Court File and Parties

COURT FILE NO.: CV-17-574105

DATE: 20180525

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Mary Lee, Plaintiff/Moving Party

AND:

Choice Bank Inc., Defendant/Responding Party

BEFORE: Justice Nakatsuru

COUNSEL: Christopher Cosgriffe, Heidi LeBlanc, for the Plaintiff

Robert L. Colson, J. Donen, for the Defendant

HEARD: May 7, 2018

ENDORSEMENT

[1] Ms. Lee moves for summary judgment against the defendant, Choice Bank. She claims that the Bank wrongfully dismissed her and breached her employment contract.

[2] Ms. Lee co-founded Choice Bank (the “Bank”) in October 2006 with her ex-spouse, Robert Cummings, and others. The Bank is incorporated in Belize and is in the business of providing international banking services to non-residents of Belize. The Bank was purchased by a Luxembourg company, Auswiel SARL, in 2013. On December 23, 2013, Ms. Lee and Mr. Cummings entered into an employment agreement whereby they became joint employees and provided duties commensurate with the office of the President of the Company. The employment agreement was initially for a three-year period. The agreement stated that employment would automatically be renewed for further employment periods of one year.

[3] On December 1, 2016, a representative of Auswiel SARL called Ms. Lee to inform her that Choice Bank would no longer be requiring her services. The Bank terminated Ms. Lee’s employment without cause, effective December 15, 2016. The termination was to take place eight days prior to the expiry of the initial three-year employment period.

[4] Prior to this call, Ms. Lee was given no indication that the Bank planned to terminate her. She was not advised that her employment would not be renewed for an additional year as she claims was required under her employment contract. Since this was not done before November 23, 2016, 30 days prior to the end of her initial three-year employment period, Ms. Lee submits that her employment was automatically renewed for an additional year. Thus, she claims that the period for which damages are owing is one year and eight days.

[5] The Bank argues for a different interpretation of the contract. Essentially, they submit that the only relevant period for which any damages are owed to Ms. Lee is the eight days between her termination letter and the end of the initial three-year employment period. Regardless, the Bank submits that the correctness of this interpretation and other issues raised are matters that should be decided at trial and not on a summary judgment motion.

[6] This case revolves around the issue of the interpretation of a contract. The contract is before me. Ms. Lee provided an affidavit and was cross-examined on it. The Bank tendered no affidavit or responding materials. I agree that the onus remains on the moving party and there is no legal or factual requirement for the Bank to provide evidence. Summary judgment has been dismissed in other cases even when a responding party offered no evidence against the motion. This all depends upon the factual and legal issues raised in a particular case. That said, as it has oft been said, a party risks losing a motion if it does not lead trump.

[7] I find that there is no genuine issue requiring a trial. I am confident in my conclusions. I disagree with the Bank that there are insufficient facts for this motion to succeed.

[8] The test for a summary judgment is now well-established and well-known. I need not detail it in any great length. However, when it comes to whether there is a genuine issue requiring a trial, it is worth quoting para. 49 of Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (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.

[9] In my view, a number of essential facts can readily be determined on this motion. There is no real dispute over them. The employment agreement was binding. Ms. Lee was terminated without cause.

[10] The key issue is whether her employment contract was renewed before she was terminated. The resolution of this issue depends upon the interpretation of her employment contract. The contract must be interpreted looking at it as a whole.

[11] The key sections are the following. The period of employment and the automatic renewal provisions are found in section 2:

2. Employment Period. This Agreement shall have an initial term commencing as of the date first written above (the “Effective Date”) and ending on third anniversary of the Effective Date (the “Initial Employment Period”), unless sooner terminated in accordance with the provisions of Section 7, 8 or 10 hereof. This Agreement shall automatically renew and continue to remain in effect after the Initial Employment Period for successive one year periods (each, a “Renewal Employment Period”), until terminated as provided herein, unless either party provides the other party with written notice of non-renewal not later than 30 days prior to the expiration of the Initial Period or the anniversary of such date in any subsequent Renewal Employment Period. The Initial Employment Period and each Renewal Employment Period of this Agreement is referred to herein as the “Employment Period”.

[12] Section 10 deals with severance payments and reads as follows:

10. Severance. In the event that the Employees’ employment is terminated by the Company other than for death or disability or cause or is terminated by the Employees for Good Reason, in addition to payment of unpaid Expenses and Base Salary and the Performance Bonus accrued through the termination date, the Company shall continue to pay the Employees the Base Salary for a period of 36 months following the date of termination, and shall also pay the Employees a lump sum amount equal to the Performance Bonus paid (or payable) in connection with the most recently completed year, multiplied by the number of years, in whole or in part, that remain in the Employment Period, provided, however, that the length of time during which the Company is obligated to make the payments of Base Salary described in this Section 9 [sic] shall in no event exceed the length of time remaining in the Employment Period (whether the Initial Employment Period or a Renewal Period, as applicable) as of the date of termination of the Employee’s employment by the Company.

[13] The parties agree that the notice of non-renewal was not given by either party.

[14] I find that there is no ambiguity to this contract. It is not necessary to refer to extrinsic evidence to interpret the material provisions in the context of the contract as a whole. I find that the intentions of the parties were clear from the text of the contract.

[15] The key issue is when the Employment Period renews. The question is not when the renewed Employment Period begins – that is obvious. The Employment Period runs after the expiry of the Initial Employment Period – it cannot logically be otherwise. However, in terms of the sections 2 and 10, Ms. Lee’s employment agreement was renewed when neither party gave notice not to renew. Thus the Employment Period was automatically renewed, after November 23, 2010, as expressly stated in the contract. Put another way, her rights to another year of employment were renewed and vested on that date.

[16] In section 2, properly interpreted, the agreement automatically renews “unless” the party provides written notice of non-renewal. Contrary to the Bank’s submission, the statement that the agreement automatically renews and continues to remain in effect “after” the Initial Employment Period, does not mean that the agreement only renews after the end of that period. I agree with Ms. Lee that the word “after” modifies the Initial Employment Period in the sense that once automatically renewed, the agreement remains in effect after the end of that period.

[17] When the record is looked at as a whole, it is clear and obvious to me that Ms. Lee should succeed. It was clearly anticipated by the parties that the severance package could have been substantial if Ms. Lee was terminated early on in her Initial Employment Period. From this, one can also reasonably infer that the parties intended that the severance could equally be relatively generous if her contract automatically renewed. It makes no sense to me to have an automatic renewal provision with a 30-day period of notice if one could simply terminate the employment contract without notice and with little consequence at any time, up and until the end of the Initial Employment Period. I agree with Ms. Lee that the interpretation offered up by the Bank would make the notice provision effectively meaningless.

[18] While the wording of the contract was somewhat different and the case was litigated under the Quebec Civil Code, the Supreme Court of Canada gave its imprimatur to the validity of such automatic renewal clauses in Uniprix Inc. v. Gestion Gosselin et Berube, 2017 SCC 43, [2017] 2 S.C.R. 59. In this case, this automatic renewal is what the parties agreed to. This is what I find leads to Ms. Lee’s success in this motion.

[19] I do wish to address one authority relied upon by the Bank. It is Hi-Tech Group v. Sears Canada Inc. (2001), 2001 CanLII 24049 (ON CA), 52 O.R. (3d) 97 (C.A.). In that case, the Court of Appeal overturned partial summary judgment because it found that the interpretation of an automatic renewal clause required a trial. I find that case can be distinguished based upon the wording of the clause. There were true competing interpretations of the clause in that case. The clause provided for automatic renewal, but stated the agreement was subject to 120 days prior written notice. Given this phrasing, a trial was required in order to determine whether it meant automatic renewal unless appropriate notice was given or whether it just meant that the agreement could be terminated at any time with 120 days’ notice. This type of ambiguity has no parallel to the case at bar. Here section 2 specifically states a written notice of “non-renewal” must be given “prior to the expiration of the Initial Period” or successive renewals.

[20] While it is not necessary to do so, if there was any ambiguity in this contract, and hence a genuine issue requiring a trial, I could nevertheless maintain my conclusion after assessing the credibility of and making appropriate inferences from the evidence of Ms. Lee. I find it was her intention to sign this contract to this effect. I do not find the arguments made by the responding party that in cross-examination she meant otherwise, persuasive. When I look at her affidavit and cross as a whole, regardless of the specific words she uses, I find that when she signed this employment agreement, she intended to contract in this way. It makes sense to me. There is no evidence from the Bank as to what their intentions were.

[21] I find that I can make the necessary findings of fact and apply the law to them. This motion is a proportionate, more expeditious and less expensive means to achieve a just result. The responding party made submissions with respect to the latter issue but I am not persuaded. A decision on this motion is far more expeditious and less expensive than a trial. It is a proportionate means to determine this action. I am confident the result is fair and just.

[22] The other arguments raised by the Bank are also unconvincing. For instance, the fact that Ms. Lee and Mr. Cummings were jointly hired to fill one position is of no moment on this summary judgment motion. I do not need to deal with them in any greater fashion.

[23] The just and fair result is that Ms. Lee is entitled to what section 10 of the agreement explicitly states she is entitled to her upon her termination.

[24] That said, I am not totally in agreement with the Ms. Lee’s position. I agree that Ms. Lee is entitled to what is set forth in section 10. However, she is not entitled to the stipend to purchase health insurance or her office expenses. Section 10 only refers to Base Salary and the Performance Bonus. Indeed, as pointed out by the Bank, the letter attached to the Employment Agreement makes it quite clear that the agreement to pay for the offence expenses ends with the termination of the Employment Agreement and is separate from the Employment Agreement. Thus, I find there is no genuine issue for trial on this. The fair and just result is that she is only entitled to the Base Salary and the Performance Bonus.

[25] With respect to the latter, looking at the terms of the agreement and the evidence on this motion, I find that the relevant year for the calculation of the bonus is for the year 2015, in the amount of USD $293,108, and not for the year 2016, in the amount of USD $542,791.43. Firstly, section 10 is unambiguous in this regard. It states it is a lump sum amount equal to “Performance Bonus paid (or payable) in connection with the most recently completed year” multiplied by the number of years, in whole and in part, that remain in the Employment Period (1 year 8 days). The Bonus Compensation Plan is set out in Schedule A of the Employment Agreement. That states that Ms. Lee was to be paid after completion of audited financial statements when final pool calculations are made. The other employees who received bonuses were to be paid by December 31 of each fiscal year. When these provisions are read properly, given that Ms. Lee was terminated effective December 15, 2016, the relevant most recent “completed year” would not on any reasonable interpretation, whether it be a calendar or fiscal year, be 2016. The most recent completed year would be 2015. Such an interpretation is consistent with the obvious intentions that the payout be based on a completed year of performance. It would work an injustice to the employee if it was based upon a partial year, such as a few months. While this leads to a lesser amount for Ms. Lee given that the partial year, 2016, was obviously shaping up to be a comparatively better year, this, in my view, is the proper construction of this contract provision.

[26] I add parenthetically, contrary to the Bank’s submission, it is of no moment that the calculation of the bonus in general for Ms. Lee depends upon the payouts given to others and the remaining pool of money. While this may have been a factor if it came to the assessment of common law damages, the terms of section 10 are clear. This is no impediment to granting summary judgment.

[27] Thus, I order (a) a declaration that Ms. Lee’s employment with Choice Bank was terminated without cause; (b) damages for breach of the Employment Agreement to be as follows: (i) a lump sum in the amount of USD $157,140.30 representing eight days remaining in the Initial Employment Period and (52) weeks for the Renewal Employment Period: (ii) a lump sum amount of USD $299,532.00 representing the Performance Bonus multiplied by the appropriate amount. The payments will be made in Canadian currency pursuant to s. 121 of the Courts of Justice Act, R.S.O. 1990, c. 43: Choice Bank must provide Ms. Lee with the amount of Canadian funds which would have been required to purchase the above amounts in U.S. dollars on the previous trading day. (See Watson & McGowan, Ontario Civil Practice, 29th ed. (Toronto: Carswell, 2015), at p. 188.)

[28] If the issues of costs cannot be resolved between the parties, I will entertain written submissions, each one limited to two pages excluding attachments (any Bill of Costs, Costs Outline, and authorities). The plaintiff shall file within 30 days of the release of these reasons. The defendant shall file within 15 days thereafter. There will be no reply submissions without leave of the court.

Justice S. Nakatsuru

Released: May 25, 2018