Court File and Parties
CITATION: Gadbois v. Newcom Business Media Inc., 2016 ONSC 2310
COURT FILE NO.: CV-15-532711
DATE: 20160408
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MARC GADBOIS
Plaintiff
– and –
NEWCOM BUSINESS MEDIA INC.
Defendant
Daniel Chodos, for the Plaintiff
John A. Howlett, for the Defendant
HEARD: March 21, 2016
LEDERMAN J.
NATURE OF MOTION
[1] The plaintiff seeks summary judgment for damages for alleged wrongful dismissal.
[2] The defendant, Newcom Business Media (“Newcom”) terminated the employment of the plaintiff without cause.
[3] The issues on this motion are: (a) what is the period of reasonable notice, and (b) what are the damages during this period of reasonable notice.
BACKGROUND FACTS
[4] The defendant is a publisher of business media and, in January 2015, it purchased 18 business publications from the Business Information Group (“BIG”), a division of Glacier Media Inc. The purchase transaction closed on January 23, 2015. The defendant agreed to hire all of the BIG employees who had been working on the purchased media assets.
[5] The defendant agreed to hire the plaintiff. He is 42 years old and had been employed by BIG since March 1, 1999.
[6] The plaintiff’s employment with the defendant continued until June 25, 2015, when it was terminated on a without cause basis.
[7] When the defendant hired the plaintiff in January 2015, they entered into an Employment Contract, drafted by the defendant, in which the defendant recognized the plaintiff’s years of service with BIG “for all employment purposes”.
[8] The Employment Contract essentially provided for the same salary, commission, bonus and benefits as the plaintiff had been receiving from BIG as follows:
(a) a base salary of $65,692.00 per year;
(b) commission upon his sales in accordance with his existing commission agreement with BIG that had been negotiated and signed in December, 2014;
(c) a 2015 bonus plan in accordance with his existing agreement;
(d) an employment benefits plan, including life insurance, short-term and long-term disability insurance, and health and dental benefits; an annual car allowance of $6,000.00; and four weeks paid vacation.
There were two changes or additions to what BIG had been providing;
(a) in lieu of the previous pension plan of BIG, there was a RRSP contribution match of up to 5% of the plaintiff’s base salary;
(b) a 1 year non-solicitation agreement was added.
[9] The defendant made a verbal commitment to the plaintiff and to all employees that their rate of compensation in 2015 would be at least equal to their rate of compensation in 2014, regardless of the profitability of the business and of other financial losses caused by the financial restructuring that was necessary.
[10] The plaintiff had served in the role of publisher for BIG for many years and continued in that role with the defendant. At BIG, the plaintiff was responsible for publishing two magazines: Service Station Garage Management magazine (“SSGM”) and L’Automobile magazine (“L’Automobile”).
[11] When the defendant acquired BIG, it merged its existing publication, Canadian Technician magazine (“CT”) with SSGM to form a new magazine called Canadian Auto Repair and Service magazine (“CARS”). The plaintiff became the publisher of CARS instead of SSGM when he began working for the defendant. He continued to be the publisher of L’Automobile as well.
[12] In his role as publisher, the plaintiff managed the two magazines and reported directly to the owner of the defendant. Although he supervised editorial staff, his primary role was to sell advertising space in the two magazines. As a result, the commission structure provided a significant part of the plaintiff’s compensation package.
[13] The Employment Contract stated: “your current commission structure for 2015 will remain unchanged”. That commission structure provided for tiered commissions as follows:
A “regular commission rate” of 2.44% on all sales revenue up to his “total targeted sales revenue” of $690,000. For sales revenue in excess of the target, it provided for an “over-achievement rate” of commission in much higher percentages of 10%, 15% and 20% depending on the sales revenue.
The “over-achievement rate” of commission was only payable on sales in excess of the “total targeted sales revenue”.
PERIOD OF REASONABLE NOTICE
[14] The plaintiff submits that he is entitled to 15-18 months’ pay in lieu of reasonable notice; whereas the defendant submits that the period should be in a range of 11-14 months.
[15] It is well recognized that the determination of the notice period is based on the Bardal factors: the character of the employment, the length of service, the age of the employee and the availability of similar employment, having regard to the employee’s experience, training and qualifications: Bardal v. The Globe and Mail Limited (1960) 1960 CanLII 294 (ON SC), 24 DLR (2nd) 140 (OHC).
[16] Here, the plaintiff’s tenure was nearly 16 ½ years in only one industry for only one employer. He occupied an important position with BIG and with the defendant in that he managed two distinct magazines and reported directly to the owner of the company. He is 42 years old and publishing positions available in the market place are limited. It is instructive that counsel could not refer to a case involving the termination of employment of a publisher.
[17] Given his age and the fact that the plaintiff has spent most of his professional career with the defendant/BIG, and having regard to the jurisprudence referred to by counsel in which employees have similar characteristics, an appropriate and reasonable period of notice for the plaintiff is 16 months.
COMPENSATION ENTITLEMENT
[18] The award of damages should include all remuneration and benefits that the plaintiff would likely have received within the 16 months period of notice.
[19] The only issue in dispute in this regard is what the plaintiff would have earned by way of commissions and bonus as part of his remuneration during that period.
COMMISSIONS
(a) Defendant’s position with respect to commissions
[20] The defendant contends that the creation of the new publication, CARS, was an entirely new development and one that was not covered in the plaintiff’s existing commission agreement. The defendant submits that the business focus at the outset of operations was to ensure that the existing advertisers switched their advertising to the new publication, CARS, with discussions about a new commission agreement with the plaintiff to take place later. There was no way of accurately forecasting the first year revenues of CARS and that made it very difficult to come up with a fair commission formula and sales target for the plaintiff.
[21] Before the creation of CARS, both SSGM and CT had a substantial number of booked orders. The plaintiff had obtained the booked orders for SSGM and Joe Glionna (the Vice-President of the defendant) had obtained the booked orders for CT. The plaintiff’s commissions at BIG were based on SSGM and L’Automobile and they obviously did not factor in the additional sales revenue expected from the CT advertisers. The defendant claims that it never intended that the sales revenue from CT advertisers which the plaintiff was not responsible for, would be factored into his total targeted sales revenue figure of $690,000.
[22] The total revenue in 2015 for CARS was $800,461.00 of which $237,124 came from CT advertisers and therefore, the defendant argues, the revenue for commission purposes for CARS should be $563,337 plus the L’Automobile revenue in 2015 of $144,102. Accordingly, the defendant submits that the total of that revenue being $707,439 should be taken as the plaintiff’s anticipated sales in 2015 and, as a result, his commission would have been $18,580 based on the existing commission agreement. That amount is slightly more than his 2014 commission of $16,196.
(b) Plaintiff’s position with respect to commissions
[23] In determining what an employee would have earned in commissions if he had remained employed during the period of reasonable notice, it may be appropriate to look at the average of the last several years’ commissions or projections based on the general sales results of the company: see Howard A. Levitt, The Law of Dismissal in Canada, 3rd ed. at para. 9: 10.320. In the instant case, commissions based on a projected basis is preferable since the plaintiff had a new employer and was the publisher of a new magazine.
[24] The plaintiff submits that had he not had been terminated and allowed to continue to work through the entire year, the total revenue that would have been earned would be approximately $1,000,000 in sales for 2015.
[25] In his previous five years with BIG, the plaintiff’s mid-year average was 68.47 % of his end of year total revenue figure. Since he earned $673,628 in booked orders as of June 25, 2015 with the defendant, this would project to a total of approximately $995,000 in orders by year end.
[26] Further, the proposed commission structure that Jim Glionna (President of the defendant), says he proposed to the plaintiff (although the plaintiff denies receiving it), required the plaintiff to hit $800,000 of annual revenue targets in order to achieve certain bonuses for CARS and a further $210,000 for L’Automobile. That entails a projected total revenue of over $1,000,000 for both of the magazines published by the plaintiff and that amount is consistent with the plaintiff’s estimate of annual sales.
THE APPROPRIATE COMMISSION CALCULATION
[27] The provision for commission in the Employment Agreement does not distinguish between accounts that may have emanated from SSGM sources and accounts that emanated from CT sources. On its face, the Employment Contract would support the position that the plaintiff was entitled to commission for all revenue earned for CARS and L’Automobile magazines.
[28] This conclusion is also consistent with the manner in which the plaintiff was paid his commission throughout 2015 prior to his termination in the sense that he was paid commission for all revenue earned by CARS and by L’Automobile respectively, regardless of whether it had previously resided with SSGM or CT. The following excerpt from the cross-examination from Joe Glionna further supports this:
Q: … Mr. Glionna, why does this statement say Service Station Garage Management rather than CARS or Canadian Auto Repair & Service Management?
A: Simply a factor of not making the change when we changed – when we put two magazines together and created a third new magazine.
Q: So in other words, it’s an administrative oversight?
A: Absolutely
Q: Okay. So this should say, in a perfect world, CARS?
A: Yes.
Q: Okay. So, therefore, Mr. Gadbois’ commission statements are based on the revenue that came in for CARS?
A: Correct
[Emphasis added.]
[29] Accordingly, there is no evidence of any agreement let alone intention that the defendant would carve out CT from the plaintiff’s commission earnings. Rather, it appears the plaintiff was to be compensated based on all revenue earned in association with CARS, regardless of its source.
[30] Therefore, applying the plaintiff’s commission structure to the total projected 2015 orders (being $1,000,000) the plaintiff would have earned $68,486 in commission during 2015. This amount should be included in the calculation of commission entitlement during the notice period.
BONUS
[31] The Employment Contract provided that the plaintiff’s current 2015 bonus plan would remain in effect. This was confirmed by Joe Glionna in cross-examination at page 25 where he indicated that the defendant had told the plaintiff they would honour bonuses even though no profit in the company that year might come to pass. Although the plaintiff stated that he did not receive his bonus in his final year with BIG, BIG’s compensation form indicates that the plaintiff was entitled to a bonus of $9,173 based on a profit share percentage. Accordingly, pursuant to the Employment Agreement with the defendant and the defendant’s commitment to honour the plan, this bonus amount of $9,173 should be part of the compensation package considered for the appropriate period of notice.
DISPOSITION
[32] With the determinations relating to commission, bonus, and the period of reasonable notice having been made as above, I will leave it to counsel to calculate the full compensation package to which the plaintiff is entitled during the period of notice taking into account the amounts already paid. If the parties cannot agree on the details of the calculation, I may be spoken to.
[33] The plaintiff submitted that as the notice period has yet to be completed, the contingency approach should be applied to the payment of damages whereby the employee’s damages are discounted by a contingency for re-employment during the balance of the notice period.
[34] In the circumstances of this case, where a substantial notice period remains and the plaintiff is not nearing retirement age, the trust and accounting approach is preferable, whereby the employee will be granted judgment, but a trust in favour of the employer is impressed on the judgment funds for the balance of the notice period requiring the employee to account for any mitigatory earnings.
[35] Hopefully, the parties will be able to agree as to the costs of this motion and action. If unable to do so, they may make written submissions within 30 days.
Lederman J.
Released: April 8, 2016
CITATION: Gadbois v. Newcom Business Media Inc., 2016 ONSC 2310
COURT FILE NO.: CV-15-532711
DATE: 20160408
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MARC GADBOIS
Plaintiff
– and –
NEWCOM BUSINESS MEDIA INC.
Defendant
REASONS FOR JUDGMENT
Lederman J.
Released: April 8, 2016