mr. Leith.
[169] Further, if Mr. Leith had offered to make an immediate announcement to entice Mr. Penteliuk to stay at World Markets, it is illogical that Mr. Penteliuk would not have immediately agreed to it. As he said in his December 17th letter, the failure to promote him was the very reason that he was leaving and he testified that he had not at that point accepted another position. According to Mr. Penteliuk’s evidence, he had the whole day to consider his position after Mr. Leith had apparently told him in the morning and again in the afternoon that he was ready to immediately make that announcement. Why then would Mr. Penteliuk not have immediately agreed to stay?
[170] The fair inference to be drawn from this evidence is that Mr. Leith made no such undertakings. Mr. Leith’s evidence that he asked Mr. Penteliuk to think matters over and talk to him again on Monday, December 20th, without making any further promises, makes the most sense. This is consistent with the careful way in which Mr. Leith handled matters and the message about the timing of the promotion that Mr. Leith had discussed with Mr. Penteliuk on previous occasions.
[171] It is also consistent with the fact that Mr. Leith said nothing to Ms. Krongold, with whom he worked very closely, about any immediate announcement. After speaking with Mr. Leith, Mr. Penteliuk said that he spoke on December 17, 2004 with Ms. Krongold who told him that Mr. Leith was working on the promotion and wanted Mr. Penteliuk to stay, and that he could get what he wanted. Certainly, if there was to be an immediate announcement, as she testified, Ms. Krongold would have been told about it.
[172] Ms. Krongold testified that she told Mr. Penteliuk that she was very surprised at his resignation and that he should reconsider because Mr. Leith was taking steps to make the promotion happen. She said that Mr. Penteliuk knew that it would take some time to make this happen because Mr. Leith had to deal with other matters of greater priority. Mr. Leith was extremely busy with the numerous resignations that were occurring. Ms. Krongold testified that on December 17, 2004, Human Resources received a lot of calls regarding resignations that were taking place and that more resignations were received the day after bonuses were deposited into accounts than would have ordinarily been the case. She said that between December 17 and 20, 2004, about 20 people resigned from World Markets. Mr. Penteliuk was the only one who held his resignation letter in abeyance.
[173] There were no further communications between Mr. Penteliuk and Mr. Leith or with anyone else at World Markets on December 17 or during the weekend of December 18 and 19, 2004. In the course of the weekend, however, Mr. Penteliuk discovered that his email, voicemail, building access card, corporate card, and BlackBerry connections with World Markets no longer functioned. Mr. Penteliuk testified that he found it “very unusual” that this would happen when World Markets was in the process of negotiating his continuation and when this had not occurred in February 2004.
[174] Mr. Penteliuk testified that back in February 2004 when he had tried to resign to join GMP, his electronic access to World Markets had not been terminated. He said that World Markets had continued his devices after he had given notice of his resignation from World Markets and worked for GMP for more than a week before he confirmed his return to World Markets. He also said that he had a GMP BlackBerry device during this period and that he told Mr. Evershed or Mr. Daviau that he had a GMP device. He said that he did not use the GMP BlackBerry device except to communicate with GMP.
[175] I do not accept Mr. Penteliuk’s evidence on these points. In my view, Mr. Penteliuk alleged that he told Mr. Evershed and Mr. Lindsay in February 2004 that he had resigned in order to support his contention that he was constructively dismissed by World Markets in December 2004. In particular, Mr. Penteliuk is attempting to support his argument that World Markets treated him differently when he resigned in December 2004, than in February 2004, including the termination of his electronic access and devices, and that this meant that World Markets no longer wanted him as an employee in December 2004.
[176] For the reasons already given, I have concluded that Mr. Penteliuk did not tell anyone that he had accepted GMP’s offer or that he resigned from his employment. One notable difference between February and December 2004 is that in February 2004, Mr. Penteliuk did not deliver a letter of resignation in February as he did in December 2004.
[177] I also find that Mr. Penteliuk did not tell anyone that he had a GMP BlackBerry device. If he had, Mr. Evershed certainly would not have concluded that he had not yet accepted GMP’s offer, given his evidence, referenced below, that Genuity gave email addresses only to individuals who had committed to joining Genuity. Further, Mr. Penteliuk’s evidence that he only used the GMP BlackBerry device to communicate with GMP is contradicted by the email that he sent on February 11, 2004, to Kevin Sullivan of GMP from his CIBC email address and by the email that was sent to him at his CIBC email address from Tom Budd of GMP.
[178] I also find Mr. Penteliuk’s reaction to the termination of his devices and access difficult to believe in the circumstances. Mr. Penteliuk had worked in financial services at the CIBC and World Markets for over 13 years. By all accounts, Mr. Penteliuk was a sophisticated and aggressive negotiator with a hard shell formed by driving to market numerous transactions worth millions of dollars. He would not have been surprised by the termination of his devices; he would have understood that World Markets was simply following protocol.
[179] Moreover, Mr. Penteliuk agreed on cross-examination that he told Mr. Leith that he might be joining Genuity, another investment dealer. He knew that a number of World Markets’ employees were leaving to join Genuity. He knew that as an investment banker, he would have access to confidential information of CIBC. He knew that CIBC is legally required to protect the confidentiality of clients. He did not dispute that CIBC had the obligation and everyone in the employ of CIBC had the obligation to protect client confidentiality. He knew that Jonathan Broer and Jim Osler, who left World Markets on December 17, 2004 to join Genuity, also had their electronic devices and access terminated. Mr. Penteliuk should and would have understood why CIBC had to terminate his access and devices.
[180] The evidence diverges again at this point. Mr. Penteliuk testified that, notwithstanding that he found it strange that access had been cut off, he decided to stay with World Markets and then returned to World Markets on Monday, December 20, 2004 in order to meet with Mr. Leith and ascertain if he was going to be promoted immediately to FIG Team Leader. He testified that, if not, his resignation would become effective.
[181] Mr. Penteliuk testified that when he returned to World Markets on December 20, 2004, he went to his desk area in FIG and shortly after his arrival, Ms. Krongold showed up, and handed him a letter that his employment was terminated effective December 17, 2004. He said that he expressed his surprise to Ms. Krongold that World Markets and she were taking this position and that they would do such a thing when they had asked him to reconsider, and that he had a meeting with Mr. Leith. He said that Ms. Krongold responded that it was something that she had to do. He testified that he gathered his things “in shock” and just left without attempting to speak or meet with Mr. Leith.
[182] Mr. Penteliuk testified that he did not speak subsequently to Mr. Leith because things had “changed so dramatically” and as a result, he did not think that a conversation would be productive at that point. He said that he took the December 17, 2004 letter and the loss of the devices and access to mean that World Markets was no longer interested in continuing his employment. He testified that he had fully expected to remain at World Markets, until he received the December 17, 2004 letter on Monday, December 20, 2004. He said that he did not want to speak with Mr. Leith after he received that letter; the December 17, 2004 letter made it “absolutely clear” to him that World Markets did not want him.
[183] For the reasons that follow, I do not accept that Mr. Penteliuk returned to World Markets on December 20, 2004, that Ms. Krongold gave him the December 17th letter on December 20, 2004, or indicated to him that his employment was terminated effective December 17, 2004.
[184] First, Mr. Penteliuk has effectively rewritten the December 17, 2004 letter that he testified made “absolutely clear” to him that World Markets no longer wanted him as an employee. By its plain reading, the actual December 17, 2004 letter addressed to Mr. Penteliuk was not a letter of termination but a standard form letter that merely referenced the departing employee’s departure from employment. It did not state that Mr. Penteliuk’s employment was terminated as at December 17, 2004 or any other date.
[185] The December 17, 2004 letter to Mr. Penteliuk did not impose but simply referred to Mr. Penteliuk’s departure in the first sentence as follows: “With your departure from CIBC World Markets…”. The balance of the first sentence and the rest of the December 17, 2004 letter clearly state that the letter’s main purpose was to remind Mr. Penteliuk of his ongoing duties of confidentiality and non-solicitation of CIBC employees in accordance with CIBC’s Code of Conduct.
[186] By linking the December 17, 2004 letter to an alleged encounter with Ms. Krongold on December 20, 2004, Mr. Penteliuk unsuccessfully attempted to elevate the December 17, 2004 letter to a letter of termination in order to support his allegation that World Markets constructively dismissed him.
[187] Further, I do not accept that Ms. Krongold would have told Mr. Penteliuk that his employment was terminated effective December 17, 2004. Ms. Krongold testified that she did not recall any such discussion with Mr. Penteliuk on December 20, 2004. Mr. Leith testified that he worked very closely with Ms. Krongold and was unaware of any such discussion.
[188] As Mr. Penteliuk acknowledged, Ms. Krongold was not a decision-maker. The unchallenged evidence is that Ms. Krongold could not on her own initiative terminate his employment. She would not even override CIBC protocol concerning the termination of Mr. Penteliuk’s devices and access without first seeking approval from Mr. Leith, as is apparent in her December 17, 2004 email to him concerning the continuation of Mr. Penteliuk’s devices and access following his resignation. It is therefore incredible that Ms. Krongold would take it upon herself to curtail Mr. Penteliuk’s reconsideration of his resignation and terminate his employment as Mr. Penteliuk has suggested.
[189] Moreover, as Mr. Penteliuk also agreed, he was to speak to Mr. Leith, who was the acknowledged decision-maker, concerning his reconsideration, and not to Ms. Krongold. Mr. Penteliuk’s desk was located in an open-concept space, only metres away from Mr. Leith’s office. Ms. Krongold testified that she would have directed Mr. Penteliuk to speak with Mr. Leith if he had come to the office on December 20, 2004. Mr. Leith and Ms. Krongold testified that they did not see Mr. Penteliuk in the office on December 20, 2004.
[190] In consequence, I do not accept that Ms. Krongold would have told or indicated to Mr. Penteliuk that his employment was terminated effective December 17, 2004, without Mr. Leith’s proper authorization.
[191] I also find that Mr. Leith did not authorize the termination of Mr. Penteliuk’s employment because I accept Mr. Leith’s evidence that he wanted Mr. Penteliuk to reconsider his resignation, as Mr. Penteliuk confirmed that Mr. Leith had asked him to do during their December 17, 2004 meeting.
[192] There is no evidence that anything had happened to cause Mr. Leith or anyone else at World Markets to withdraw the request that Mr. Penteliuk reconsider his resignation. The possibility that Mr. Penteliuk might be joining Genuity was already relayed to Mr. Leith at their December 17, 2004 meeting. This information clearly had no effect on Mr. Leith’s request to Mr. Penteliuk that he reconsider his resignation, because following their meeting, as recorded in his email exchange with Ms. Krongold on December 17, 2004, and as Mr. Leith and Ms. Krongold testified, Mr. Leith directed that Mr. Penteliuk’s access and devices not be terminated before December 20, 2004.
[193] Moreover, Mr. Leith’s spontaneous reaction to Mr. Penteliuk’s use of a Genuity email address, as recorded in his email response on December 22, 2004, is clear evidence that Mr. Leith believed at that time that Mr. Penteliuk was still reconsidering his resignation. In response to Ms. Krongold’s email, in which she forwarded Mr. Penteliuk’s December 22, 2004 email, indicating that he had returned his BlackBerry device and other items to World Markets, with the message that, “Thought you might be interested to see that our recently departed friends are already using Genuity email addresses”, Mr. Leith wrote: “Amazing! I thought Rob’s resignation was effective December 31, but I could be wrong.” As Mr. Leith also testified, his email clearly indicates that he thought that Mr. Penteliuk was still reconsidering whether to leave World Markets. Mr. Leith’s email response, in my view, belies any suggestion that Mr. Leith had instructed Ms. Krongold to advise Mr. Penteliuk on December 20, 2004 that his employment was terminated effective December 17, 2004.
[194] Ms. Krongold testified that she produced the standard letter addressed to Mr. Penteliuk on the morning of December 17, 2004, after she learned of his resignation, along with many others for employees who had resigned that day. She confirmed that the letter for Mr. Penteliuk, dated December 17, 2004, was not a termination letter but a letter to remind Mr. Penteliuk of his continuing obligations of confidentiality and non-solicitation of World Markets’ employees, which survived his departure from World Markets.
[195] Ms. Krongold testified that CIBC protocol was initiated upon an employee’s resignation. Human Resources would draft departure letters for the employees who had resigned, reminding them of their obligations under the Code of Conduct, in particular, their ongoing duties of confidentiality and non-solicitation. Once the letters had been signed by the Team Leaders of the respective business units, protocol was to deliver the letters to the departing individuals and walk them out of the premises. If the individual was not on the premises, then the letter would be couriered to the person’s home. Technology personnel would be contacted to cut off technology devices, access, Visa and calling cards, in order to protect confidential information and clients.
[196] On December 17, 2004, at 9:24 a.m., Paul Spafford, Vice Chairman of World Markets wrote by email to Ms. Krongold, copying Mr. Leith, that, “So far I have heard directly from Jim Osler, Rob Penteliuk, Jonathan Broer and Stewart Busbridge. They have all resigned and are on their way to Genuity. Still waiting to hear from Jaime Nagy who is the other one expected to go.”
[197] In her December 17, 2004 email sent at 9:44 a.m., Ms. Krongold advised Chris Brown that she was in the process of preparing letters for the investment banking people who had resigned, whom she said included Mr. Penteliuk.
[198] In her December 17, 2004 email sent at 10:05 a.m., Ms. Krongold asked Mr. Leith if World Markets should cut off Mr. Penteliuk’s email, voicemail, and corporate cards or wait until Monday. By his 11:17 a.m. email, Mr. Leith asked to wait until Monday. However, they were subsequently advised at 11:26 a.m. by email from Brian McDonald that the voicemail and corporate card had already been stopped but that they could be reinstated easily.
[199] Ms. Krongold had Mr. Leith sign the December 17, 2004 letter for Mr. Penteliuk, along with numerous other letters in relation to other employees who had also tendered resignations. She had no recollection of how Mr. Penteliuk received the letter. She said that, if she had given it to him, she would have walked him off the premises. She said that she did not walk him off the premises on December 17, 2004 because he was reconsidering his resignation. She testified that it was highly unlikely that she gave him the letter and had no recollection of giving it to him. She could not find a courier slip indicating that the letter had been sent to his home. She said that she did not give it to him on December 20, 2004 because he did not come into the office.
[200] Mr. Leith confirmed Ms. Krongold’s evidence about CIBC’s protocol concerning departing employees and in particular that the purpose of the protocol is to protect client and other confidential information. Mr. Leith also confirmed signing letters for everyone who had resigned and were under his management, which highlighted the departing employees’ ongoing duties of confidentiality. He confirmed that there were a large number of resignations on that day. The employees who resigned said without exception that they were joining Genuity or likely would join Genuity. Mr. Leith said that he did not give Mr. Penteliuk the December 17, 2004 letter. He did not know how Mr. Penteliuk received it and assumed that he would have received it from Human Resources.
[201] There is no question that Mr. Penteliuk received the December 17, 2004 letter. The letter is addressed to Mr. Penteliuk at World Markets, rather than his home address, which suggests that it was intended to be delivered to him at the office. It may very well be that Ms. Krongold did hand Mr. Penteliuk the December 17th letter, as Mr. Penteliuk testified. However, it is more likely that this occurred not on December 20, but on December 17, 2004.
[202] It is common ground that Mr. Penteliuk and Ms. Krongold spoke at some point on December 17, 2004 following his meeting with Mr. Leith. In consequence, she had the opportunity to give Mr. Penteliuk the December 17th letter when she spoke to him about reconsidering his resignation. Moreover, Ms. Krongold’s evidence is that she did not recall Mr. Leith telling her to hold off giving Mr. Penteliuk the December 17th letter after he signed it.
[203] As a result, it makes sense that Ms. Krongold gave Mr. Penteliuk the December 17th letter on December 17th, in order to protect client confidentiality, in case he did not return on December 20th. In this context, Mr. Penteliuk’s expression of surprise at receiving this letter when he was considering his resignation on December 17th, and Ms. Krongold’s response that it was something she had to do, in other words, to protect confidentiality, are credible.
[204] Moreover, Mr. Penteliuk did not testify that Ms. Krongold or anyone else escorted him from World Markets’ premises, either on December 17 or 20, 2004. If Ms. Krongold had handed him the December 17th letter on December 20th, as an acceptance of his resignation, she would have walked him off the premises. She did not walk Mr. Penteliuk off the premises on December 17, 2004, because he was reconsidering his resignation. Given the flurry of activity caused by the resignations on December 17, 2004, it is not surprising that Ms. Krongold did not recall giving Mr. Penteliuk the letter.
[205] Finally, it is a significant omission that Mr. Penteliuk made no mention of the December 20, 2004 meeting with Ms. Krongold in his and his counsel’s subsequent communications with CIBC and World Markets, and in his Statement of Claim.
[206] In his January 11, 2005 letter to John Hunkin, CEO of CIBC, in which Mr. Penteliuk requested relief from forfeiture of his unvested deferred equity units, Mr. Penteliuk wrote that, “As you know, I resigned from my employment with CIBC World Markets on December 17, 2004. You may not be aware that my primary reason for resigning was the failure of CIBCWM to fulfill its February 2004 agreement with me.” If, as Mr. Penteliuk testified, Ms. Krongold had advised him by handing him the December 17th letter or otherwise that his employment was terminated effective December 17, 2004, this would have been an important piece of information to include in his January 11, 2005 letter, in support of his allegations of constructive dismissal.
[207] Similarly, no mention of the alleged December 20, 2004 encounter between Mr. Penteliuk and Ms. Krongold was referenced in the letter of November 29, 2005 from Mr. Penteliuk’s counsel to World Markets, or in Mr. Penteliuk’s Statement of Claim issued on December 21, 2006, in which it was claimed that Mr. Penteliuk had been constructively dismissed from his employment.
[208] In particular, the events of December 19, 2004 are specifically referenced in the November 29, 2005 letter and in the Statement of Claim, at paragraph 16, namely, the cancellation of Mr. Penteliuk’s BlackBerry, email and voicemail services. Further, while reference is made in paragraph 16 of the Statement of Claim to the proposed meeting between Mr. Leith and Mr. Penteliuk on December 20, 2004, the alleged December 20, 2004 encounter between Mr. Penteliuk and Ms. Krongold is absent. Again, if it had occurred as described by Mr. Penteliuk at trial, the alleged December 20th encounter between Mr. Penteliuk and Ms. Krongold would have been a very significant event in the narrative of Mr. Penteliuk’s constructive dismissal claim.
[209] In my view, all of this evidence establishes that Mr. Penteliuk did not return to work on December 20, 2004. Rather, Mr. Penteliuk had made up his mind sometime during the weekend of December 18 or 19 or on December 20, 2004 not to return to World Markets and to join Genuity.
Mr. Penteliuk’s decision to join Genuity
[210] Mr. Penteliuk’s evidence with respect to his discussions with Genuity and how he joined Genuity was far from credible. It was riddled with contradictions and clearly intended to leave the impression that Mr. Penteliuk did not first consider joining Genuity until World Markets allegedly failed to fulfill its undertakings to him, and that the final straw was when World Markets allegedly pushed him out the door by terminating his employment effective December 17, 2004. The evidence establishes, however, that Mr. Penteliuk was actively exploring the possibility of joining Genuity in early November 2004.
[211] Mr. Penteliuk testified that he became aware of Genuity in September 2004 when he read about its creation. He said that he spoke to Mr. Evershed and Mr. Daviau in early November 2004 about what they were doing at Genuity. Mr. Penteliuk testified that at their November meeting, they had asked him to evaluate the business prospects of Genuity.
[212] Mr. Penteliuk testified that Mr. Evershed had told him that he could have access to Genuity’s business plan if he signed a non-disclosure agreement. Mr. Penteliuk identified the November 23, 2004 non-disclosure agreement produced at trial[^13] as the one that he signed on November 23, 2004, and Genuity’s business plan that he also received on that day. He testified that he thought of Genuity as a potential client at that time and did not view Genuity as an option for himself until after December 2, 2004.
[213] I do not accept Mr. Penteliuk’s evidence in this regard. Rather, the evidence that I do accept establishes that Mr. Penteliuk was pursuing the possibility of joining Genuity as a partner when he signed the Genuity non-disclosure agreement on November 23, 2004.
[214] Initially, Mr. Penteliuk testified that it was not until after December 2, 2004, when he had received notice of his compensation, which he felt was completely unsatisfactory, that he was approached by Genuity to join the company.
[215] Mr. Penteliuk said on his examination for discovery that because he was sufficiently “miffed” when he received his compensation on December 2, 2004, which he found low, and because he had no update respecting the timing of his Team Leader status, he began considering other alternatives at that point in time.[^14] He said that other than the one conversation he had with Mr. Evershed or Mr. Daviau sometime in November about Genuity, he did not pursue the possibility of joining Genuity until after December 2nd. He said that he met with Mr. Evershed sometime between December 2nd and December 8th, signed a non-disclosure agreement, and received Genuity’s business plan.[^15]
[216] Mr. Penteliuk’s evidence at trial that he did not consider joining Genuity until after December 2, 2004, and his evidence given on discovery that he signed the non-disclosure agreement after December 2, 2004, were directly contradicted by the copy of the non-disclosure agreement dated November 23, 2004 at Tab 39 of Exhibit 1. Mr. Penteliuk attempted to explain this serious discrepancy in his evidence by alleging that he had mixed up the dates and signed the non-disclosure agreement to obtain information about Genuity as a potential client of World Markets and not for the purpose of joining the company.
[217] I do not accept Mr. Penteliuk’s evidence in this regard.
[218] First, it is contrary to his discovery evidence that he signed the non-disclosure agreement after December 2, 2004 in order to obtain confidential information about Genuity with the view of joining Genuity, and not regarding Genuity as a potential client of World Markets.
[219] Further, if Mr. Penteliuk did sign the non-disclosure agreement for the purpose of obtaining information about Genuity as a potential client, he was acting in serious breach of his obligations to World Markets and contrary to the terms of the Genuity non-disclosure agreement.
[220] Mr. Penteliuk admitted that he said nothing to Mr. Leith during their meeting on November 24, 2004, the day after Mr. Penteliuk signed the Genuity non-disclosure agreement and obtained Genuity’s business plan, or at any other time. This is consistent with the terms of the Genuity non-disclosure agreement which prohibited disclosure of the information received to third parties and to use it only for the purpose of evaluating the business prospects of Genuity with a view towards becoming a partner of Genuity.[^16]
[221] Mr. Leith’s uncontroverted evidence is that World Markets’ policies required Mr. Penteliuk to obtain the authority and permission of World Markets to sign any non-disclosure agreement or any other agreement which would bind World Markets. Mr. Leith testified that anything that would bind the organization, such as a non-disclosure agreement, would have to be approved by the legal division. Mr. Leith was never advised that Mr. Penteliuk had met with Genuity in November 2004 or signed a non-disclosure agreement. Mr. Leith testified that, if he had known, he would have been very disturbed by it and would have asked if there were grounds for dismissing Mr. Penteliuk from his employment.
[222] It is also significant that Mr. Penteliuk’s alleged business intentions are flatly contradicted by the wording of Genuity’s non-disclosure agreement itself and also by Mr. Evershed’s evidence.
[223] The Genuity non-disclosure agreement, at paragraph 2, states that Mr. Penteliuk has been provided with a confidential information package “solely for the purpose of evaluating the business prospects of Genuity with a view towards becoming a partner thereof”; and paragraph 6 reads that Mr. Penteliuk, “acknowledges that the undersigned was not solicited, but rather approached Genuity or its partners on the undersigned’s own initiative to enquire about the prospect of joining the firm”[^17].
[224] The Genuity non-disclosure agreement, at paragraph 1, also provides that Mr. Penteliuk received a copy of the Genuity draft partnership agreement, dated September 9, 2004. Mr. Penteliuk did not deny receiving the partnership agreement, but claimed that he did not realize that it was part of the documents that had been provided to him on November 23, 2004.
[225] It is not credible to me that Mr. Penteliuk ignored paragraphs 1, 2 and 6 of the non-disclosure agreement and did not notice that he had been provided with a draft partnership agreement, as the non-disclosure agreement stated. He admitted that he was used to signing legal documents and that he read the non-disclosure agreement before he signed it, although he tried to suggest that he might not have carefully read it.
[226] Finally, Mr. Evershed testified that everyone who was interested in getting information about Genuity for the purpose of becoming a partner signed the non-disclosure agreement and that is why Mr. Penteliuk signed the non-disclosure agreement. Mr. Evershed’s evidence was credible and consistent with the wording of the non-disclosure agreement. He said that he was not sure whether he approached Mr. Penteliuk or Mr. Penteliuk approached him about joining Genuity. He agreed that it could have been at the end of October or the beginning of November that they started to speak with prospective employees of Genuity and that, although no formal offers were made, they were having discussions with potential Genuity partners, of whom Mr. Penteliuk was one.
[227] At trial, Mr. Penteliuk initially maintained that Mr. Evershed and Mr. Daviau had not spoken to him before November 24, 2004, about the possibility of his joining Genuity. However, on his examination for discovery, Mr. Penteliuk admitted that before November 24th, either Mr. Daviau or Mr. Evershed had said to him during a telephone conversation that there might be a role for him at Genuity if he were interested; but that they had approached him, he did not approach them.[^18]
[228] When confronted at trial with his contrary discovery testimony, Mr. Penteliuk then admitted that in the original meeting with Mr. Evershed and Mr. Daviau at the bar in the Royal Bank Plaza in the beginning of November they said that there might be something at Genuity for him but he claimed that it was not an offer and that he did not take their statement seriously.
[229] Although Mr. Penteliuk attempted to downplay and reconstruct his interest in Genuity, it is clear that he did take seriously the possibility about joining Genuity and that in fact he instigated the discussions with Genuity.
[230] This is supported by an exchange of emails between Mr. Penteliuk and Genuity on November 16, 2004 (corresponding in time to the telephone conversation that Mr. Penteliuk said that he had with Mr. Evershed or Mr. Daviau).
[231] Mr. Penteliuk instigated the email exchange by writing to Mr. Evershed as follows: “Let’s get together next week. Next monday or tuesday pm [sic] looks good. Let me know what works for you.” Mr. Evershed confirmed at trial that Mr. Penteliuk’s email started discussions about his joining Genuity.
[232] Mr. Evershed testified that he forwarded Mr. Penteliuk’s November 16, 2004 email to Mr. Daviau and asked for his views to which Mr. Daviau responded by email: “Same old views. Nothing new. I like him. He would be some management time. I think we would have the equity for him but I should double check. Thanks”. Mr. Evershed testified, and this is also clear from Mr. Daviau’s email response to him, that Mr. Evershed assumed that Mr. Penteliuk’s request to meet with them was an expression of his interest in joining Genuity.
[233] If Mr. Evershed and Mr. Daviau had initiated discussions about Mr. Penteliuk joining Genuity, Mr. Evershed’s request for Mr. Daviau’s views and Mr. Daviau’s response that he would have to check if they would have the equity for Mr. Penteliuk, would make no sense. Rather, they would have already discussed these issues and determined that there might be a place for Mr. Penteliuk at Genuity. This is further borne out by the evidence given by Mr. Evershed and Mr. Penteliuk that there were a variety of discussions as to whether there was a role for Mr. Penteliuk at Genuity because there was not enough business in the Financial Institutions Group.
[234] Mr. Penteliuk testified that he may have met with Mr. Evershed between December 2 and 14, 2004. Mr. Penteliuk said that he was discussing with Mr. Evershed the prospect of joining Genuity. Mr. Penteliuk testified that Mr. Evershed subsequently suggested that he speak with Mr. Kassie about what may or may not be available at Genuity. Mr. Penteliuk spoke with Mr. Kassie and also further with Mr. Evershed and Mr. Daviau.
[235] Under cover of letter dated December 14, 2004, Mr. Kassie for Genuity offered a partnership to Mr. Penteliuk, setting out terms and conditions, and asked that the offer be countersigned and accepted by Mr. Penteliuk no later than 3:00 p.m. on Monday, December 20, 2004. Mr. Evershed testified that there was no partnership agreement in place when the offer was made, although there may have been a draft in process at that time.
[236] Mr. Penteliuk testified that the December 14th offer was not in a form that he would accept and that he did not accept it by the December 20th deadline in the offer. He said that he recommenced discussions with Genuity on December 20th.
[237] Mr. Penteliuk admitted that between December 2 and 17, 2004, he had ongoing discussions regarding joining Genuity with Jon Broer and Jim Osler. He acknowledged that Genuity was a “unique opportunity”.
[238] Mr. Penteliuk also acknowledged that between December 14 and 18, 2004, he probably had more discussions but he cannot remember them with Mr. Evershed, Mr. Daviau, Mr. Kassie and Earl Rotman. There were a variety of discussions as to whether there was a role for him at Genuity because, as Mr. Evershed and Mr. Penteliuk testified, there was not enough business available at Genuity in the Financial Institutions Group, so Mr. Penteliuk would have to add areas of coverage.
[239] Mr. Penteliuk testified that, during the weekend of December 18 and 19, 2004, when he discovered that his email, voicemail, corporate card and building access card had been cancelled, he spoke to Jon Broer and Jim Osler, World Markets employees who had resigned to join Genuity, and perhaps to Mr. Evershed.
[240] Mr. Penteliuk testified that he had some discussions with Genuity prior to Christmas 2004, but most of the senior partners of Genuity were away so little took place then. He said that he had significant discussions regarding compensation and the partnership agreement later and that the negotiations and discussions took the better part of the month of January 2005. In late January 2005, he said he had a deal to go to Genuity. Mr. Penteliuk testified that he did not sign the partnership agreement until February 2005. The signed partnership agreement was not produced at trial.
[241] Mr. Penteliuk testified that he had not yet committed to Genuity when he used the Genuity email on December 22, 2004, but that there was a reasonable probability that he would end up there. I do not accept Mr. Penteliuk’s evidence in this regard. While he may not have formally signed documentation to join the Genuity partnership by December 22nd, the evidence clearly establishes that Mr. Penteliuk had committed to joining Genuity by that date and that in or around that date began promoting Genuity’s interests.
[242] Mr. Penteliuk testified that later on the morning of December 20th, he met with Mr. Evershed to let him know what had happened at World Markets. He told Mr. Evershed that he was interested in speaking to them about joining Genuity and believed it would be a good fit, wanted to see the partnership agreement, and figure out the equity structure and the structure of his initial investment in Genuity. Given the reasonable chance that he would be joining Genuity, he asked if they would provide him with an email address and BlackBerry device. He testified that he did not have an email address or functioning device because World Markets had terminated them.
[243] This is contrary to Mr. Evershed’s evidence. Mr. Evershed testified that Mr. Penteliuk joined Genuity early in the week following the payment of the bonuses at World Markets. He said that it was not likely that Genuity provided Mr. Penteliuk with an email address before he joined Genuity, and that he would not have been able to keep the email address if he had not signed a partnership agreement. In cross-examination, Mr. Evershed agreed that Genuity would ensure that someone had committed before Genuity allowed that person to use Genuity’s email accounts.
[244] I accept Mr. Evershed’s evidence because it makes complete sense. By using a Genuity email address, Mr. Penteliuk would be publicly advertising that he is connected to Genuity; it is completely logical that he would not be permitted to do that unless he was in fact committed to joining Genuity.
[245] Mr. Evershed’s evidence is also consistent with Mr. Penteliuk’s own actions in pursuing an opportunity with Genuity, including signing a non-disclosure agreement to obtain information on November 23, 2004, and his dealings with World Markets.
[246] Mr. Penteliuk had clearly spoken to the other departing employees about joining Genuity because, by December 21, 2004, he was participating in an email exchange with Jon Broer, Jim Osler, Jamie Nagy and Stewart Busbridge about amendments to the Genuity partnership agreement. On December 21, 2004, Mr. Penteliuk communicated by means of a rogers.com account, which Mr. Penteliuk confirmed was his Genuity “shadow” email account. Mr. Penteliuk testified at trial that Genuity had retained the law firm, Bennett Jones LLP, to represent him and the other non-founding partners in their discussions and negotiations of the Genuity Partnership agreement with the Genuity founding partners.
[247] On December 22, 2004, Mr. Penteliuk advised Monique Herst, his assistant at World Markets, via his Genuity email address, that he had returned his “rim, calling and credit card to rod. Along with the unpaid cell stub. Invoice u have.” Openly using his Genuity email address and returning World Markets’ property indicate that Mr. Penteliuk had joined Genuity. As already noted, this is the conclusion that Ms. Krongold and Mr. Leith formed upon seeing Mr. Penteliuk’s email.
[248] As evidenced by the exchange of emails, by December 23, 2004, Mr. Penteliuk was assisting Genuity in recruiting potential employees. Only a person associated with Genuity would have been permitted to do this. Mr. Penteliuk’s actions were consistent with the commitment that Mr. Evershed said he had made to Genuity and contrary to his duties to World Markets. According to the prohibition contained at page 14 of the CIBC Code of Conduct, by which Mr. Penteliuk was bound as an employee of World Markets, “Employees may not engage in employment or business activity that will or appears to put them in a conflict of interest with their duties at CIBC, including without limitation, starting or taking an active role in a business that competes with or supplies good and services to CIBC”.[^19]
[249] Finally, as shown by his January 2005 emails, prior to formally signing the Genuity partnership agreement in February 2005, Mr. Penteliuk was advising former clients that he was with Genuity. The fact that he had not formalized his agreement with Genuity or signed the partnership agreement clearly did not prevent him from actively working for Genuity.
Conclusion
[250] For the reasons already stated, I find that the conduct of World Markets did not evince an intention to no longer be bound by its promise to promote Mr. Penteliuk to the role of FIG Team Leader. Rather, World Markets wanted and pressed Mr. Penteliuk to stay, even when he said that he would likely join Genuity, another investment dealer.
[251] The length of the period envisaged to formally promote Mr. Penteliuk to the position of FIG Team Leader was not unreasonable in the circumstances. The reasonable person in the same circumstances would not have considered the timing to be unreasonable.
[252] At all times World Markets urged Mr. Penteliuk to have patience and took significant steps to implement his promotion to FIG Team Leader, including giving him the promised significant increase in his compensation, and effectively announcing his promotion to the most senior levels of management, Human Resources, and the incumbent, Mr. Fox.
[253] While the timing of his promotion was irksome to Mr. Penteliuk who was impatient to assume his new role, it did not amount to a breach of the fundamental term of his contract that he be appointed to the position of FIG Team Leader within a reasonable time. The timing of his promotion was likely longer than either Mr. Penteliuk or World Markets had hoped that it would be; however, it was reasonable in the circumstances of this case and in keeping with World Markets’ agreement with Mr. Penteliuk.
[254] Mr. Penteliuk was ambitious and impatient. He had only been in the position of Managing Director for barely 8 months before he was contemplating resigning if he did not obtain the FIG Team Leader position. Although regularly assured that he would have the FIG Team Leader position, he did not want to wait any longer. Rather, he was determined to leave and take up the unique opportunity with Genuity. He was entitled to do so. He is not entitled, however, to require World Markets to pay for his business decision, which was not prompted by any breach by World Market.[^20]
[255] For all of these reasons, I find that Mr. Penteliuk was not constructively dismissed from his employment by World Markets. He voluntarily resigned to take up a partnership with Genuity.
Issue No. 2: Is Mr. Penteliuk’s claim for constructive dismissal statute barred?
[256] If my conclusion that Mr. Penteliuk was not constructively dismissed from his employment is incorrect, it is necessary to consider the issue of whether Mr. Penteliuk’s claim for constructive dismissal is statute barred.
[257] World Markets argues that, while his other claims were commenced in a timely manner, Mr. Penteliuk’s claim for damages arising out of his alleged constructive dismissal is statute barred because it was commenced on December 21, 2006, more than two years following his resignation from employment on December 17, 2004.
[258] With respect to his constructive dismissal claim, Mr. Penteliuk argues that the date on which his cause of action arose was December 31, 2004, the date that his letter of resignation indicated that his resignation from World Markets became effective; and, as a result, Mr. Penteliuk’s action is not statute barred because he commenced his action on December 21, 2006, less than 2 years from the effective date of the termination of Mr. Penteliuk’s employment on December 31, 2004.
[259] It is common ground that the applicable limitation period with respect to Mr. Penteliuk’s constructive dismissal claim is the basic two-year limitation period set out in section 4 of the Limitations Act, 2002[^21], which provides as follows:
Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.
[260] For the purposes of this case, subsections 1 and 2 of section 5 of the Limitations Act, 2002, articulate when Mr. Penteliuk’s constructive dismissal claim is discovered:
(1) A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made; and
(iv) that having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).
(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.
[261] According to the case law submitted by the parties, the effective date of an employee’s resignation from employment does not necessarily constitute the date on which a claim for wrongful or constructive dismissal is discovered. Rather, the date on which a claim for wrongful or constructive dismissal is discovered is the date that the employer imposes for the termination of the employee’s employment or the date on which the employee accepts the employer’s repudiation of the employment contract.[^22]
[262] As a result, although the effective date of Mr. Penteliuk’s termination from his employment with World Markets may be December 31, 2004 for other purposes, such as, for example, payment of salary, vacation pay and dividends, it is not the date on which his claim for constructive dismissal was discovered.
[263] According to Mr. Penteliuk’s evidence, on December 20, 2004, Ms. Krongold told him that his employment was terminated effective December 17, 2004. He testified that in consequence, he understood at that point in time that World Markets did not want him to be an employee any longer and that there was no point in having a discussion with Mr. Leith about remaining with World Markets. Mr. Penteliuk said that he subsequently went to see Mr. Evershed in the course of the same morning of December 20th, told him what had happened, and expressed an interest in joining Genuity.
[264] For the reasons already stated, I do not accept that Ms. Krongold told Mr. Penteliuk that his employment was terminated effective December 17, 2004. I do accept, however, that Mr. Penteliuk was impatient with the timing of his promotion to FIG Team Leader and disappointed with the compensation that he felt was “a little light”. Mr. Penteliuk might have been hedging his bets, as he had done with the GMP offer: if Mr. Leith had confirmed the FIG Team Leader position on December 20, 2004, Mr. Penteliuk might have stayed with World Markets; if not, his resignation would become effective and Mr. Penteliuk would follow the siren call of Genuity.
[265] Although Mr. Penteliuk testified that he did not formally join Genuity until January 2005, I find that the evidence clearly establishes that he actively started working for Genuity on or around December 22, 2004, as evidenced by the email transmission sent that day via his Genuity email address to World Markets in which he confirmed the return of his electronic devices and passes to World Markets. By his actions, Mr. Penteliuk clearly demonstrated his belief that there was no possibility that he would be made FIG Team Leader by World Markets and that he had accepted World Markets’ alleged repudiation of his contract.
[266] Further, Mr. Leith had asked Mr. Penteliuk to take until December 20, 2004, to reconsider his resignation, to which Mr. Penteliuk agreed. Mr. Leith and Mr. Penteliuk had no further communications. In consequence, Mr. Penteliuk could not reasonably have discovered his claim for constructive dismissal before December 21, 2004, when the December 20, 2004 deadline for reconsideration of his resignation had passed.
[267] Accordingly, Mr. Penteliuk’s claim for constructive dismissal is not statute barred because it was commenced within two years from the date on which he discovered or ought reasonably to have discovered his claim for constructive dismissal against World Markets.
Issue No. 3: Reasonable Notice Period
[268] In the event that I am incorrect and Mr. Penteliuk was constructively dismissed, it is necessary to determine what the appropriate notice period should be. Mr. Penteliuk argues that the notice period should be 18 months. World Markets contends that a 12-month notice period would be appropriate.
[269] The determination of the appropriate notice period is not a mere mechanical exercise or calculation but requires the consideration of a constellation of various factors relevant to the circumstances of the dismissed employee, including the employee’s age and length of service, the terms of the employment contract, the context and nature of the employment relationship, the events leading up to and culminating in the termination of employment, and the availability of similar employment, having regard to the experience, training and qualifications of the employee.[^23]
[270] It is agreed that I should assess Mr. Penteliuk’s years of service with the defendant from the start of his employment with CIBC on July 9, 1991 to December 31, 2004, as the end date for the purpose of calculating years of service. This results in 13 years, 6 months and 22 days of service. Mr. Penteliuk was a long-serving and senior manager of the defendant when his employment ended. His entire working life to that point had been in the service of CIBC and World Markets.
[271] Well educated, with an Honours BBA degree and CFA designation, and only 36 years old at the time that he left World Markets, the evidence establishes that Mr. Penteliuk had excellent prospects to obtain similar employment relatively quickly with another employer in the financial services industry, at or around the same level of remuneration and seniority. As Mr. Leith testified, “it was quite good times” in the investment banking industry at that time.
[272] The evidence establishes that when Mr. Penteliuk was employed by World Markets, other investment dealers approached him about the possibility of joining them.
[273] As already noted, in February of 2004, Mr. Penteliuk had received a lucrative offer of employment from GMP as its FIG Team Leader, which would have represented a promotion for him. Further, Mr. Penteliuk testified that he negotiated with GMP to make himself whole with respect to the unvested deferred equity that he would be leaving behind on his departure from World Markets.
[274] Further, Mr. Penteliuk testified that he had a “semi-regular dialogue” with Canaccord Financial Inc. about its interest in hiring him. He participated in the Canaccord public offering in the summer of 2004. Canaccord made it known to him that it would have discussions with him about joining Canaccord. Canaccord was an independent investment dealer which in 2010 purchased Genuity.
[275] Mr. Penteliuk also admitted in cross-examination that over the course of 2 or 3 years, he had dialogue with the Royal Bank of Canada about joining RBC in a Team Leader type position. He said that RBC made it clear that he could pick up the dialogue with RBC at any time.
[276] From this evidence, I conclude that it is likely that there were opportunities for comparable employment and compensation available to Mr. Penteliuk in the financial services industry at the time that he left World Markets.
[277] All cases must be considered in terms of their own unique circumstances; however, the ranges of reasonable notice periods set out in the relevant case law for similar plaintiffs in similar circumstances to Mr. Penteliuk are of general assistance in establishing a reasonable notice period in this case. The range of notice periods contained in the case law submitted by the parties is from 12 to 24 months. All of the plaintiffs in the case law provided were senior managers and had been employed for at least 10 years. The cases at the higher end of the notice period range involved much older claimants than Mr. Penteliuk who had at least five years’ more service than Mr. Penteliuk.
[278] Based on the evidence that I have reviewed and the applicable case law, I find that it could have taken Mr. Penteliuk 12 months to find a comparable position in the financial services industry or to work his way up to a comparable position with comparable compensation, if he had not joined Genuity. I shall return to the effect of Mr. Penteliuk’s decision to join Genuity under the next heading in these Reasons.
Issue No. 4: Damages and Mitigation
Overview
[279] If Mr. Penteliuk was constructively dismissed, Mr. Penteliuk would be entitled to receive as damages the compensation that he would have earned if he had continued in his employment during the period of reasonable notice, which I have determined to be 12 months, less any monies that he earned or could have earned by way of mitigation of his damages, and subject to the terms of his employment agreement with World Markets.[^24]
[280] As already noted, Mr. Penteliuk’s compensation consisted of his base salary, statutory and group benefits, and discretionary incentive compensation paid in cash and deferred equity.
[281] During the first 12 months that he was with Genuity, Mr. Penteliuk earned the amount of $94,715.00. He had invested $200,000.00 in Genuity partnership units.
[282] World Markets paid Mr. Penteliuk his salary, vacation pay, expenses and benefits to December 31, 2004. His unvested deferred equity units were forfeited.
[283] Mr. Penteliuk claims damages calculated as the difference between his cash compensation at Genuity and his total compensation (including deferred equity) at World Markets. Mr. Penteliuk’s cash compensation at Genuity for the first 12 months was $94,715.00 and his total direct compensation at World Markets for fiscal 2004 was $2,300,000.00. Mr. Penteliuk’s claim for damages in relation to the 12-month notice period amounts to $2,205,285.00.
[284] World Markets argues that Mr. Penteliuk is not entitled to any damages because of his failure to mitigate his damages. World Markets submits that Mr. Penteliuk could have fully mitigated his damages by remaining in his employment with World Markets until he secured comparable employment with another investment bank or dealer, or by obtaining comparable employment with another investment bank or dealer.
[285] Further, World Markets asserts that it is inappropriate to compare Mr. Penteliuk’s extraordinary earnings for fiscal 2004 with his unusually low compensation at Genuity during its start-up year, that only the cash component of Mr. Penteliuk’s compensation should be considered, and that the ultimate value of Mr. Penteliuk’s equity share in Genuity should be factored into the equation, leaving no damages.
Mitigation
[286] In the oft-cited passage from Michaels v. Red Deer College[^25], on behalf of the Supreme Court of Canada, Laskin, C.J.C. set out the following principles concerning the dismissed employee’s obligation to mitigate his or her damages and the employer’s onus to prove the employee’s failure to mitigate any damages, as follows,
In the ordinary course of litigation respecting wrongful dismissal, a plaintiff, in offering proof of damages, would lead evidence respecting the loss he claims to have suffered by reason of the dismissal. He may have obtained other employment at a lesser or greater remuneration than before and this fact would have a bearing on his damages. He may not have obtained other employment, and the question whether he has stood idly or unreasonably by, or has tried without success to obtain other employment would be part of the case on damages. If it is the defendant's position that the plaintiff could reasonably have avoided some part of the loss claimed, it is for the defendant to carry the burden of that issue, subject to the defendant being content to allow the matter to be disposed of on the trial judge's assessment of the plaintiff's evidence on avoidable consequences.
[287] In order to determine Mr. Penteliuk’s real loss, it is necessary to examine the steps that he took to mitigate his damages after his constructive dismissal. If wronged, Mr. Penteliuk is entitled to be put in as good a position as he would have been, had there been proper performance by World Markets to promote Mr. Penteliuk to the position of FIG Team Leader. Mr. Penteliuk’s duty to mitigate his damages must be understood in terms of the qualification that World Markets cannot be called upon to pay for any part of Mr. Penteliuk’s losses which could have been avoided by Mr. Penteliuk taking reasonable steps to avoid their unreasonable accumulation.[^26]
[288] Mr. Penteliuk admitted during cross-examination that he did not seriously attempt to seek any alternative opportunities other than his partnership in Genuity. I have already reviewed in detail the evidence that Mr. Penteliuk actively pursued a partnership with Genuity.
[289] Mr. Penteliuk’s partnership in Genuity represented a “unique opportunity”, as Mr. Penteliuk said, to be part of a new investment dealership. He had seen the success of GMP and Canaccord which had successfully gone to market under his direction. Mr. Penteliuk believed that Genuity had a reasonably good probability of success so he had very little doubt that Genuity would be successful. Genuity aspired to be the next GMP. According to Mr. Penteliuk, the idea was to take Genuity public in 3 to 5 years, but there was no assurance of it.
[290] Mr. Penteliuk agreed that he took the risk or variability on compensation in the near term at Genuity with the expectation that he was building a business in the long term. As a result, he admitted during cross-examination that he expected that he would have a reduced income in the start-up years, which turned out to be the case, and that his first year income at Genuity of $94,715.00 was acceptable to him.
[291] Although he initially would not agree with the proposition that his investment of time and energy in the start-up years was sweat equity, when he was shown his examination for discovery, he agreed what he had said was true, as follows:
Q. So when you went to Genuity, would you have anticipated making $95,000 in the first year?
A. I knew what I was getting myself into in terms of short-term remuneration. For sweat equity.
Q. For long-term gain?
A. Correct.
Q. So that $95,000 was within the range of what you might have expected, whether that was 150 or…
A. I wouldn’t say it was within a range. It was an outcome that I was willing to accept.[^27]
[292] Mr. Penteliuk also admitted as true his evidence given at his examination for discovery that he and the others at Genuity viewed their first year as a positive year in terms of a good first step for a start-up organization.[^28]
[293] In his second year at Genuity, Mr. Penteliuk received $150,000.00 as a draw and $503,000.00 as a bonus. His draw was paid to a personal holding company, Penteliuk GM Holdings. Mr. Penteliuk owned his partnership interest in Genuity through Penteliuk GM Holdings. The shares of Penteliuk GM Holdings were held by Penteliuk Financial Corporation, Penteliuk Family Trust and him personally. Mr. Penteliuk testified that no monies were paid to the family trust in 2006, perhaps monies were paid in 2007, and definitely monies were paid in 2008. This was an income splitting strategy to pay out income to his wife. The losses attributed to the Genuity partnership were allocated to his holding company.
[294] The fact that Mr. Penteliuk effectively went into his own business by joining the Genuity partnership does not by itself mean that he failed to mitigate his damages. It is well established that an individual can properly start his or her own business in order to mitigate damages when dismissed from employment. The question is whether it was reasonable for Mr. Penteliuk to have done so in the circumstances of this case. The burden of proof is on World Markets to demonstrate that Mr. Penteliuk could reasonably have avoided a loss or that he acted unreasonably in failing to do so.[^29]
In assessing whether Mr. Penteliuk’s action in joining the Genuity partnership was reasonable in the circumstances, I have taken into account the following considerations gleaned from the case law[^30] submitted by the parties:
i. Self-employment can be in the same business as the former employment or can be a complete departure.
ii. Self-employment is problematic as an effort to mitigate because of the inevitable start-up costs and the unlikelihood that the dismissed employee’s income will approximate his former income until the business becomes established.
iii. Self-employment is viewed as a last resort rather than a first line of attack on the loss of income resulting from termination.
iv. Absent contacts and expertise that make self-employment a viable option, the reasonableness of the dismissed employee starting his or her own business will depend on the availability of alternative employment and the adequacy of the employee’s effort to find it.
v. To the extent that there are other reasonable alternative employment opportunities with comparable immediate earnings and the dismissed employee has no reasonable prospect of making a similar amount of money in the short run in his or her own business, self-employment is difficult to justify.
[295] For the reasons that follow, I conclude that World Markets has met its onus in proving that Mr. Penteliuk could reasonably have avoided the losses that he claims and that his decision to join Genuity was not a justifiable effort to mitigate.
[296] First, I agree with World Markets’ assertion that Mr. Penteliuk could have remained at World Markets to mitigate his damages.
[297] In appropriate circumstances, a dismissed employee may be required to return or continue to work for the same employer in order to mitigate the employee’s damages. The central issue is whether a reasonable person would accept such an opportunity; the test is of objective reasonableness. To answer this question requires a multi-factored and contextual analysis. In particular, the critical element is that an employee not be obliged to mitigate his or her damages by working in an atmosphere of hostility, embarrassment or humiliation.[^31]
[298] Mr. Penteliuk did not face such an atmosphere at World Markets. Mr. Penteliuk agreed in cross-examination that he got along with everyone at World Markets throughout his employment there, and that, from his perspective, there was no animosity. By all accounts, Mr. Penteliuk was highly regarded and valued as an employee and senior manager at World Markets.
[299] Mr. Penteliuk’s compensation of $1.3 million and his special Merchant Banking bonus of $1 million reflected his worth to World Markets. Mr. Lindsay, Mr. Evershed and Mr. Leith testified that it was unusual for a bonus of that magnitude to be paid from the Merchant Banking group. This compensation was paid to Mr. Penteliuk to retain him at World Markets.
[300] Certainly, according to the evidence given by Mr. Leith and Ms. Krongold, World Markets did not want to lose Mr. Penteliuk and asked him to reconsider his resignation on December 17, 2004. Unequivocal steps had been taken to transition Mr. Penteliuk into the role of FIG Team Leader; and it was made clear to Mr. Penteliuk that he was moving into that position. Mr. Leith and Ms. Krongold testified as to their surprise when they discovered that he had decided to work for Genuity as they had hoped that he would reconsider and return to World Markets.
[301] Whether Mr. Penteliuk was impatient, or simply did not want the Genuity opportunity to slip through his fingers, is unclear. If, as Mr. Penteliuk said, he did not join Genuity until January 2005, he certainly did not have to leave World Markets when he did. He was clearly a valued employee whom World Markets wished to retain. He was urged to reconsider. He chose to leave.
[302] If Mr. Penteliuk had stayed at World Markets until he found a comparable position in the financial services industry, he would have suffered no damages. Mr. Penteliuk’s evidence is that he did not seriously pursue any other opportunity but his partnership with Genuity. However, the evidence establishes that Mr. Penteliuk could have explored employment opportunities with other investment banks or dealers.
[303] While I agree that Mr. Penteliuk had likely, as he said, “burnt his bridges” with GMP, he could have pursued opportunities with Canaccord and RBC. As already noted, Mr. Penteliuk had open and ongoing communications with Canaccord and RBC about joining them. He did not have any discussions with Canaccord after December 17, 2004; and, after December 17, 2004, it appears that Mr. Penteliuk may have had a conversation with RBC, however, he said that he elected to go to Genuity.
[304] Mr. Penteliuk testified that at Canaccord, there would be a lot more variability in compensation because Canaccord was an independent investment bank and he could not say that he would have received the same compensation as with GMP. While that may be true, Mr. Penteliuk would still have earned more compensation, at Canaccord, an established independent investment bank, than at Genuity during its start-up year.
[305] With respect to RBC, Mr. Penteliuk said initially that he did not have compensation discussions with RBC, although he understood that RBC would have to be competitive with World Markets. However, when shown his evidence from his examination for discovery, Mr. Penteliuk admitted it was true that he had discussed ranges of compensation with RBC like those he would have seen at CIBC.[^32]
[306] Mr. Penteliuk conceded during cross-examination that one often negotiate deferred equity left behind and that is what he did with GMP. According to his evidence, Mr. Penteliuk negotiated with GMP a signing bonus that would have compensated him for the loss of his unvested CIBC deferred equity units which he understood would be cancelled upon his voluntarily leaving World Markets to join a competitor. He also negotiated comparable salary and benefits.
[307] Mr. Penteliuk was an expert in negotiation. This is what he did for a living. Using the lucrative offer from GMP that he had brokered, in February 2004, he skilfully negotiated with World Markets to secure the promise of a promotion to FIG Team Leader and increased compensation. Mr. Penteliuk would have negotiated comparable compensation and benefits with any new employer in the financial services industry in order to make himself whole on his departure from World Markets.
[308] According to the evidence, including the number of approaches made to Mr. Penteliuk and the level of compensation that he was commanding, the financial services industry was doing quite well in 2004 and 2005. Mr. Penteliuk would not have gone cap in hand to secure new employment with another investment dealer or bank but would have obtained comparable employment and compensation as he enjoyed at World Markets.
[309] As he admitted, Mr. Penteliuk entered the partnership with Genuity knowing that he would make much less compensation in the short term in exchange for the prospect of later financial gain. Indeed, in 2010, Genuity was purchased by Canaccord for a reported value of $289 million. Mr. Evershed agreed that Mr. Penteliuk’s 1.9% share in Genuity would have been worth between $6.5 and $7 million in 2010. Unfortunately for Mr. Penteliuk, he left Genuity in 2008.
[310] Mr. Penteliuk was perfectly entitled to take the unique opportunity with Genuity. However, it cannot be said that Mr. Penteliuk mitigated his damages when he deliberately accepted a partnership that he expected would lead in the short run to much lower remuneration, but from which he was hoping for significant long-term benefits. Mr. Penteliuk knew that he had no reasonable prospect of making a similar amount of money during the first years of his partnership with Genuity as he had at World Markets. It was meant to be an ownership investment in Genuity which would come to fruition in 3 to 5 years’ time.
[311] Mr. Penteliuk’s stature in the financial services industry afforded him significant mobility. He chose not to seek an equivalent position elsewhere because he wanted to take up the opportunity to participate in the Genuity partnership. Any difference between his earnings as an employee with World Markets and his compensation as a partner of Genuity was of his own making. World Markets is not responsible for the business and career decision that Mr. Penteliuk made in joining Genuity as a partner.
[312] Based on Mr. Penteliuk’s evidence concerning the expected compensation from GMP if he had accepted the offer in February 2004 and his admission that his compensation, had he joined RBC, would have been competitive with his World Markets compensation, I find that, if Mr. Penteliuk had obtained employment with an established investment bank or dealer, and not a partnership with a newly formed company, his compensation for the first 12 months of his new employment would have been comparable to his compensation with World Markets. Moreover, as he did with GMP, he likely would have negotiated the loss of his unvested deferred equity units and any incentive pay with his new employer, and would have suffered no loss from his new employment.
Calculation of damages
[313] If I am incorrect in finding that Mr. Penteliuk could have fully mitigated his damages, I turn to consider the calculation of Mr. Penteliuk’s damages from his alleged constructive dismissal.
[314] Given Mr. Penteliuk’s conscious choice to earn dramatically decreased compensation by joining a start-up company and the extraordinary bonus that Mr. Penteliuk received from the Merchant Banking pool in fiscal 2004, it is simply not reasonable to compare the income that Mr. Penteliuk received in his first year with Genuity to his compensation in 2004 from World Markets, and then claim the difference as his loss caused by the alleged constructive dismissal.
[315] Further, only the cash component of Mr. Penteliuk’s compensation from World Markets should be compared to the cash component of Mr. Penteliuk’s compensation from Genuity.
[316] According to the RSA Plan and predecessor plans, which the parties agreed govern the deferred equities awarded to employees[^33], deferred equity amounts are not included in the calculation of any severance payments.[^34] The equity component of Mr. Penteliuk’s total direct compensation was designed to reward CIBC employees by providing an opportunity for them to share in the growth and success of CIBC.[^35] This purpose is inconsistent with an employee’s departure from employment.
[317] Moreover, including the value of Mr. Penteliuk’s unvested RSAs for fiscal 2004 would over compensate Mr. Penteliuk.
[318] According to paragraph 23 of the Statement of Agreed Facts, as of December 31, 2004, Mr. Penteliuk had a total of 11,650 unvested CIBC deferred equity units with a total value of $815,500.00, comprised of the following:
(i) 552 unvested SPP Award shares relating to 2002;
(ii) 1,423 unvested RSA units relating to 2003;
(iii) 9,675 unvested RSA units relating to 2004.
[319] Section 6.03 of the RSA plan[^36] provides that employees who are terminated without cause are given the full value of any unvested deferred equity. It is common ground that termination without cause comprises constructive dismissal from employment. The provisions of 6.03 are as follows:
6.03 Vesting on Termination without Cause. Notwithstanding section 6.01, where the employment of a Participant within the CIBC group terminates on a day by reason of the termination of such employment by the CIBC Group without cause, all of the Participant’s RSA Units that are outstanding on that day and that are not otherwise vested on or before that day shall be vested on that day.
[320] It is conceded by World Markets that if Mr. Penteliuk was constructively dismissed, he is entitled to receive the full value of his unvested deferred equity units. He would be entitled to that amount even if he had fully mitigated all of his damages.
[321] As a result, I exclude the value of Mr. Penteliuk’s deferred equity from the damages calculation.
[322] I agree with Mr. Luftspring’s submission that Mr. Penteliuk’s potential gains on his investment in Genuity should also be excluded from the calculation of his damages for the period of reasonable notice. Mr. Penteliuk invested monies into Genuity and was not given his partnership interest in lieu of income; and Mr. Penteliuk could not have realized any gains on his investment during the period of reasonable notice and never did realize any profit from his investment in Genuity.[^37] His investment was simply returned to him when he left Genuity.
[323] Mr. Penteliuk also claims that he is entitled to receive the value of the Restricted Share Awards (“RSAs”) that would have been awarded and vested during the period of reasonable notice.
[324] Mr. Penteliuk is not entitled to damages for the loss of the RSA Plan where the Plan contains contrary contractual terms. In the presence of contrary contractual terms, those terms govern.[^38] The RSA plan clearly provides that the value of equity awards is not included in the calculation of any severance payment.[^39] Mr. Penteliuk is bound by all of the Plan’s terms.[^40]
[325] In consequence, Mr. Penteliuk is not entitled to any compensation for any additional RSAs that could have been granted during the period of reasonable notice.
[326] In order to arrive at a fair comparison between Mr. Penteliuk’s compensation at World Markets and at Genuity, it is also necessary to remove from the damages calculation the extraordinary $1 million cash bonus from the Merchant Banking pool. The $1 million bonus from the Merchant Banking pool was an unusual bonus that Mr. Lindsay, Mr. Evershed and Mr. Leith testified they had never previously seen awarded. It is an outlier that should not be included in the damages calculation.
[327] There is no evidence from which I could fairly infer that Mr. Penteliuk would again be awarded such a bonus. Mr. Penteliuk had never before been awarded such a bonus. In 2002, his cash bonus was $440,503.00 and in 2003, his cash bonus was $472,500.00. With respect to 2005, although Mr. Penteliuk’s compensation for fiscal 2005 would have taken into account the work he did on the First Asset transaction, which closed in fiscal 2005, the evidence establishes that the First Asset transaction was much smaller in magnitude than the Assante transaction.[^41] It is therefore a fair inference that Mr. Penteliuk would not have been granted $1 million in incentive compensation as a result of his work on the First Asset transaction.
[328] A fairer comparison also requires that Mr. Penteliuk’s cash compensation from World Markets be compared to his cash compensation at Genuity in its second year of operation. As a start-up operation, Genuity was not expected to generate in its first year the revenues that it would ultimately produce once it was better established in its second and third years of operations. Indeed, Genuity’s Business Plan projected no material new issue revenue for its first three months of operations.[^42]
[329] This state of affairs is also borne out by Mr. Penteliuk’s earnings in the second and third years of Genuity’s operations. By Genuity’s second year of operation, Mr. Penteliuk was receiving a $150,000.00 draw, which was comparable to his base salary in 2004 at World Markets, and received a $503,000.00 bonus, also comparable to the average of the cash bonuses which he received from World Markets in fiscal 2002, 2003 and 2004. In 2007, Mr. Penteliuk earned $887,500.00 in cash compensation at Genuity.
[330] As a result, I find that, if Mr. Penteliuk was constructively dismissed, he sustained no damages. As already mentioned, he would nevertheless be entitled to the full value of his 11,650 unvested deferred equity units that he had at the time of his departure from World Markets.
Issue No. 5: Other claims
i. Relief from forfeiture of Mr. Penteliuk’s deferred equity units
[331] Even if he was not constructively dismissed, Mr. Penteliuk argues that World Markets failed to follow its own policy and unfairly and unreasonably refused to grant him relief from the forfeiture of his unvested deferred equity units, which were cancelled on the termination of his employment with World Markets.
[332] In accordance with the provisions of section 7.01 of the RSA Plan (and predecessor plans), when a World Markets employee voluntarily resigns from employment, all of the employee’s outstanding, unvested deferred equity is forfeited.[^43] Section 6.06 of the RSA Plan provides that if the departing employee wishes to request relief from forfeiture, the employee must make an application within 30 days of the employee’s voluntary termination from employment. The RSA Plan expressly provides that, “The CIBC CEO may, in his sole discretion, determine that all or any number of outstanding RSA Units/Shares will vest or remain outstanding, but is not under any obligation to approve such a request.”[^44]
[333] The Equity Compensation Request to Waive Forfeiture Provision Procedure, an appendix to the RSA Plan, provides as follows: “While CIBC’s CEO retains the discretion to vest any RSA Unit/Shares in all situations, the following examples of voluntary termination reasons and possible outcomes regarding forfeiture have been established to help guide managers in their decision-making process.” Among the examples, it is stated clearly that if the reason for an employee’s voluntary termination is employment by another bank/investment bank or employment within the financial services industry, the RSA Unit/Shares would be forfeited.[^45]
[334] In his letter dated January 11, 2005, Mr. Penteliuk requested that CIBC exercise its discretion in favour of granting him his unvested deferred equity units. He testified that he understood that he had to make his request to the CEO who would consider the circumstances surrounding his departure in determining whether to grant relief from the forfeiture of his shares. He admitted that if he were going to work for a competitor of World Markets, his unvested deferred equity units would be forfeited and that he would not be granted the relief sought.
[335] CIBC responded to Mr. Penteliuk’s application for relief of forfeiture by way of the letter of Joyce Phillips dated March 7, 2005. In her letter, Ms. Phillips stated that CIBC’s discretion had been delegated to her to consider Mr. Penteliuk’s request, that his request had been considered and denied, that his deferred equity units would be forfeited, and that this decision was final.
[336] The evidence establishes and Mr. Penteliuk admitted that, if he was not constructively dismissed and had voluntarily resigned from his employment, he lost his entitlement to his unvested deferred equity, he would have to seek relief from forfeiture from CIBC, and the granting of such relief was within CIBC’s discretion.
[337] While Mr. Penteliuk concedes World Markets’ discretion to deny him relief from forfeiture, he argues that it was not exercised in good faith in his case. Mr. Penteliuk states that where the departing employee has provided many years of loyal service as he had and is not joining a competitor, CIBC has granted relief from forfeiture. Mr. Penteliuk maintains that Genuity was not a competitor of World Markets.
[338] Respectfully, I do not accept this submission. The evidence clearly establishes that Genuity was in the business of financial services. It may have been smaller than World Markets at the time that Mr. Penteliuk joined Genuity, but it was carrying on or intending to carry on the same kind of business as World Markets with the same kind of clients.
[339] Indeed, Genuity’s own description of its business and clients in its Business Plan dated September 9, 2004 explicitly states that it is in the same business as World Markets, namely, “a financial services firm” and “an investment dealer engaging in investment banking, institutional sales and trading and research activities through-out Canada”. Under the heading, “Industry Positioning and Competition”, World Markets is specifically identified as one of the several “full service investment dealers” which are seen as “Genuity’s primary competition”.[^46]
[340] During his cross-examination at trial, Mr. Penteliuk agreed that in Genuity’s Business Plan, it stated that Genuity’s primary competition would be full service investment dealers such as CIBC World Markets. Mr. Penteliuk also agreed that it was Genuity’s business plan to compete directly with bank-owned dealers, like World Markets, as well as with GMP and Canaccord.
[341] The evidence further establishes that Genuity was targeting and providing services to the clients also serviced by World Markets. For example, Mr. Penteliuk admitted during his cross-examination that Rockwater Capital Corporation[^47] was a client of World Markets and that in April 2005, Mr. Penteliuk, on behalf of Genuity, participated in a share offering of Rockwater. The other unchallenged evidence is that Genuity was targeting or providing services to other clients of World Markets, such as, for example, Canico Resource Corp.[^48] and Bema Gold Corporation.[^49]
[342] Whether or not Genuity was a competitor to World Markets is ultimately a red herring. Regardless, World Markets had the absolute discretion not to grant Mr. Penteliuk relief from forfeiture even if he did not work for a competitor of World Markets. As noted expressly in the Equity Compensation Request to Waive Forfeiture Provision Procedure under the RSA Plan, “Since all waivers are totally discretionary, requests may be declined even though the employee has no plans in engaging in a competitive activity.”[^50]
[343] There is no evidence that World Markets exercised its discretion not to grant Mr. Penteliuk relief from forfeiture of his RSAs in an unreasonable manner or in bad faith. Rather, from her letter, it appears that Ms. Phillips considered Mr. Penteliuk’s request and denied it, in compliance with the practice and policies of World Markets, which I have just reviewed.
[344] In consequence, I conclude that World Markets was entitled to take the position that it did and that Mr. Penteliuk is not entitled to relief from the forfeiture of his unvested deferred equity.
ii. Cash Incentive Pay
[345] Mr. Penteliuk claims payment of the amount of $3,750.00. There was a change to World Market’s compensation grid in June 2004, which resulted in $3,750.00 of Mr. Penteliuk’s discretionary incentive pay being deferred to RSAs rather than being paid to him in cash for the fiscal year 2004.
[346] Specifically, on June 30, 2004, the Equity Participation Program grid[^51] was changed to add one additional deferral tier at the high end of discretionary incentive pay. For fiscal year 2003, 37.5% of discretionary incentive pay of $1,000,000 or more was delivered in RSAs. The change implemented to the grid on June 30, 2004 was that 40% of discretionary incentive pay of more than $2,000,000 would be delivered in RSAs.
[347] It is agreed that, if World Markets had granted Mr. Penteliuk relief from forfeiture of his RSAs, he would have received his RSAs and he would not have a claim for the loss of cash that would not have been deferred and delivered in RSAs.
[348] For the following reasons, I conclude that Mr. Penteliuk is entitled to be paid the amount of $3,750.00.
[349] It is common ground that World Markets had the right to change the discretionary incentive pay plan from year to year. As acknowledged by Mr. Penteliuk in cross-examination, the grids can change from year to year.
[350] With respect to Mr. Penteliuk, however, in consideration for Mr. Penteliuk remaining with World Markets and turning down the GMP offer, World Markets had agreed to pay him increased compensation, which would have been in accordance with the incentive pay plan as it existed at that time. World Markets was not entitled to change unilaterally the agreement that it had made with Mr. Penteliuk. Mr. Penteliuk did not consent to this unilateral change.
[351] As a result, World Markets is required to pay Mr. Penteliuk the amount of $3,750.00.
iii. Dividend
[352] Finally, Mr. Penteliuk also claims an unpaid dividend of $7,572.50 on his unvested CIBC RSAs. As stated in paragraph 26 of the Statement of Agreed Facts, Mr. Penteliuk was an employee of World Markets on both the dividend declaration date of December 2, 2004 and the dividend record date of December 29, 2004 with respect to the CIBC stock dividend and held RSAs on both dates.
[353] According to the case law submitted by the parties, it is the plain meaning of the Plan language that is to govern.[^52] I turn then to consider the language of the RSA Plan.
[354] According to section 7.01 of the RSA Plan, where the employment of an employee terminates on a day because of the resignation of an employee, all of the employee’s RSA units that are outstanding on that day and that are not vested on or before that day shall be cancelled and shall cease to be outstanding immediately after the end of that day, and no person shall be entitled to any compensation as a consequence of the cancellation of the outstanding RSA units.[^53]
[355] What is meant by termination of employment for the purposes of interpreting the RSA Plan is set out in section 10.12 of the RSA Plan. According to subsection 1 of section 10.12 of the RSA Plan, for the purposes of the Plan, an employee’s employment “shall be considered to have terminated effective on the last day of the individual’s active and actual employment, whether that day is selected by agreement with the individual, unilaterally by the employer or otherwise, with or without advance notice to the individual”.[^54]
[356] In summary, section 10.12 of the RSA Plan provides that the last date of employment means the last day of the employee’s active and actual day of employment, without taking into account any notice period. Subsection 2 of section 10.12 provides that, “For the avoidance of doubt, after an individual’s employment within the CIBC group has terminated, the individual shall not be entitled to receive an RSA Award nor any RSA Units (including, in respect of any period of notice given or that ought to have been given under applicable law in respect of such termination of employment).”[^55] In the version of the RSA Plan dated February 16, 2005, which applied to fiscal 2004, subsection 2 of section 10.12 further provided that, “No period of notice or any payment in lieu thereof nor severance or combination thereof shall be considered as extending the period of employment of an individual for the purposes of this Plan.”[^56]
[357] The CIBC RSA Plan clearly provides that an employee’s unvested units are cancelled upon the termination of an employee’s employment and that RSA Awards and RSA Units do not continue to vest during any period of reasonable notice; however, the words, “active and actual”, in relation to an employee’s last day of employment, are not defined in the Plan. The Plan does not distinguish between “active” and “actual” employment; the only distinction is between employment and any period of reasonable notice following the termination of employment.
[358] This same distinction between “active” employment and the period of reasonable notice following the termination of employment appears also to have been drawn by the court in Black v. Second Cup[^57], at paragraph 41 of that decision. In that case, the court determined that had the plaintiff been constructively dismissed, he would not be entitled to the bonus that he would have earned during the period of reasonable notice because the bonus was only payable to those who are in “active service”[^58] at the time of distribution.
[359] There was no evidence that the period from December 17 to December 31, 2004 was ever treated by World Markets or Mr. Penteliuk as notice.
[360] Mr. Penteliuk testified that, by stating the effective date of December 31, 2004 in his December 17, 2004 letter of resignation, he was not setting out a period of notice, but, as he also stated in his letter, was indicating his availability and willingness to work through any transition period before his resignation became effective on December 31, 2004.
[361] World Markets has not taken the position in its Statement of Defence or at trial that any period of reasonable notice commences on December 31, 2004, or that for the purpose of calculating any damages that may be owed to Mr. Penteliuk during any period of reasonable notice, any monies paid to Mr. Penteliuk up to December 31, 2004 should be credited against any damages awarded to him.
[362] As a result, I conclude that, for the purpose of the RSA Plan, Mr. Penteliuk was engaged in “active and actual employment” on December 29, 2004.
[363] A dividend on Mr. Penteliuk’s unvested RSAs was recorded on December 29, 2004. Section 8.03 of the Plan states that, if an employee still holds RSA units on the record date, then the dividend shall be paid at a later date. January 28, 2005 was the later dividend payment date. Any employees of World Markets who held RSAs as of December 29, 2004 would be paid the dividend on January 28, 2005, regardless of whether or not they were still employees on the payment date of January 28, 2005. Again, there is no evidence that Mr. Penteliuk’s unvested and outstanding RSA units were cancelled before December 31, 2004.
[364] The evidence establishes that World Markets treated Mr. Penteliuk as an employee until December 31, 2004, for the purposes of receiving salary, vacation pay and benefits, and for regulatory purposes, even though he was not physically present in World Markets’ offices and was working for Genuity.
[365] For the purpose of determining Mr. Penteliuk’s entitlement to a dividend that was declared before the effective date of the termination of his employment, absent specific Plan language, on the basis of the admissions and the evidence produced at this trial, I see no basis for determining that by “active and actual” employment, the Plan required Mr. Penteliuk to be physically present in and working for World Markets when the dividend was declared.
[366] As a result, Mr. Penteliuk is entitled to be paid the dividend of $7,572.50.
Conclusion:
[367] For all of these reasons, I dismiss Mr. Penteliuk’s claims against World Markets for constructive dismissal and for relief from forfeiture of his RSAs.
[368] I allow Mr. Penteliuk’s claims against World Markets for payment of the deferred cash incentive pay of $3,750.00 and the dividend of $7,572.50, in the total amount of $11,322.50, together with prejudgment and post-judgment interest.
Interest:
[369] In his Statement of Claim, Mr. Penteliuk claims interest on any damages awarded to him in accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43. Section 130 of the Courts of Justice Act gives the court a wide discretion with respect to making an interest award, including ordering an interest rate greater than the rates prescribed in sections 127 and 128 of the Act, and the period of time over which interest is calculated.
[370] Although Mr. Penteliuk claims damages in subparagraph 1 (b) of his Statement of Claim on account of World Markets’ “wrongful withholding of a dividend” and pleads in paragraph 29 of his Statement of Claim that World Markets “misappropriated” the dividend that was recorded on December 29, 2004, he has not indicated whether he is claiming simple or compound interest. In the appropriate case, the court has the general jurisdiction to award compound interest, where there is a wrongful detention of money that ought to have been paid at the interest rate in accordance with which the wrongdoer has had the benefit of using the wrongfully detained funds.[^59]
[371] If the parties cannot otherwise agree on these interest issues, they may make brief written submissions to me through Judges’ Administration, Room 170, at 361 University Avenue, as follows: the plaintiff shall deliver his submissions by April 16, 2014; the defendant shall deliver its responding submissions by April 30, 2014; and the plaintiff shall deliver any reply submissions by May 7, 2014.
Costs:
[372] If the parties cannot agree on the disposition of the costs of this action, they shall make brief written submissions to me through Judges’ Administration, Room 170, at 361 University Avenue, plus a costs outline, as follows: the plaintiff shall deliver his submissions by April 16, 2014; the defendant shall deliver its submissions by April 30, 2014, including any responding costs submissions and any claim for costs; the plaintiff shall deliver any responding submissions to any claim for costs made by the defendant by May 14, 2014; and the parties shall deliver their respective reply submissions, if any, by May 20, 2014.
[373] I take this opportunity to thank counsel again for their very helpful and thorough presentation of this case.
L.B. Roberts J.
Date: April 2, 2014
[^1] Farber v. Royal Trust Co., 1997 387 (SCC), [1997] 1 S.C.R. 846, at para. 26.
[^2] Home v. Phillips Cables Limited (1984), 1984 64 (NS SC), 63 N.S.R. (2d) 242.
[^3] Mr. Evershed testified that he left World Markets in June 2004, but negotiated his departure in May, which was backdated to April 2004.
[^4] Re Pitts and Director of Family Benefits Branch of the Ministry of Community & Social Services (1985), 1985 2053 (ON SC), 51 O.R. (2d) 302 (Div.Ct.), at p. 10.
[^5] 1951 252 (BC CA), [1952] 2 D.L.R. 354 (B.C.C.A.), at p. 357.
[^6] Atlantic Financial Corp. v. Henderson, [2007] O.J. No. 1743, at para. 27; and Adams v. Ginsberg, 1994 CarswellOnt 3710, at para. 13.
[^7] Mandeville v. Manufacturers Life Insurance Co., 2012 ONSC 4316, at paras. 7-8; and Olympic Wholesale Co. v. 1084715 Ontario Ltd., [1997] O.J. No 5482, at para. 3.
[^8] World Markets’ fiscal year end was October 31st.
[^9] Transcript, October 6, 2009, pp. 37-38, q. 159.
[^10] Transcript, October 6, 2009, p. 5, q. 9.
[^11] Exhibit 2, Tab 97.
[^12] Exhibit 2, Tab 98.
[^13] Exhibit 2, Tab 39.
[^14] Transcript, October 6, 2009, p. 109, q. 485.
[^15] Ibid., pp. 110-111, qq. 491-494.
[^16] Exhibit 2, Tab 39, Genuity Non-Disclosure Agreement, paras. 2, 5 and 7.
[^17] Ibid., paras. 2 and 6.
[^18] Transcript, October 6, 2009, pp. 93-94, qq. 411-412.
[^19] Exhibit 2, Tab 2.
[^20] Chapman v. BNS, 2007 18732 (ON SC), [2007] O.J. No. 2044 (Ct.J.), at paras. 103, 113, 123, 127, and 129.
[^21] S.O. 2002, Ch. 24, Sch. B.
[^22] Bambury v. Royal Bank of Canada, 2011 ONSC 2840, [2011] O.J. No. 2135, at para. 36; Saltsov v. Rolnick, 2010 ONSC 914, 262 O.A.C. 299 (Div.Ct.), at para. 23; and Oxman v. Dustbane Enterprises Ltd., [1986] O.J. No. 718 (C.A.), at para. 41.
[^23] Bardal v. The Globe & Mail Ltd., 1960 294 (ON SC), [1960] O.W.N. 253, 24 D.L.R.(2d) 140 (O.S.C. High Court).
[^24] Chann v. RBC Dominion Securities Inc., 2004 66310 (ON SC), 2004 CarswellOnt 3341, 34 C.C.E.L. (3d) 244, at para. 93; Chapman v. Bank of Nova Scotia, 2007 18732 (ON SC), [2007] O.J. No. 2044, 58 C.C.E.L. (3d) 25, at para. 136; and Cole v. Merrill Lynch Canada Inc., 2005 56201 (ON SC), 2005 CarswellOnt 9962, 154 A.C.W.S. (3d) 1103, at para. 98.
[^25] Michaels v. Red Deer College, 1975 15 (SCC), [1976] 2 S.C.R. 324, at p. 6.
[^26] Michaels v. Red Deer College, supra, at pp. 5-6.
[^27] Transcript, October 6, 2009, p. 156, qq. 695-697.
[^28] Ibid., pp. 155-156, q. 694.
[^29] Gryba v. Moneta Porcupine Mines Ltd., 2000 16997 (ON CA), [2000] O.J. No. 4775 (C.A.), at paras. 35 and 57.
[^30] Allan v. Westinghouse Canada Inc., [2000] O.J. No. 5054 (Ct.J.), at paras. 86 to 90; Huszar v. Antech Antenna Technologies Ltd., [1988] O.J. No. 2145 (S.C.O. High Court), at p. 13; and Hart v. EM Plastic & Electric Products Ltd., 2008 BCSC 2281, [2008] B.C.J. No. 316, at paras. 38-39.
[^31] Evans v. Teamsters Local Union No. 31 (2008) 2008 SCC 20, 1 S.C.R. 661, at paras. 28 and 30; and Chevalier v. Active Tire & Auto Centre Inc., 2012 ONSC 4309, [2012] O.J. No. 3414, at para. 20; aff’d, 2013 ONCA 548, [2013] O.J. No. 4093.
[^32] Transcript, October 6, 2009, p. 134, qq. 606-607.
[^33] Exhibit 9, para. 1.
[^34] Exhibit 2, Tabs 85-90.
[^35] Ibid.
[^36] These provisions of the RSA Plan are the same as those in the Stock Participation Plans for previous years: see Exhibit 2, Tabs 84-86.
[^37] Gryba v. Moneta Porcupine Mines Ltd., supra, at paras. 58-63.
[^38] Ibid.; and Kieran v. Ingram Micro Inc., 2004 4852 (ON CA), [2004] O.J. No. 3118, 33 C.C.E.L. (3d) 157, at paras. 56 and 58-61
[^39] Exhibit 2, Tabs 85 to 90.
[^40] Kieran v. Ingram Micro Inc., supra, at paras 47 and 49.
[^41] Mr. Penteliuk agreed that the Assante transaction produced revenue for World Markets of just shy of $30 million whereas the First Asset transaction generated about $4 or $5 million in revenue.
[^42] Exhibit 2, Tab 40, p. 8.
[^43] Exhibit 2, Tab 89.
[^44] Exhibit 2, Tab 82, Tab 87, pp. 1-2, Tab 89, p. 8, and Tab 90, pp. 1-2.
[^45] Exhibit 2, Tab 83.
[^46] Exhibit 2, Tab 40, pp. 1-2.
[^47] See also Exhibit 6, Tabs A 1-3.
[^48] Exhibit 6, Tabs B 4-6.
[^49] Exhibit 6, Tabs C 9-14.
[^50] Exhibit 2, Tab 82, p. 2.
[^51] Exhibit 2, Tab 80.
[^52] Gryba v. Moneta Porcupine Mines Ltd., supra, at paras. 24 and 49.
[^53] Exhibit 2, Tab 89, p. 8.
[^54] Exhibit 2, Tab 89, p. 15.
[^55] Ibid.
[^56] Exhibit 2, Tab 90, p. 15.
[^57] 1995 7270 (ON SC), [1995] O.J. No. 75, 8 C.C.E.L. (2d) 72.
[^58] These words appeared within quotation marks in the text of the decision and, while no specific reference was made to any document, they appear to refer to the employer’s written policies.
[^59] Claiborne Industries Ltd. v. National Bank of Canada (1989), 1989 183 (ON CA), 69 O.R. (2d) 65 (C.A.), [1989] O.J. No. 1048, at paras. 166 to 168.