Court File and Parties
CITATION: Cunningham v. Design Filtration Microzone Inc., 2017 ONSC 5486
COURT FILE NO.: 17-71385
DATE: 2017/09/07
COURT OF ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Craig Cunningham, Plaintiff
AND:
Design Filtration Microzone Inc., Defendant
BEFORE: Mr. Justice Calum MacLeod
COUNSEL: D. Bruce Sevigny, for the Plaintiff Nigel McCready, for the Defendant
HEARD: September 7, 2017
ENDORSEMENT
[1] This is a motion for summary judgment brought under Rule 20.01 (2)(b). This is a wrongful dismissal action. The parties argue that summary judgment is an appropriate forum to adjudicate the question of damages. Entitlement to some measure of compensation is not in dispute. The parties should be commended for agreeing to summary disposition of these issues.[^1]
[2] It is not disputed that the plaintiff was an executive level employee and a professional engineer who was dismissed without cause.
[3] The parties disagree on the length of the notice period and entitlement to a performance bonus.
[4] The plaintiff was the vice-president of the defendant and was previously the president of one of the predecessor corporations amalgamated to/ form the defendant. He had at the time of the dismissal over eight years of continuous service with this employer or its predecessors. At the time of the dismissal, he was 55 years old and was the second most senior executive officer as well as the most senior engineer, a profession he had pursued for more than 30 years.
[5] His compensation package included salary, benefits and pension as well as a potential bonus. The base salary was $141,800.00 and the benefits are valued at $4,000.00 per year. The employer pension contribution was 4 % of salary. Before bonus, the parties agreed the value of this package is $151,564.24. Bonus was payable if awarded from a bonus pool based on 15 % of company profits.
[6] Entitlement to bonus is in dispute. It is not disputed that the plaintiff had received a bonus in 2015 in the amount of $14,000.00. The president of the company conceded on discovery that he had expected a bonus to be payable in 2016 and had originally believed the corporation would have had a profit of $450,000.00. This was subsequently reduced by write-downs (including apparently a reserve for this lawsuit) but in any event the defendant takes the position that the bonus was discretionary and is not part of regular compensation. The defendant states that no bonuses were paid in most of the past 8 years.
[7] On the question of notice, the plaintiff argues that the application of the Bardal factors[^2] justify notice of 14-16 months. The defendant argues for 8-10 months. Neither of these positions are outrageous. Cases have been submitted by both parties in support of these ranges. Of course none of these cases are identical.
[8] In this case I take into account the age and level of responsibility of the plaintiff, the specialized nature of the industry in which he was working; and the length of his employment on one hand. On the other, he has a portable professional designation and several years of potential employment before retirement age. I am of the view that these factors justify notice in the upper end of the range but I would not put that as high as 14 months. In my view, 12 months notice for an 8 year employee would be justified on the facts of this case.
[9] With respect to the bonus, I accept that the bonus would not have been automatic and was discretionary. But the evidence shows that he would have earned a bonus in the year when he was terminated. Even allowing for some manipulation of the profit numbers post-termination, the profit of 2016 appears to have been slightly lower than in 2015.
[10] I find that there was entitlement to a bonus for 2016 in the amount of $12,000.000 and the plaintiff was artificially deprived of that bonus by his sudden and unexpected termination. It was also unexpected to the president of the corporation who conceded under cross examination that the plaintiff would have met the criteria developed by head office and that he himself would have expected a bonus to be paid. This is not on all fours with Paquette[^3] but the principle set out in that decision is similar. I am satisfied that a bonus would have been paid if the decision to terminate had not been taken.
[11] There is no automatic entitlement to a bonus during the notice period. The evidence is that bonus was not a regular part of the plaintiff’s compensation package. He had not received a bonus is 2013 or 2012 for an example. Accordingly, I would not consider entitlement to bonus in 2017.
[12] In conclusion, summary judgment is appropriate.
[13] The plaintiff is entitled to pay in lieu of notice of 12 months salary, benefits and pension contributions.
[14] He is also entitled to payment of a $12,000.00 bonus for the year of termination.
[15] The defendant has also conceded the plaintiff is owed vacation pay of $1,200.00.
[16] From these amounts it is necessary to deduct amounts actually paid. I expect counsel can agree upon the math but I may be spoken to in the event of a disagreement.
[17] I recognize that pay in lieu of notice also requires withholding of income tax and may be subject to other statutory requirements. I am confident counsel can agree on these calculations as well.
[18] We are currently 9 months past termination and still within the notice period. I am satisfied that the plaintiff has been diligent in efforts to mitigate but of course his obligation is ongoing.
[19] In the event the plaintiff obtains employment within the next 3 months, he will be required to account for that income to the defendant.
Mr. Justice Calum MacLeod
Date: September 7, 2017
CITATION: Cunningham v. Design Filtration Microzone Inc., 2017 ONSC 5486
COURT FILE NO.: 17-71385
DATE: 2017/09/07
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Craig Cunningham, Plaintiff
AND
Design Filtration Microzone Inc., Defendant
BEFORE: Mr. Justice Calum MacLeod
COUNSEL: D. Bruce Sevigny, for the Plaintiff
Nigel McCready, for the Defendant
ENDORSEMENT
Mr. Justice Calum MacLeod
Released: September 7, 2017
[^1]: See Hryniak v. Mauldin, 2014 SCC 7 @ paras 1-3, 24-28 and 49. [^2]: Bardal v. The Globe and Mail Ltd., (1960) 24 D. L.R. (2d) 141 (Ont. HCJ.) as adopted in Machtinger v. HOJ Industries Ltd., 1992 CanLII 102 (SCC), [1992], 1 SCR 986 (SCC) [^3]: Paquette v. TeraGo Networks Inc., 2016 ONCA 618