Court File and Parties

OTTAWA COURT FILE NO.: 15-66851 DATE: 20170717

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

STEVEN KERZNER Plaintiff – and – AMERICAN IRON & METAL COMPANY INC. Defendant

Counsel: Alan Riddell and Kyle Van Schie, for the Plaintiff Peter MacTavish and Heather Cameron, for the Defendant

HEARD at Ottawa and Kingston: 14, 23 December 2016 and 17 January 2017; post-hearing written submissions received 27 March, 3 April, 4 and 11 May, 6 and 16 June 2017.

mew j.

REASONS FOR DECISION

(Motion for Summary Judgment)

[1] Steven Kerzner was first hired by Bakermet, Inc. in 1980. At the time, Bakermet was a privately owned family business providing recyclable products to foundries and smelters and steel mills in Canada and elsewhere. The company bought and sold various types of ferrous and non-ferrous metal, and other steel products.

[2] Mr. Kerzner eventually became a one third owner of Bakermet, acquiring shares from his father in around 1993. He also became the company’s president.

[3] In August 2008, Bakermet was purchased by ArcelorMittal, which describes itself as the world’s “leading steel and mining company”, for $45 million plus a net capital adjustment.

[4] As a one third owner of Bakermet, Mr. Kerzner received approximately $17,162,637 in consideration for the sale.

[5] As part of the Bakermet sale, the plaintiff executed a release agreement in favour of Bakermet and its successors releasing any and all claims which he “has now, or may have in the future” for any fact, act or omission by reason of or in connection with his position as an employee of Bakermet.

[6] Part of the arrangement with ArcelorMittal was that Mr. Kerzner would continue to be employed as the general manager (Non-Ferrous Products) of ArcelorMittal Ottawa Inc.

[7] Mr. Kerzer thereafter worked for ArcelorMittal under a series of employment agreements entered into in August 2008, May 2011 and May 2014, respectively.

[8] The 2008 Employment Agreement provided that it replaced and superseded any previous arrangements or agreements and that Mr. Kerzner “finally releases and forever discharges” Bakermet and ArcelorMittal from all claims relating to such arrangements or agreements. The 2011 and 2014 Employment Agreements contained similar release provisions.

[9] The 2014 Employment Agreement was a two-year fixed term contract. It contained provisions governing payments due to Mr. Kerzner in the event of early termination of his employment by the employer.

[10] In March 2015, ArcelorMittal Ottawa was acquired by the defendant, American Iron & Metal Company Inc. (“AIM”). Mr. Kerzner’s employment was transferred to AIM.

[11] According to Mr. Kerzner, at the end of July 2015 he was told by AIM’s President, Herbert Black, that he wanted Mr. Kerzner to remain an employee of AIM for the indefinite future because he was important to the Ottawa operation.

[12] On 11 September 2015, AIM provided Mr. Kerzner with one week of working notice of the termination of his employment. He was advised that he would be provided with six months’ salary continuation and benefits coverage, purportedly in accordance with the provisions of his May 2014 employment agreement.

[13] Based upon over 35 years of continuous employment with the defendant and its predecessors, Mr. Kerzner seeks between 24 and 30 months’ pay in lieu of notice, less mitigation income earned.

[14] The defendant asserts that Mr. Kerzner’s entitlement to compensation was limited, by the terms of the employment agreement, to what he was offered at the time of his termination. However, because Mr. Kerzner has subsequently gone on to work for a competitor, the defendant counterclaims for damages based upon Mr. Kerzner’s alleged breach of non-solicitation and non-competition clauses in his employment contract.

PRELIMINARY ISSUE: IS SUMMARY JUDGMENT PROCEDURE APPROPRIATE?

[15] The plaintiff submits that all issues between the parties can be resolved by summary judgment. The defendant challenges this and points to incomplete disclosure of business records and financial information which require, at a minimum, further evidentiary inquiry.

[16] In Hyrniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court of Canada broadened and liberalised the availability of summary judgment under rule 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and encouraged judges to resolve disputes in that fashion when they can justly do so.

[17] There will be no genuine issue requiring a trial where a judge is able to reach a fair and just determination on the merits and where the material filed on the motion: (i) allows the judge to make the necessary findings of fact; (ii) allows the judge to apply the law to the facts; and (iii) is a proportionate, more expeditious and less expensive means to achieve a just result: Hryniak, at paras. 32, 49-51; Fernandes v. Carleton University, 2016 ONCA 719, 34 C.C.E.L. (4th) 180, at para. 28.

[18] Under rule 20.04(2.1), the summary judgment motion judge is provided with a number of powers enabling the court to weigh evidence, evaluate credibility, and draw reasonable inferences.

[19] In Peticca v. Oracle Canada ULC, 2015 ONSC 2015, 254 A.C.W.S. (3d) 356, Myers J. observed, at para 2, in relation to employment contract disputes:

Wrongful dismissal cases with no cause alleged are an area that is particularly well suited to summary judgment. The principal facts required to assess the reasonable notice period — age, salary, position, length of tenure, seniority, job duties — are generally not an issue. The Court can look at precedents to assess the circumstances of the case, and quite readily assess the reasonable notice period.

[20] Although this case involves a wrongful dismissal case with no cause alleged, the issues go beyond just the assessment of a common law notice period.

[21] The defendant therefore resisted summary judgment, arguing that certain issues raised would require a full trial and discovery process, including:

a. the extent to which the plaintiff solicited AIM's customers; b. whether the plaintiff breached his fiduciary duties to AIM; c. whether the plaintiff acted in bad faith when, as a sophisticated party, former principal, and key employee, he negotiated multiple employment agreements following the sale of his shares only to resile from his commitments almost immediately after having been given notice of termination; d. assessment of the Plaintiff's post-termination mitigation earnings (which will likely require expert evidence)

[22] While it is claimed that the evidence concerning post-termination events is unclear, there are no evidentiary disputes of substance concerning the agreements and the conduct of the parties up to the point of termination.

[23] Accordingly, and the asserted complexities of the dispute notwithstanding, it was my provisional view after hearing argument on the suitability of summary judgment, but not having at that time heard argument on all of the issues raised by the motion, that most, if not all, of the issues raised could be addressed on the record already before the court and that to the extent further evidence was required to finally determine all issues, the options and powers provided by rule 20.04 could be appropriately deployed to resolve them.

[24] Although originally listed for a one day hearing, oral argument eventually filled three days, supplemented by several exchanges of post-hearing written submissions. However, after all of that, my provisional view on the suitability of summary judgment remains unchanged.

THE EVIDENCE

[25] The record of evidence was substantial and included transcripts of the cross-examinations of Mr. Kerzner and AIM’s representative as well as the responses to undertakings given at those examinations.

The Employment Agreement

[26] The agreement in place at the time of the plaintiff’s termination was the 2014 Employment Agreement. As already noted, this was the last in a series of three employment agreements entered into between the plaintiff and ArcelorMittal Ottawa. The first, entered into on 5 August 2008 concurrently with the sale of the business of Bakermet to ArcelorMital, contained the following features:

a. Employment of Mr. Kerzner as General Manager, Non Ferrous Products; b. A salary of $250,000 per year and annual bonuses of $200,000 for three years, subject to the achievement of certain performance goals and other conditions; c. The agreement replaced and superseded previous arrangements and agreements; d. Non-competition and non-solicitation clauses effective for two years in a territory comprising the provinces of Québec and Ontario following the termination of employment; e. The agreement was for an indeterminate period.

[27] On the same date, Mr. Kerzner, through his family trust, which was one of the sellers of Bakermet shares, entered into a “Non-Competition and Non-Solicitation Agreement” with Bakermet and ArcelorMittal Montréal Inc., effective for five years.

[28] Each of the 2008, 2011 and 2014 Employment Agreements contained “entire agreement” terms purporting to expressly replace and supersede all previous arrangements and agreements. The 2014 iteration provided:

The Executive agrees that the terms of this Agreement replace and supersede all the terms which were set forth under any previous arrangement and/or agreement and the Executive fully and finally releases and forever discharges the Corporation and the Parent Corporations from all claims relating to the same. All discussions, correspondence, understandings and agreements between the parties relating to the subject matter of this Agreement are superseded by and merged into this Agreement which alone (together with the Corporation's policies and programs and any other document specifically referred to herein), fully and completely expresses the Agreement between the parties on the terms of the Executive's employment by the Corporation as of the Effective Date of this Agreement, and the same is entered into with no party relying upon any statement or representation or made by or on behalf of any party not embodied in this Agreement, or as specifically set out herein.

[29] The 2011 Employment Agreement had a fixed term of three years and there was a provision requiring the employer to provide Mr. Kerzner with six months’ notice if it intended not to renew or continue the agreement at the end of its term (this was subsequently amended by reducing the six month notice period to three). The non-competition clause precluded Mr. Kerzner from being employed by any business related to the acquisition, processing and marketing of superior recyclable products from all types of ferrous and non-ferrous metal as conducted by ArcelorMittal Ottawa, ArcelorMittal Montréal and ArcelorMittal SA in Ontario, Québec and the Atlantic Provinces for eighteen months following the termination of his employment. The non-solicitation provision related to the same territory and was effective for two years.

[30] On 7 May 2014, ArcelorMittal Ottawa wrote to Mr. Kerzner, advising him that it did not wish to renew the 2011 Employment Agreement on the same terms and conditions, but offering new employment conditions. Following negotiations, the 2014 Employment Agreement was entered into. It was a fixed term, two year contract, the preamble to which provided:

…the parties have determined that the Corporation and the Parent Corporations would suffer irreparable harm to its competitive position if the Executive was to provide management services, accept employment or pursue any other activity that requires him to be engaged within the scrap metal recycling industry within the province of Ontario and Quebec as well as the Atlantic Provinces in any capacity.

[31] Other provisions of the agreement included:

a. Mr. Kerzner would receive an annual base salary of $185,000 plus annual bonuses of $46,250 subject to the achievement of certain performance goals and other conditions; b. Payment to Mr. Kerzner of a retention bonus of $25,000 on 6 August 2016 (the end of the term) if he performed his duties until the end of the agreement; c. Early termination upon the provision of one week of working notice plus six months of notice or pay in lieu; d. Defined payments and benefits upon termination, subject to Mr. Kerzner providing ArcelorMittal with a full and satisfactory release upon the receipt of such payment; e. Non-competition and non-solicitation agreements similar to those contained in the 2011 Employment Agreement; f. ArcelorMittal could assign its rights and obligations under the agreement in connection with any sale or transfer of the business, all such rights and obligations to inure to and be binding upon any successor to the business and assets of ArcelorMittal.

[32] Each of the employment agreements, including the 2014 Employment Agreement, provided that Mr. Kerzner would not be entitled to any termination payments if he breached any of the restrictive covenants:

In the event that the executive has breached any of the restrictive covenants hereunder, the corporation shall have the right to suspend or terminate any or all remaining payments and/or benefits, if any, referenced in section 15.2 of the agreement.

[33] A severability clause in the agreement provided for the severance from the agreement of any invalid, illegal or unenforceable provision, such that the enforceability and validity of the remaining provisions would continue in force and effect.

The Plaintiff is Terminated

[34] On 11 September 2015, a letter was hand-delivered to Mr. Kerzner notifying him that his employment was being terminated, without cause, effective 18 September 2015. The letter offered to pay Mr. Kerzner $92,500 (six months’ pay) less applicable statutory deductions by way of salary continuation in purported compliance with the 2014 Employment Agreement. The letter stated that “[t]his amount is inclusive of your entitlements under the Employment Standards Act ”. The offer also included continuation of benefits for six months.

[35] At a meeting with AIM’s representatives on 11 September, Mr. Kerzner was told that AIM was satisfied with his work but that AIM was terminating his employment due to difficult financial times in the industry.

[36] At the time of his termination, Mr. Kerzner was 58 years old and had been employed by AIM and its predecessors for over 35 years of uninterrupted service.

[37] On 24 September 2015, the plaintiff’s solicitors wrote to the defendant advising that, in their opinion:

a. The six month termination provision in the 2014 Employment Agreement was null and void because it was not in compliance with the Employment Standards Act, 2000, S.O. 2000, c. 41, under which any employee with more than 26 years of service is entitled to a minimum of 34 weeks of combined statutory termination pay and statutory severance pay; b. The plaintiff was entitled to common law pay in lieu of notice, which in the case of someone with more than 30 years of service would be 24 months’ pay; c. The non-competition provisions in the agreement were unreasonable and therefore null and void; d. No fresh consideration had been provided to Mr. Kerzner in exchange for his agreement to the non-solicitation provisions (adding, in a subsequent letter, that the provisions were vague and overly-broad and the restriction unreasonably long); e. The law left Mr. Kerzner free to immediately join a competing business, or start up his own competing business, without any contractual restrictions.

[38] Unsurprisingly, the defendant took a contrary view. When, in November 2015, Mr. Kerzner accepted a position with Palmer Recycling Ltd., an Ottawa-based direct competitor of ArcelorMittal Ottawa, AIM purported to invoke its right under the 2014 Employment Agreement to suspend or terminate all remaining termination payments and benefits that would otherwise have been owed to Mr. Kerzner.

The Plaintiff’s Employment with Palmer Recycling Ltd.

[39] On 9 November 2015, Mr. Kerzner commenced employment with Palmer. His initial salary was $70,000.

[40] On 30 November 2015, Mr. Kerzner incorporated Startrek Enterprises Ltd., a holding company, for the purpose of purchasing Palmer.

[41] Within a month of joining Palmer, the plaintiff had become president of Palmer and, effective 5 December 2015, began earning $150,000 (salary) a year.

[42] Effective 1 August 2016, a numbered company, 2157984 Ontario Limited executed a General Conveyance Agreement to purchase the assets of Palmer. Mr. Kerzner is the president of the numbered company. The purchase price for the assets of Palmer Recycling was $800,000 plus the assumption of specified debts of $1.09 million for total consideration of $1.89 million.

[43] Mr. Kerzner owns one third of the shares in the numbered company through Startrek Enterprises. The other two thirds are owned by other parties in the scrap metal industry, including Glenview Iron & Metal, a competitor of Bakermet, AIM and ArcelorMittal during Mr. Kerzner’s time with them.

[44] The compensation available to Mr. Kerzner as a result of his ownership interest in Palmer includes entitlement to the receipt of “Distributable Funds” (dividends) to be paid within 90 days of the end of Palmer’s fiscal year.

[45] At this juncture, Mr. Kerzner, to quote the defendant, “will not, or cannot” provide further information about potential distribution which he earns or could earn, thus, the defendant argues, inhibiting the ability to assess mitigation (if Mr. Kerzner is entitled to damages) or the amount of AIM’s counterclaim (if applicable).

[46] What does appear from the record is that AIM and Palmer had a number of common suppliers and clients at the time that Mr. Kerzner joined Palmer.

[47] Mr. Kerzner asserts that during the time he has worked at Palmer, he has abided by the terms of the non-solicitation clause in the 2014 employment contract, and has scrupulously refrained from soliciting any and all customers of AIM.

[48] Palmer has been unable to produce records of its business dealings prior to June 2015. The defendant raises concerns about this and questions whether Palmer is, in fact, unable to make disclosure or simply unwilling to make disclosure, and in either eventuality, questions why. Based on the records that have been produced, between 1 June 2015 and 9 November 2015 (when Mr. Kerzner joined), Palmer conducted $65,358 of business with entities who also sold scrap to AIM or ArcelorMittal during Mr. Kerzner’s employment. An average of $12,449.14 per month.

[49] Yet, between 9 November 2015 and 7 November 2016, Palmer conducted:

a. $251,702 of business with entities that were pre-existing clients of Palmer before Mr. Kerzner joined and who, to Mr. Kerzner’s knowledge, also sold scrap to AIM or ArcelorMittal during Mr. Kerzner’s employment with them (an average of $20,975 per month); b. $21,730 of business with entities who are new suppliers of scrap metal to Palmer since Mr. Kerzner commenced employment and who also sold scrap to AIM or ArcelorMittal during Mr. Kerzner’s employment with them ($1,810.83 per month); and c. $3,602 of business with clients who were pre-existing clients of Palmer Recycling before Mr. Kerzner joined and who, to Mr. Kerzner’s knowledge, also sold scrap to AIM or ArcelorMittal during Mr. Kerzner’s employment, but who had not done business with Palmer between 1 June 2015 and 8 November 2015 (an average of $300.16 per month).

[50] The defendant calculates, based on the above, that Palmer has done a total of $277,034 of business with entities who also sold scrap to AIM or ArcelorMittal during Mr. Kerzner’s employment with them. On average, this amounts to $23,086.16 per month, nearly double the average value for the period prior to Mr. Kerzner’s employment.

ISSUES

[51] The parties took different approaches to the identification of the issues raised on this motion, and the order in which they should be analysed. I see them broadly as follows:

a. Validity of the termination provisions in the 2014 Employment Agreement; i. Conformity with the Employment Standards Act; ii. Effect of fixed term; b. Effect of restrictive covenants; c. Effect of releases; d. Post-Termination Conduct of the Parties i. Non-payment of compensation by AIM ii. Breach of Fiduciary Duty by Mr. Kerzner iii. Duty of Mr. Kerzner to account for post-termination earnings e. Damages

[52] The issue of the plaintiff’s entitlement, if any, to compensation, is necessarily informed by the view taken of the validity and effect of the employment agreement, the releases and post-termination conduct and events.

[53] Similar considerations apply to the defendant’s counterclaim.

A. Validity of Termination Provision in the Employment Agreement

[54] Mr. Kerzner argues that the termination clause in his employment agreement conflicts with the employer’s responsibilities under the Employment Standards Act, and, as such, is void ab initio. Consequently, the plaintiff submits that Mr. Kerzner’s entitlement to notice would be determined in accordance with common law principles.

[55] Alternatively, the plaintiff argues that defendant and its predecessors have sought to evade the traditional protections of the Employment Standards Act and the common law by the use of a series of fixed-term contracts, when the underlying reality of the employment relationship is one of continuous service by Mr. Kerzner for many years coupled with verbal representations and conduct on the part of the employer that clearly signalled an indefinite-term relationship.

Non-Conformity with the Employment Standards Act

[56] Section 54 of the Employment Standards Act requires an employer to give written notice of termination of employment to an employee who has been continuously employed for three months or more. Section 57 provides that such notice shall be given,

g. At least seven weeks before the termination, if the employee’s period of employment is seven years or more and fewer than eight years; or h. At least eight weeks before the termination, if the employee’s period of employment is eight years or more.

[57] Under section 61(1), an employer is permitted to terminate the employment of an employee without notice, or with less notice than is required under section 57 if the employer:

a. Pays to the employee termination pay in a lump sum equal to the employee’s entitlement had he or she continued to work during the notice period, and b. Continues to make whatever benefit plan and contributions would have been required in order to maintain the employee’s benefits during the notice period.

[58] Sections 64 and 65 of the Employment Standards Act deal with an employee’s entitlement to severance pay. The effect of these positions, vis-à-vis Mr. Kerzner, is an entitlement on his part to severance pay calculated by multiplying his regular wages for a regular work week by the number of years in employment up to a maximum of 26 weeks.

[59] Mr. Kerzner asserts that under the Employment Standards Act, AIM owed the maximum severance pay prescribed, 26 weeks, and the maximum termination pay prescribed, namely 8 weeks, because Mr. Kerzner had been employed in AIM’s newly acquired business for more than 35 years.

[60] The contractual termination provision of one week of working notice plus six months of notice or pay in lieu of falls short of the plaintiff’s entitlement, based on this argument.

[61] The position of the defendant is that the effect of the releases signed by Mr. Kerzner limit his entitlement to seven weeks’ notice and seven week’s severance, based on his continuous employment with ArcelorMittal and AIM from 2008 to 2015, for a total of fourteen weeks. The six months provided for in the Employment Agreement is a greater benefit. Accordingly, the Employment Standards Act is not breached.

[62] AIM’s position is, of course, dependent on a finding that the releases signed by Mr. Kerzner wiped the slate clean in August 2008.

[63] While in no way conceding the effect of the releases as advanced by AIM, Mr. Kerzner argues that even if the clock was reset in 2008, the termination provisions in the 2014 Employment Contract have the potential to fall out of conformity with the Employment Standards Act.

[64] In a recent decision of the Court of Appeal, Covenoho v. Pendylum Ltd., 2017 ONCA 284, the court held that in determining whether an employment contract is in compliance with the Employment Standards Act, what should be considered is whether a provision’s application potentially violates the Employment Standards Act at any date after hiring. The employment contract in question contained a provision which purported to allow the employer to terminate the employee’s employment without cause and without notice or payment in lieu of notice regardless of her length of employment. The employee had not yet completed three months of employment with the employer at the time of her termination. On a motion for summary judgment, the motion judge concluded that as the employee had been employed for less than three months, she was not entitled to notice under the Employment Standards Act. The Court of Appeal disagreed. The termination provisions were contrary to the Employment Standards Act in that they purported to allow the employer to terminate the employee without cause in the event that she had been in continuously employed for more than three months. Having so found, the Court held that to determine whether the contract was in compliance with the Employment Standards Act, its terms must be construed as if the employee had continued to be employed beyond three months.

[65] Mr. Kerzner bolsters his argument by reference to the decision of Pattillo J., sitting as a single judge of the Divisional Court, in Garreton v. Complete Innovations Inc., 2016 ONSC 1178 where he stated, at para. 27:

... In my view, the employment contract must be considered at the time it is executed. If the termination provision is not onside with notice provisions and severance provisions (if applicable) of the Act at the outset, then it is void and unenforceable. Potential violation in the future is sufficient. As Low J. states [in Wright v. The Young and Rubicam Group of Companies (Wunderman) 2011 ONSC 4720], "It is not that difficult to draft a clause that complies completely with the Act, no matter the circumstance."

[66] If the clock was, in fact, reset in August 2008, the termination provision in the 2014 Employment Agreement would only violate the Employment Standards Act when the combined notice and severance entitlement of the plaintiff exceeded 27 months (i.e. the one week of working notice plus six months of notice or pay in lieu provided for in the agreement). That will not happen until the year 2035, when Mr. Kerzner will be 78 years old. When this is considered in the context of the employment relationship between 2008 and 2015, which has featured three successive employment agreements (about which more below), the potential for the termination provision to eventually fall afoul of the Employment Standards Act is, in my view, simply too remote to deem it “offside” the Act.

[67] Accordingly, I conclude that the termination provision of the 2014 Employment Agreement would only violate the Employment Standards Act if it is found that the plaintiff did not release his pre-August 2008 service with Bakermet from consideration.

Validity of Fixed-Term Contracts

[68] The plaintiff also argues that the 2014 Employment Agreement is invalid to the extent that it purports to limit his Employment Standards Act entitlements because of its fixed term.

[69] In Ceccol v. Ontario Gymnastic Federation (2001), 55 O.R. (3d) 614 (C.A.), it was held, at para. 26:

… a court should be particularly vigilant when an employee works for several years under a series of allegedly fixed-term contracts. Employers should not be able to evade the traditional protections of the ESA and the common law by resorting to the label of 'fixed-term contract' when the underlying reality of the employment relationship is something quite different, namely, continuous service by the employee for many years coupled with verbal representations and conduct on the part of the employer that clearly signal an indefinite-term relationship.

[70] In Ceccol, the employee had been employed pursuant to a series of one-year contracts over a seventeen year period, the terms of which were very similar. Each contract stated that the agreement was subject to renewal if the plaintiff received a favourable performance review and if the parties could agree on the terms and conditions of renewal.

[71] The Court of Appeal emphasised that unequivocal and explicit language is required to establish a fixed-term contract and that any ambiguities will be construed strictly against the employer’s interests: Ceccol, at paras. 25 and 27.

[72] The term of the 2014 Employment Agreement is established by the statement in the preamble that “the Executive has undertaken to work for the Corporation following the Effective Date for a period of two (2) years” and by Article 3 which provides that the agreement is to take effect on 7 August 2014 and to terminate at 11:59 p.m. on 6 August 2016 unless terminated earlier in accordance with the terms of the agreement.

[73] Article 14 of the 2014 Employment Agreement provides that if the Corporation intends not to renew or continue the employment at the end of its term, it was to advise Mr. Kerzner in writing, at least three months before 6 August 2016.

[74] It seems to me that the circumstances of Mr. Kerzner’s employment are of a different character to those described in Ceccol. First, and most importantly, his employment has to be seen in the context of the transactions involving the purchase and sale of the business. The first employment contract which he entered into was for an indefinite term. The 2011 agreement was for a fixed term of three years. The 2014 agreement was for a fixed term of two years. The latter two agreements both required the employer to provide notice to Mr. Kerzner if the agreement was not going to be renewed or continued.

[75] Mr. Kerzner says that based on the representations made to him, and notwithstanding the provisions of the written agreements, his employment was for an indefinite term.

[76] The defendant, pointing to the “whole agreement” provision in the 2014 Employment Agreement, submits that the document speaks for itself and that whereas the first employment agreement had been for an indefinite term, the 2011 and 2017 iterations were clearly not.

[77] Furthermore, the conversation which Mr. Kerzner alleges he had with AIM’s president just a couple of months before he was terminated, during which he says he was told that his employment was indefinite, was a conversation which occurred after the 2014 Employment Agreement had been entered into and not long after the agreement had been assigned to AIM. I do not consider this discussion as relevant to my interpretation of the 2014 Employment Agreement.

[78] Ultimately, I do not regard this circumstance in the present case as akin to those where virtually identical fixed term contracts were renewed, year after year. Rather, the employment relationship was one which was evaluated by both parties as time went on and as circumstances changed. I accordingly conclude that Mr. Kerzner was, in fact, employed pursuant to a fixed term contract.

B. Effect of Restrictive Covenants

[79] Regardless of any issues relating to the term of the contract or its compliance with the Employment Standards Act, the plaintiff challenges the validity of the non-competition and non-solicitation clauses contained in the 2014 Employment Agreement.

[80] Mr. Kerzner argues that the 2014 Employment Agreement contains three distinctive restrictive covenants, namely:

a. A non-competition provision (Article 10.1); b. A non-solicitation of customers (clause 11.1); and c. Prohibition against the acceptance or procurement or assisting in the acceptance of any business from any customer or the supply or procurement of assistance in the supply of any goods or services to any customer of AIM’s.

[81] To be enforceable, restrictive covenants must be reasonable in all of the circumstances. The parties agree that a determination of whether a restrictive covenant is reasonable will be influenced by whether it was negotiated as part of the sale of the business by Bakermet to ArcelorMittal, or as part of an employment agreement.

[82] The parties disagree on whether the restrictive covenants in the 2014 Employment Agreement should be seen in the context of the plaintiff’s sale of his sales in Bakermet or should be considered only in the context of the employment agreement.

[83] The plaintiff notes that the precise clauses contained in the 2008 Employment Agreement and in the 2008 Services Agreement (which expired in 2013), were not carried forward in the 2011 and 2014 Employment Agreements. This, the plaintiff argues, favours interpreting the restrictive covenants by reference only to the employment agreement and not the longer history of the relationship between the parties.

[84] There can be no doubt that it was important to ArcelorMittal, at the time of its acquisition of Bakermet, that Mr. Kerzner should be both retained as a senior employee but also restricted in his ability to compete with ArcelorMittal or solicit its business in the event that he left the company. This was reflected not only in the employment contracts but, also, in a separate Non-Competition and Non-Solicitation Agreement, which was signed concurrently with the share purchase transaction in August 2008 and which was effective for five years.

[85] However, by the time the 2014 Employment Agreement was entered into, the separate Non-Competition and Non-Solicitation Agreement had run its course.

[86] Although the 2014 Employment Agreement contained non-solicitation and non-competition terms that replicated those found in the 2011 agreement and that were similar, but not identical, to those contained in the 2008 Employment Agreement, AIM cannot, on the one hand, argue that the plaintiff was subject to a series of short-term contracts with his rights as an employee limited accordingly, but simultaneously argue that the non-competition and non-solicitation clauses contained in those employment agreements should be assessed in the context of the plaintiff’s sale of his Bakermet shares.

[87] Accordingly, I find that the reasonableness of the non-competition and non-solicitation provisions in the 2014 Employment Agreement should be assessed having regard to the other provisions of that agreement rather than the longer-term relationship between the plaintiff and the defendant’s predecessors, and in particular the plaintiff’s sale of his shares in Bakermet.

[88] The 2014 Employment Agreement is for a term of two years. The non-competition obligation survives for eighteen months following the termination of employment. The non-solicitation provisions survive for two years following the termination of employment.

[89] It is well settled that a factor determining the reasonableness of a covenant in restraint of trade in an employment contract is the duration of the restraint: Reed Shaw Osler Ltd. v. Wilson (1981), 1981 ABCA 317, 17 Alta. L.R. (2d) 81, 35 A.R. 451, 62 C.P.R. (2d) 58 (C.A.) at para 22.

[90] In circumstances where there is a fixed term contract of employment, one of the factors to be taken into account when considering the reasonableness of the restrictive covenant is whether it is temporally proportionate to the term of the employment. In 947535 Ontario Ltd. v. Jex (2004), 37 B.L.R. (3d) 152 (Ont. S.C.), the court considered the reasonableness of a two year temporal limitation in restrictive covenants of employees at a business providing tax return preparation services. The court’s reasons for decision record that the employees signed new contracts every year and worked for approximately five months per year. The court found that the two year temporal limitation was unreasonable.

[91] In Cameron v. Canadian Factors Corp. Ltd. (1970), 18 D.L.R. (3d) 574 (SCC), the Supreme Court held that, when determining the reasonableness of a temporal restraint an employer could, through contract, place on a departing employee, the court should first assess what a reasonable period of time is for the employer to put someone else in the departing employee’s place in order to protect the employer’s business interests. Against that should be balanced the right of the departing employee to take his or her business experience with them.

[92] While there are plenty of examples of cases in which eighteen month or two year restrictive covenants for senior employees in positions comparable to Mr. Kerzner’s have been deemed by courts to be reasonable, none of the decisions I have been referred to have involved fixed term employment contracts for a relatively short term of employment.

[93] AIM cannot have it both ways. It is unreasonable for an employer in the position of AIM to insist on a fixed term arrangement, albeit a renewable one, yet to simultaneously restrain Mr. Kerzner from working elsewhere in the only business he has been involved in for the past 35 years, for a period of time that (in the case of the non-solicitation restriction) is for the same length of time as the employment contract itself.

[94] The plaintiff points too to the geographic restrictions imposed by the restrictive covenants as emblematic of their unreasonableness.

[95] The 2014 Employment Agreement was, of course, entered into by ArcelorMittal, rather than AIM. However, the reasonableness of the agreement is determined as of the date of its execution: Ergonic Resources Inc. v. Waker (1982), 19 Sask.R. 128 (Q.B.) at para. 11. The “Territory” defined in the 2014 Employment Agreement is, as already noted, “the Provinces of Quebec and Ontario and the Atlantic Provinces”. By contrast, the 2008 Non-Competition and Non-Solicitation Agreement defined the territory as Ontario and Quebec (as did the 2008 Employment Agreement).

[96] The evidence of Mr. Kerzner is that during the term of the 2014 Employment Agreement, he only worked out of Ottawa, did not do business in any part of the Atlantic Provinces, and only conducted business in Eastern Ontario and Western and Central Quebec. Mr. Kerzner adds that during his years working for ArcelorMittal and AIM, he did not work with any Ontario based clients or suppliers situated west of Belleville and never did any work with any Quebec based clients or suppliers situated east of Quebec City. Accordingly, he argues that the geographic restrictions are unreasonably broad.

[97] It is also noteworthy that, aside from one year working for an optician 35 years ago when he was in his early 20s, the scrap metal industry is the only industry in which Mr. Kerzner has ever worked. It is therefore the only industry in which he has the experience, the business expertise, the knowledge of products and prices, and the contacts necessary to obtain comparable managerial employment. This is particularly so now that Mr. Kerzner is in his late 50s and, likely, no longer qualified for, or marketable enough, to be hired into any management level positions in another industry.

[98] AIM counters that the restrictive covenants were drafted reasonably and no more broadly than necessary to protect its legitimate interests. It points to the preamble in the 2014 Employment Agreement which provided that:

The parties have determined that the Corporation and Parent Corporations would suffer irreparable harm to its [sic] competitive position if the Executive was to provide management services, except employment or pursue any other activity that requires him to be engaged within the scrap metal recycling industry within the Provinces of Ontario and Québec as well as the Atlantic Provinces in any capacity…

[99] However, the fact that an employee has agreed and acknowledged in a contract that a restraint of trade is a reasonable one does not automatically prevent the court from ruling that it is unreasonable and, hence, unenforceable. The acknowledgement is, nevertheless, relevant to and useful for the assessment of whether restrictive covenants are reasonable: Guay Inc. v. Payette, 2013 SCC 45, [2013] 3 SCR 95 at para. 60.

[100] Guay v. Payette involved a non-competition clause in a commercial contract. It was found that there was no evidence that the non-competition term of five years was unreasonable. A contrasting approach was taken in United Rentals of Canada Inc. v. Brooks, 2016 ONSC 6854, where this court held that a twelve month restrictive covenant was unenforceable where there was no evidence to support the restriction’s reasonableness.

[101] As the Supreme Court has directed, Mr. Kerzner’s acknowledgement that the defendant requires protection of its legitimate business interest is a factor to be taken into consideration. But read and considered in the context of a short, fixed-term contract with unreasonably broad geographic restrictions, and even allowing for the fact that the 2014 Employment Agreement provides Mr. Kerzner with an entitlement to compensation upon termination that is more generous than his statutory entitlement, I have concluded that the non-competition and non-solicitation clauses are unreasonable and, hence, unenforceable.

[102] To summarize my conclusions with respect to the 2015 Employment Agreement:

a. The termination provisions in the employment agreement are, subject to my conclusion on the effect of the releases, valid; b. The employment agreement is a fixed term contract of employment; and c. The non-competition and non-solicitation clauses in the employment agreement are unreasonable and, therefore, unenforceable.

C. The Releases

[103] As already discussed, there have been four releases given by Mr. Kerzner in favour of AIM’s predecessors in business.

[104] As part of the Bakermet sale, Mr. Kerzner executed a release agreement in which he “irrevocably and unconditionally” released and discharged Bakermet and various related entities and persons from any and all claims which he “has now, or may have in the future … for any fact, act or omission up to and including the date [of the release], including without limitation by reason, or in connection with… [his] position as a shareholder, director, officer, employee or creditor of Bakermet Inc. [and related companies] at any time up to and including the date [of the release]”. The definition of “Claims” included “all actions, causes of action, suits, proceedings, executions, judgements, duties, debts, accounts, contracts and covenants, claims and demands whatsoever for losses, damages, liabilities, indemnity, costs (including legal and professional costs), expenses, interest or injury of every nature and kind whether in law or in equity”.

[105] The release expressly provided that it enured to the successors, heirs, legal representatives and assigns of the released persons.

[106] Reference has already been made to the release provisions in the 2008 and 2011 Employment Agreements. The intended effect of these provisions was that the agreement in which they appeared was to replace all previous agreements except for the restrictive covenants contained in the Non-Competition and Non-Solicitation Agreement.

[107] The “entire agreement” clause in the 2014 Employment Agreement contained release provisions that were substantially similar to the release provisions in the 2008 and 2011 Employment Agreements, the only significant difference appearing to be the absence of any reference to the non-competition and non-solicitation agreement (which was, by then, spent) and the replacement of the term “Buyer” with the term “Parent Corporation”.

[108] AIM argues that, as a result of the 2008 Release Agreement, the effect of these releases is that Mr. Kerzner specifically, irrevocably, and unconditionally released and discharged Bakermet, ArcelorMittal and AIM of any and all claims, actions, damages and liabilities that he had or could have in the future relating to his employment up to the date that he executed the release.

[109] While AIM acknowledges that the effect of the releases contained in the employment agreements does not preclude a determination that Mr. Kerzner’s years of service run from August 2008, for Employment Standards Act purposes, it argues that the 2008 release, signed concurrently with the share purchase agreement, does preclude Mr. Kerzner from arguing that his years of service with Bakermet should be added to his years of service with ArcelorMittal and AIM for the purposes of determining Employment Standards Act entitlements and common law notice.

[110] The plaintiff refers to the well-established principle that a release is to be interpreted narrowly in favour of the party granting the release so that it covers only those matters which were specifically in the contemplation of the parties at the time the release was given. This principle was established by the House of Lords in London & South Western Railway v. Blackmore (1870), L.R. 4 H.L. 610 at 623-624:

The general words in a release are limited always to that thing or those things which were specifically in the contemplation of the parties at the time when the release was given. But a dispute that had not emerged or a question which had not at all arisen, cannot be considered as bound and concluded by the anticipatory words of a general release.

[111] London & South Western Railway was followed by the Divisional Court in Biancaniello v. DMCT LLP, 2015 ONSC 6361 at para. 14: “ … If the parties want to bar unknown claims, they must use clear and unequivocal language to express that intention”. However, that decision was reversed on appeal: 2017 ONCA 386. The Court of Appeal analysed in some detail, the decision of the House of Lords in Bank of Credit & Commerce International SA (In Liquidation) v. Ali (No.1), [2001] 1 All E.R. 961 (H.L.). After an extensive review of the opinions expressed by their lordships in that case. Feldman J.A., on behalf of the Court of Appeal summarised the real issue in Ali as not whether the general words of the release in question should be interpreted to include unknown claims (all of the Law Lords agreed that the release would cover factually unknown claims). Rather, the issue was whether the parties contemplated that the release included claims yet to materialise in fact and law at the time that the release was drafted and signed. At para. 42 of the Court of Appeal’s decision, Feldman J.A. writes, in respect of the Ali decision:

One can distill the following principles from these reasons:

1. One looks first to the language of a release to find its meaning…
2. Parties may use language that releases every claim that arises, including unknown claims. However, courts will require clear language to infer that a party intended to release claims of which it was unaware…
3. General language in a release will be limited to the thing or things that were specifically in the contemplation of the parties when the release was given…
4. When a release is given as part of the settlement of a claim, the parties want to wipe the slate clean between them…
5. One can look at the circumstances surrounding the giving of the release to determine what was specifically in the contemplation of the parties…

[112] The issue in Biancaniello was a release that was signed as part of the settlement of a fee dispute between an accounting firm and its clients in respect of a specific transaction that the accountants had worked on. It subsequently came to light that the accountants’ advice had been negligent. The Divisional Court held that because the parties were not aware that the accountants had given negligent advice, the clients’ claim for negligence did not exist when the release was signed and, consequently, that the release did not bar a negligence claim against the accountants.

[113] The Court of Appeal found that by executing a release covering all claims arising from the services provided by the accountants up to a certain date, the parties intended to fully and finally settle the fee dispute – a dispute that had arisen because the client was unhappy with both the time spent and the quality of the service provided by the accountants. As Feldman J.A. observed, at para. 51:

… The language of the release covers all claims arising from the work the accountants did on the butterfly transaction in 2007. The parties were wiping the slate clean in respect of that work. Had the client wished to exclude claims it might later discover arising from that work, it could have bargained for that result.

[114] The defendant argues, relying on Biancaniello, that the general language of the release signed by Mr. Kerzner was sufficient to release “any and all claims” regarding “any fact, act or omission” relating to his “position as a shareholder, director, officer, employee or creditor of Bakermet Inc.” And, as such, the slate having been wiped clean, Mr. Kerzner cannot reach back to the start of his employment with Bakermet Inc. for the purposes of determining his common law notice or Employment Standards Act entitlements.

[115] AIM also relies on the Court of Appeal’s decision in Cosentino v. Sherwood Dash Inc., 2014 ONCA 843, affirming the unreported decision of Mew J. dated 17 April 2014. In that case, the appellant had been a shareholder, officer and director of the respondent company until 8 March 2013. On that day, he sold his shares to a purchaser for $80,000. The share purchase and sale agreement which the parties entered into required the appellant to, amongst other things, transfer his shares; assign and transfer all shareholders loans to the purchaser; provide a release in a prescribed form (attached to the agreement); resign as an officer and director of the respondent; execute a confidentiality and non-disclosure agreement; and, execute a non-competition agreement. The share purchase and sale agreement also provided that, if requested by the respondent, the appellant should continue as an employee of the respondent for a period of up to one month, with the same duties that he currently had, and at the same salary, with benefits. Thereafter it was provided that the parties “shall” enter into an agreement whereby the appellant agreed to reasonably make himself available as a consultant to the respondent.

[116] The appellant signed the release contemplated in the share purchase and sale agreement. In the release, the appellant purportedly released the respondent:

… from all actions, causes of actions, suits, debts, duties, accounts, bonds, covenants, contracts, claims and demands whatsoever which [the appellant] as a former shareholder, director, officer, creditor and/or employee of the [releasees] now has or hereafter can, shall or may have for or by reasons of or in any way arising out of any cause, matter or thing whatsoever existing up to the present time and, in particular, without in any way limiting the generality of the foregoing, for or by reason of or in any way arising out of any and all claims for monies advanced by way of salary, wages, consulting fees, bonuses, expenses, retirement of pension allowances, director’s fees, participation in profits or earnings or other remuneration whether authorized or provided by – law, resolution, contract, agreement or otherwise up to the date of this Release.

[117] The appellant resigned as an officer and director of the respondent, but claimed that he had not resigned as an employee. He brought an action against the respondent for payment of termination pay and severance pay in accordance with the Employment Standards Act. The appellant’s evidence was that:

It was never my understanding that I would have to resign from my employment, nor did I ever agree to resign from employment as part of the share purchase transaction. I also understood the agreement as allowing the Defendant to require me to stay for up to one month, if I did [sic] decided to resign from my employment, subsequent to the completion of the transaction. I did not choose to resign.

[118] In his oral reasons, the motion judge found that although the release could have been more felicitously worded, the minor deficiencies which existed did not negate the fact that the only employment which the appellant had with the respondent was as its Vice-President Operations and that when he resigned as an officer and director of the respondent and sold his shares, no other relationship remained. The intention and the effect of the transaction was a clean break. In rejecting the appellant’s assertion that it was never his understanding that he would have to resign from his employment and, as a consequence, upholding the scope and effect of the release, the motion judge stated, at page 9 of the transcript of his oral reasons:

The commercial agreement which [the appellant] entered into with the [respondent], when sprinkled with a very small dose of common sense, leads to the inevitable conclusion that the [appellant] resigned not only as an officer and director of the defendant but, also, as an employee…

[119] Turning to the release, the motion judge noted, at page 10, that, at the time of the transaction in question, the appellant had worn “a number of different hats”:

It was necessary to address (and, perhaps, compensate for) not only the cessation of [the appellant’s] employment but, also, his interests as a shareholder, director and, indeed (by way of a shareholder loan), creditor of the [respondent]. The result was … a “package deal”.

[120] Upholding the motion judge, the Court of Appeal said, at para. 4:

The share purchase agreement clearly contemplates continued employment only if requested by the respondent and then only for a period of one month. In any event, the appellant signed a full and final release whereby he released the respondent from any and all claims as a shareholder, director, officer, creditor and/or employee. We agree with the motion judge that on this record, the appellant’s assertion that he did not resign as an employee is untenable.

[121] By analogy with the circumstances in Cosentino, AIM argues that the 2008 share purchase transaction was, in effect, a settlement for substantial consideration. The release was intended to wipe the slate clean up to the date of the agreement. The fact that Mr. Kerzner may have remained employed after the date of the release is immaterial. As in Cosentino, Mr. Kerzner wore two hats.

[122] In my view, it comes down to this: to adapt the language of the Court of Appeal in Biancaniello, would it be fair to conclude that it was in the parties’ contemplation that the release executed by Mr. Kerzner included any claim related to the fact of his pre-release employment with Bakermet if he subsequently brought a claim against Bakermet’s successor corporation for wrongful dismissal?

[123] Looking at the circumstances surrounding the giving of the release, it is immediately apparent that, in addition to a substantial payment to Mr. Kerzner for his shares, his continued employment with ArcelorMittal, on terms that included generous compensation and a release of all claims relating to his previous employment by Bakermet, was intended to wipe the slate clean at that point. There is no issue of any inequality of bargaining position between Mr. Kerzner and ArcelorMittal or Bakermet: all parties were legally represented. And while there is no evidence that any of the parties specifically turned their minds to what might happen in a subsequent wrongful dismissal claim by Mr. Kerzner, the evidentiary record supports the reasonable inference that the consideration provided in return for Mr. Kerzner giving up all rights or claims arising from, or associated with, his pre-2008 employment.

[124] I therefore find that any entitlements which Mr. Kerzner might otherwise have under the Employment Standards Act or at common law, are on the basis of his employment with the defendant and its predecessors from 8 August 2008 onwards.

[125] Having made this finding, and having regard to my conclusion that the termination provision in the 2014 Employment Agreement is valid, it can readily be seen that the entitlement provided to Mr. Kerzner by the termination provision is more generous than his statutory entitlements under the Employment Standards Act.

D. Post-Termination Conduct

[126] Both parties take the position that the other has not complied with its contractual obligations post-termination. AIM has not paid Mr. Kerzner the compensation he claims to be entitled to. Mr. Kerzner is alleged to have breached the restrictive covenants and to have breached fiduciary duties owed by him to AIM.

Non-Payment of Compensation by AIM

[127] Does the defendant’s failure to provide Mr. Kerzner with either the termination payment provided for by the 2014 Employment Agreement, or statutory termination pay and statutory severance pay in accordance with the Employment Standards Act amount to a repudiation, by AIM, of the employment agreement? The plaintiff says it does.

[128] AIM takes the position that it was always willing to comply with its obligations under the 2014 Employment Agreement, so far as termination pay was concerned. It did not make the payment because Mr. Kerzner challenged the validity of the termination provision. It will be recalled that Mr. Kerzner sought immediate termination and severance pay owing under the Employment Standards Act which, he asserted, should reflect the entitlement of a terminated employee with more than 26 years of service, i.e. 34 weeks of combined statutory termination pay and statutory severance pay. Having taken this position, Mr. Kerzner declined to accept AIM’s offer to pay him $92,500 (equal to six months of pay based on his current base salary) less applicable statutory deductions, by way of salary continuance, conditional upon Mr. Kerzner providing AIM with a release as contemplated in the 2014 Employment Agreement.

[129] Regardless of the position of the parties and their understanding of the validity, or otherwise, of the provisions of the 2014 Employment Agreement, at a very minimum, Mr. Kerzner should have received statutory termination pay and statutory severance pay consistent with that of a seven year employee. That was Mr. Kerzner’s minimum entitlement, regardless of whether he was in breach of a non-solicitation or non-competition agreement and regardless of whether the (more generous) compensation available to him under the 2014 Employment Agreement was available.

[130] The ongoing dispute between AIM and Mr. Kerzner regarding the length of Mr. Kerzner’s employment, the validity of the termination agreement, whether his employment was indefinite or for a fixed term and whether he was in breach of restrictive covenants, does not excuse AIM’s non-payment of Mr. Kerzner’s statutory entitlements.

[131] As it turns out, I have concluded that the termination provisions of the 2014 Employment Agreement were valid, that Mr. Kerzner should be regarded as a seven year employee rather than a 35 year employee for the purposes of his entitlements under the Employment Standards Act, and that the restrictive covenants are unenforceable.

[132] It would make no commercial, let alone common sense, if every time a dispute arose about the contractual and statutory obligations of the parties to an employment contract, either party could simply take the position that non-compliance with post-termination responsibilities amounts to a repudiation of the contract.

[133] I can do no better than echo the comments of Dunphy J. in Oudin v. Centre Francophone de Toronto, Inc. (2015), 2015 ONSC 6494, 27 C.C.E.L. (4th) 86 (ONSC) at para. 27:

The test for repudiation of contracts in general and employment agreements in particular is neither new nor particularly controversial. Parties will be held to have repudiated an employment agreement if by their conduct they have demonstrated their "clear intentions to no longer be bound" by the terms of the employment agreement (per Gillese J.A. in Roden v. Toronto Humane Society at para. 50). In my view, the conduct of the defendant cited by the plaintiff is a long, long way from meeting this standard of repudiation of an employment contract.

[134] By reason of my finding with respect to the restrictive covenants, the counterclaim based on the alleged breaches of those covenants is dismissed. And because Mr. Kerzner’s subsequent employment with Palmer Recycling does not amount to a breach of contract, such employment does not disentitle him to termination pay on contractual grounds.

Breach of Fiduciary Duty

[135] AIM argues that the termination of an employee does not automatically relieve that employee of any ongoing fiduciary duties: Evans v. Sports Corp, 2013 ABCA 14 at para. 37.

[136] As a senior executive of AIM, Mr. Kerzner would, of course, have had fiduciary duties to his employer. There is no suggestion that he breached those duties during the course of his employment.

[137] AIM’s statement of defence and counterclaim requests “in the alternative” to a declaration that the restrictive covenants are enforceable, “a declaration that [Mr. Kerzner] breached his fiduciary obligations to AIM by commencing employment with a competitor in November 2015”.

[138] No particulars of Mr. Kerzner’s alleged breach of his fiduciary obligations are pleaded, but a clue can be found in a paragraph addressing damages which refers to confidential and proprietary information having been taken and/or used by Mr. Kerzner.

[139] I accept the basic premise that Mr. Kerzner’s fiduciary responsibilities did not automatically end with his employment. And it is the taking up of employment with Palmer that is said to have been in breach of his fiduciary responsibilities. But that assertion is harder to sustain given the finding that the restrictive covenants are unenforceable.

[140] As already noted, Mr. Kerzner says that he has scrupulously refrained from soliciting any and all customers of AIM. Beyond the bald assertion in the counterclaim that AIM has been damaged by its confidential and proprietary information having been taken or used by Mr. Kerzner, AIM has presented no evidence to the contrary. Although AIM is not the moving party on this motion for summary judgment, Mr. Kerzner’s notice of motion seeks, among other relief, the dismissal of AIM’s counterclaim. It is trite law now that a party opposing a summary judgment motion must put its best foot forward in response to the motion: Miaskowski v. Persaud, 2015 ONCA 758 at para. 27.

[141] The record before me is insufficient to support any finding that Mr. Kerzner breached any continuing fiduciary obligations he may have had to AIM.

Duty of Plaintiff to Account for Post-Termination Earnings

[142] Given my findings on the restrictive covenant and fiduciary duty, I do not regard it as necessary or appropriate for Mr. Kerzner to have to account to AIM for the income that he received from Palmer during what would have been the salary continuation period. There is no duty to mitigate where an employment agreement stipulates a fixed term of notice or payment in lieu: Bowes v. Goss Power Products Ltd. (2012), 2012 ONCA 425, 351 D.L.R. (4th) 219 (Ont. C.A.) at para. 41. The sum payable is a liquidated amount.

[143] AIM, of course, had the choice of either paying Mr. Kerzner a lump sum or paying him by way of salary continuation. No doubt AIM would say that it contemplated that Mr. Kerzner would not engage in competing employment because of the restrictive covenants: the 2014 Employment Agreement provided that if Mr. Kerzner breached any of the restrictive covenants, AIM would have the right to suspend or terminate any remaining payments or benefits. However, having found that the restrictive covenants are unenforceable, and in the absence of any other provision in the 2014 Employment Agreement requiring Mr. Kerzner to give credit for any other income earned by him during a salary continuation period, I find no basis in law for him to do so.

[144] For the foregoing reasons, AIM’s counterclaim should be dismissed.

E. Damages

[145] Mr. Kerzner should be paid $92,500 in accordance with Article 15.2 of the 2014 Employment Agreement. Mr. Kerzner was also entitled to receive employee benefits for six months following his termination and, to the extent that he was not, he should be compensated accordingly. If the parties cannot agree on an appropriate amount to reflect this, I will provide directions for further submissions to be made on this issue. Pre-judgment interest is payable in accordance with the Courts of Justice Act.

COSTS

[146] I would encourage the parties to agree on the issue of costs. Should they not be able to do so, I direct as follows:

a. The plaintiff should serve a bill of costs on the defendant, accompanied by written submissions, within 21 days of the release of these reasons; b. The defendant should serve its response on the plaintiff within 14 days thereafter; c. The plaintiff should serve his reply, if any, within 7 days thereafter; d. In all cases, the written submissions should be limited to 4 pages, plus bills of costs; and e. The defendant is invited to submit the bill of costs it would have presented to the court had it been successful in the action; f. Copies of any offers to settle said to be relevant to the disposition of costs should be provided to the court

I would ask counsel for the plaintiff to collect copies of all of the parties’ costs materials and arrange to have the package delivered to me care of the Trial Coordinator (Civil and Criminal) at Kingston as soon as the final exchange of materials has been completed. For the avoidance of doubt, no materials should be filed individually; rather, counsel for the plaintiff should assemble a single package for delivery as described above.

[147] I am grateful to counsel for the quality and comprehensiveness of their presentations and for their assistance to the court generally.

Graeme Mew J.

Released: 17 July 2017

OTTAWA COURT FILE NO.: 15-66851 DATE: 20170717 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: STEVEN KERZNER Plaintiff – and – AMERICAN IRON & METAL COMPANY INC. Defendant REASONS FOR DECISION (Motion for Summary Judgment) Mew J. Released: 17 July 2017