ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Scott Bravener
Plaintiff
– and –
Lower Lakes Towing Ltd.
Defendant
William R. Gale and Michael S. Stitz, for the Plaintiff
Thomas McRae, for the Defendant
HEARD: August 17, 2017
REASONS FOR DECISION
CAROLE J. BROWN, J.
Overview
1The plaintiff, Scott Bravener (“Mr. Bravener”), brings this summary judgment motion for an Order granting damages in lieu of his 2016 fiscal bonus from his employer, Lower Lakes Towing Ltd. (“LLT”), pursuant to the 2014 Employment Agreement dated July 3, 2014. He also seeks damages for bad faith as well as punitive damages.
2It is the position of the plaintiff that pursuant to his Employment Contract with LLT and the 2016 incentive/bonus plan, he is owed bonus compensation for 2016 in the amount of $119,381.23. It is the plaintiff’s position that, based on a plain reading of the 2016 plan document and the Contractual Agreement, the bonus plan was an objective, non-discretionary plan based on company performance, not personal performance. It is further his position that the Compensation Committee of LLT had no contractual right to deny compensation if plan targets for a given year were achieved, which they were in 2016.
3The plaintiff submits that he worked during the duration of his Contractual Agreement, and beyond the fixed term contract’s end, March 31, 2016, during a contemplated renewal negotiation period. The parties failed to reach a renewal Agreement, a period during which the 2014 Agreement remained operative. The plaintiff submits that the bonus is due and owing pursuant to the 2014 Agreement.
4It is the position of the defendant that the plaintiff is not entitled to judgment for the balance of his bonus for 2016, that LLT has no obligation to pay him by virtue of the 2014 Agreement and that the payment of the balance of the bonus to him and two other Named Executive Officers (“NEOs”) is subject to the discretion of the Board.
5It is the position of the defendant that there are genuine issues in dispute that require viva voce evidence and assessments of credibility, and further that the allegations of bad faith cannot be decided in the absence of viva voce testimony and a determination on a full evidentiary record.
6This action was commenced December 23, 2016 and, to date, there have been no examinations for discovery.
Facts Not In Dispute
7LLT is a publicly traded company and a subsidiary of Rand Logistics Inc. (“Rand”). Its headquarters are located in Port Dover, Ontario. It is one of the largest marine transportation service providers operating on the Great Lakes, and provides bulk freight shipping services throughout the Great Lakes Region.
8The plaintiff was a founding partner of LLT in 1994. In 2006, Rand acquired indirectly all shares of LLT. Edward Levy (“Mr. Levy”) is the President and CEO of Rand. Mr. Bravener continued as President and CEO of LLT.
9On October 8, 2009, the plaintiff and LLT entered into an Employment Agreement. This contract was superseded on July 3, 2014, by a Fixed Term Agreement which was to terminate March 31, 2016. Said contract contemplated a renewal/extension mechanism as at March 31, 2016. Pursuant to the 2014 Employment Contract, the plaintiff was to be paid a base salary of $294,752, plus annual increases, contributions to retirement plans and pensions totaling not less than $24,270, health/accident benefits and five weeks paid vacation.
10From the time LLT was sold to Rand, the plaintiff remained as President and CEO of LLT through March 31, 2016, the end of his Fixed Term Agreement with the defendant.
Facts in Dispute
11It is the position of the defendant that, during the plaintiff’s tenure as President and CEO, there was no formalized bonus plan. The bonus plan would fluctuate from year to year. Until 2010, Mr. Bravener was the individual who made all of the allocation decisions each year. The plaintiff maintains that he was paid a bonus every year, except 2012, when the senior management team and the plaintiff elected to contribute their portion to the employees.
12The defendant maintains that, during the 2016 fiscal year (April 1, 2015 to March 31, 2016), LLT introduced a formal bonus plan to be paid quarterly. The defendant maintains that the bonus plan was an incentive plan and was discretionary. It was based in part on full-year results, as well as personal performance and vessel performance; thus it was part formulaic and part based on achieving personal goals. The discretion to pay the bonus always remained in the Board of Directors based on LLT’s final performance. The plaintiff maintains that it was a mathematical performance-based bonus, with no discretion on the part of the Compensation Committee regarding whether the bonus would or would not be paid.
13The defendant produced a document that Rand had filed with NASDAQ on July 28, 2016, which stated, under “Cash Bonuses” as follows: “Messrs. Edward Levy, Hiltwein and Bravener were eligible to receive a portion of an annual cash bonus pool that is payable at the discretion of the Compensation Committee based on certain financial targets.… During the fiscal year ended March 31, 2016, Messrs. Hiltwein and Bravener were paid bonuses in the amount of $16,010 and $15,464, respectively. The Compensation Committee has not yet determined if any additional bonuses will be paid to Messrs. Hiltwein, Bravener and Edward Levy for the fiscal year ended March 31, 2016.” The plaintiff notes that this was filed after the plaintiff’s employment had terminated and that he had only been on the Rand Board through February 2015. Further, while it names Mr. Levy as a potential recipient of a bonus, Mr. Levy was never part of the short term investment program, and was not entitled to receive a bonus from the pool. The defendant confirms this. The plaintiff further cites his Employment Contract at paragraph 10 which states
“Changes to Agreement”
Any modifications or amendments to this agreement must be in writing and signed by all parties or else they shall have no force or effect.
14The defendant’s fiscal year was April 1 to March 31. Mr. Bravener received a partial bonus payment of $19,215 for the first quarter of fiscal 2016. It is the position of the defendant that, based on the Compensation Committee discretionary determination, the NEOs, including Messrs. Hiltwein and Bravener agreed that rather than receiving a quarterly bonus for the second quarter, they would be eligible for the annual bonus. The plaintiff states that he agreed to the bonus being deferred, but never agreed to not receiving it at all. After the third quarter, the Board determined that based on the company performance, no bonus would be paid.
15It is the position of the defendant that there is much contradictory evidence between the plaintiff and defendant, that the supporting affidavits disagree and are contradictory on material points and that such contradictory evidence will depend on assessments of credibility, such that viva voce evidence will be required. As regards the issue of bad faith, the defendant submits that summary judgment is not appropriate as it must be determined on the basis of credibility and a full evidentiary record.
16It is the position of the defendant that bonus payments were not made from 2011 to 2015. The defendant maintains that the deceased disciplinary actions relate to the manner in which the plaintiff announced his departure on April 14, 2016, namely that he first announced his departure to his LLT employees at 10:37 AM, then to the customers and vendors of LLT, and finally to Mr. Levy at 10:39 PM on the same evening, based on which, the Corporation made the official announcements. On April 15, 2016, LLT sent Mr. Bravener a letter reminding him of his non-disclosure requirements pursuant to the Employment Agreement. In that regard, the letter requested that Mr. Bravener immediately return all documents in his possession and certify in writing that all such information had been permanently deleted from any privately owned electronic storage, computers and media. Mr. Bravener failed to provide LLT with such certification and, on this motion, admitted that he had retained certain emails concerning his employment and remaining remuneration although he has not, to date produced them. In correspondence dated May 6, 2016, the Corporation took the position that such unauthorized communication with corporate customers, vendors and employees and disclosure of the change in his employment status, which constituted material confidential information, may have been in contravention of provisions of the Employment Contract aas well as violating restrictions on use and disclosure of confidential information. The Company reserved its rights with respect to alleged breaches and disclosure of material non-public information prior to the Company’s public disclosure thereof.
17It is the position of the defendant that the contract was amended as regards the bonus plan pursuant to the PowerPoint presentation made at the March 3-5, 2015 Winter meeting and that the plaintiff was involved in the design of the bonus plan. The plan included provisions for termination. If termination was without cause, the Company retained the right to determine how any unpaid cash bonus or unvested common stock or options were treated; if voluntary, the employee forfeited the unpaid cash bonus.
18The defendant relies on the Court of Appeal decision in Soboczynsk v Beauchamp, [2015] O.J. No. 2055 for the proposition that an “entire agreement clause” such as that in the 2014 contract did not prevent the parties from amending the terms of the contract. As set forth at paragraphs 51 and 52 of that case:
51First, an entire agreement clause does not prevent the parties from amending the terms of their agreement. In other words, most contract events can affect both the enforceability of the obligations in the agreement and add new obligations to those imposed by its terms.
52Second, and relatedly, entire agreement clauses do not apply prospectively unless the wording expressly so provides. In the words of Weiler J.A., at paras. 49-50:
[An] exception to the parole evidence rule is the existence of any subsequent oral agreement to rescind or modify a written contract provided that the agreement is not invalid under the Statute of Frauds: Ellis v Abell, [1884] 10 O.A.R. 226 (Ont. C.A. at para 85.
Clauses such as the entire agreement clause in issue here are normally used to try to exclude representations made prior to the signing of the written agreement. See P.M. Perell, “A Riddle Inside an Enigma, The Entire Agreement Clause” (1998) The Advocates’ Q. 287. Nothing in [the entire agreement clause] suggests that an oral agreement to surrender the franchise several years later would be of no effect. It cannot be said the entire agreement clause was clearly intended to cover any and all future contractual relations between Shelanu and Print Three.
19The plaintiff testified in the cross-examination on his supporting affidavit that the PowerPoint presentation dated February 17, 2015 was the Short and Long Term Incentive Compensation Program for Fiscal 2016 presented to the Captains and Chiefs at the Winter meeting. The plan was approved by the Compensation Committee for Fiscal year 2016. He further testified that he was involved in establishing the provisions regarding bonus payments where an employee voluntarily leaves or is terminated without cause, as set forth at para. 17, above.
20The defendant maintains that the plaintiff resigned from his position, while the plaintiff maintains that he was terminated.
21The defendant submits that the Board retained discretion as regards the bonus, that this was also made clear in the proxy circular filed with NASDAQ and that, given the plaintiff’s position, this is a triable issue, as is the bad faith issue. The defendant submits that the case cries out for viva voce evidence.
22Once the plaintiff’s fixed term contract expired on March 31, 2016, the parties attempted to negotiate an extension of the contract pursuant to the terms of the agreement over a two week period thereafter. The plaintiff thereafter notified the defendant that negotiations were at an end, thus triggering a termination without cause.
23The plaintiff was paid his severance payments, but no bonus, which he maintains amounts to $119,381.23.
24It is the position of the plaintiff that during the Winter meetings of March 3-5, 2015, the PowerPoint presentation of the Incentive Compensation Program: Executive Summary was given, and that he had been part of the design of the program.
25The plaintiff submits that the compensation program was all based on numbers with no element of discretion, that there is no reference to discretion in the PowerPoint and that the evidence shows that the bonus is a contractual bonus, based on Company performance against target.
26I note that the eligibility requirements for the Short Term Incentive Program (STIP) stipulated that the employee must be an active employee at the time of the award, with satisfactory personal performance and no disciplinary actions.
27The PowerPoint further stated that if a participant is terminated without cause, the Company retains the right to determine how an unpaid cash bonus is to be treated. The plaintiff maintains that this provision indicates that the Company only retains the right to determine “how” and not “whether” the bonus will be paid. It is the plaintiff’s position that the actual payment of the bonus is not discretionary, although the method of payment may be discretionary.
28I note that, in cross-examination on his affidavit, when asked “I put it to you that at all times the Compensation Committee retained discretion with respect to the awards and bonuses for the Named Executives within the Rand family,” he stated: “The Compensation Committee would weigh in on the recommendations of the senior management, which would have been Ed Levy”. It is the position of the defendant that “weigh in” must indicate discretion. In the alternative, the defendant submits that this Court should make an adverse inference regarding the plaintiff’s failure to answer the question.
29The defendant submits that the bonus was discretionary and is not in any event payable as the defendant alleged performance/disciplinary issues and a breach of the contract terms by notifying clients personally regarding his departure. It is the position of the plaintiff that these issues were not alleged in the statement of defence, were first argued at the summary judgment motion and form part of the basis for the plaintiff’s allegations of bad faith.
30The evidence indicating that following the May 25, 2015 disciplinary meeting notes in evidence, the plaintiff received his first quarter bonus and received a performance evaluation of three of four. Further, while the notes raised regard communication issues, there were never any warnings, any performance action plan nor any suspensions.
31The plaintiff suggests that he was being “eased out” and that his responsibilities were being altered and lessened, such that this may be considered a constructive dismissal case. There is insufficient evidence before the Court to make such a determination.
32The plaintiff maintains that the 2014 contract is the relevant one as this is a fixed term contract and the 2016 amendments to the bonus plan do not apply to a fixed term contract. There is no sufficient evidence before this Court to determine this. The plaintiff further maintains the 2014 contract provisions contained at section 9.1(a) are applicable and that he did not resign.
Summary Judgment
The Law
33Pursuant to Rule 20, summary judgment shall be granted where there is no genuine issue requiring a trial.
34In Hyrniak v Mauldin, 2014 SCC 7, [2014] S.C.J. No. 7, the Supreme Court of Canada determined that there would be no genuine issue requiring a trial where a judge is able to reach a “fair and just determination on the merits” of the case. This will be the case when the process: (1) permits the judge to make the necessary findings of fact on the basis of the evidence adduced, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
35Pursuant to Hyrniak, the motion judge should first determine if there is a genuine issue requiring a trial based only on the evidence before the court, without using the new fact-finding powers set forth in Rule 20.04. There will be no genuine issue requiring a trial if the summary judgment process provides the court with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportional procedure. If there appears to be a genuine issue requiring a trial, the motion judge should determine if a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). The judge may, at his or her discretion, use those powers, provided that doing so does not offend the interest of justice, i.e., that it will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.
36The moving party bears the onus of establishing that there is no triable issue. However, a responding party must “lead trump or risk losing”: 1061590 Ontario Limited v Ontario Jockey Club, 1995 CanLII 1686 (ON CA), [1995] O.J. No. 132, 21 O.R. (3d) 547 (Ont. C.A.). The responding party may not rest on the allegations or denials in the pleadings, but must present by way of affidavit or other evidence, specific facts and coherent, organized evidence demonstrating a genuine issue. The motions judge is entitled to assume that the record contains all evidence that the parties will present if there is a trial. It is not sufficient for the responding party to say that more and better evidence will be available at trial. The court must take a “hard look” at the evidence to determine whether there is a genuine issue requiring a trial.
Analysis
37In the circumstances of this case, based on all of the evidence before me, I find that there are genuine issues requiring a trial. I am not satisfied that I am able to make a fair and just determination of the issues on the merits and to make the necessary findings of fact on the basis of the record before the Court, nor using the new powers available to the Court pursuant to Rules 20.04(2.1) and (2.2). I am of the view that in the circumstances of this case and based on the evidence before me, a fair and just determination of the issues before the Court can only be made on a full evidentiary record, with viva voce evidence and, potentially, assessments of credibility as necessary, in order to reach a fair and just determination of the issues on the merits. I do not find that summary judgment, in the circumstances of this case, is a proportionate, more expeditious and less expensive means to achieve a just result.
38There are material issues in dispute in this matter as between the plaintiff and Edward Levy/Rand. While the plaintiff maintains that the bonus plan is non-discretionary and that the Compensation Committee of the parent company had no contractual right to deny compensation if the planned targets for the year were achieved, the defendant maintains that the bonus plan was discretionary, which was known to the plaintiff.
39Further, the plaintiff maintains that there was no discussion regarding performance deficiency, insubordination or Board discretion to deny bonuses as stated by Mr. Levy in his affidavit. However, the defendant refutes this and maintains that there were discussions regarding performance deficiencies and insubordination and further that there were discussions about the Board discretion to deny bonuses. Given the dispute, this will require viva voce evidence from the parties and potentially others, and potentially assessments of credibility, as required.
40The plaintiff maintained that the NEOs were advised by Mr. Levy that all would be foregoing their bonus for the second quarter due to a potential financial covenant issue, while the defendant denies this and states that the NEOs agreed to forgo their bonuses for motivational/morale reasons and not for a covenant issue.
41Further, the plaintiff states that Mr. Levy agreed to pay the 2016 bonus at the time that the plaintiff was being terminated while the defendant disagrees with this and states that there was no agreement between himself and the plaintiff as regards payment of a bonus. Again, this will require viva voce evidence and potentially assessments of credibility.
42These issues are all central to this wrongful dismissal action. While the parties had provided certain seminal documents including the 2014 Agreement, the 2016 PowerPoint presentation, disciplinary notes and communications between the plaintiff and Mr. Levy, I am not satisfied that I am able to determine the issues involved in this matter on the basis of the record currently before the Court.
43I am of the view that viva voce evidence will be required from the plaintiff, Mr. Levy and others in order to establish the material facts in this case. I am of the view that the issues can only be determined on a full evidentiary record, which is not before this Court. I am satisfied that there are genuine issues requiring a trial.
44I dismiss the motion and order this matter to proceed expeditiously to trial.
Costs
45I would urge the parties to agree upon costs, failing which I would invite the parties to provide any costs submissions in writing, to be limited to three pages, including the costs outline. The submissions may be forwarded to my attention, through Judges’ Administration at 361 University Avenue, within thirty days of the release of this Endorsement.
Carole J. Brown, J.
Released: November 28, 2017
CITATION: Bravener v. Lower Lakes Towing Ltd., 2017 ONSC 7060
COURT FILE NO.: CV-16-566708
DATE: 20171128
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Scott Bravener
Plaintiff
– and –
Lower Lakes Towing Ltd.
Defendant
REASONS FOR DECISION
Carole J. Brown, J.
Released: November 28, 2017