COURT FILE NO.: CV-19-001-00
DATE: 2019-11-29
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
DAVID DEVLIN
Plaintiff
- and -
HIGH LINER FOODS INCORPORATED
Defendant
Counsel: Chris Foulon, for the Plaintiff Mark Tector, for the Defendant
HEARD: July 15, 2019
REASONS FOR JUDGMENT
D.E HARRIS J.
INTRODUCTION
[1] After more than 25 years working for High Liner Foods Incorporated (“High Liner”), Mr. Devlin’s employment was terminated without cause as part of what was called a “realignment” by High Liner. Quite a number of other employees were let go the same day. Mr. Devlin was 55 years old.
[2] Negotiations with the company to agree on a fair severance were unsuccessful. Mr. Devlin applies to court for a determination of the fair disposition of his claims. The issues are:
a) Is this a proper case for summary judgment?
b) What was reasonable notice in the circumstances?
c) Is the plaintiff due compensation for loss of his bonus and benefits?
d) Did the plaintiff sufficiently mitigate his damages?
[3] The parties join in saying that this is an appropriate case for summary judgment. I agree: Hryniak v. Mauldin, 2014 SCC 7. There are no outstanding factual issues which require judicial determination. It has been held several times by the Superior Court that in circumstances where there are no contested facts, wrongful dismissal claims are particularly suitable to resolution by summary judgment: Edmond v. Algonquin College 2018 ONSC 1898, 290 A.C.W.S. (3d) 509 at paras. 86-87; Asgari v. 975866 Ontario Ltd. 2015 ONSC 7508, 262 A.C.W.S. (3d) 128 at paras. 2-4.
I. WHAT WAS REASONABLE NOTICE?
FACTUAL BACKGROUND
[4] Mr. Devlin started working for High Liner in July of 1993 as a Senior Key Account Manager. When his employment was ended by High Liner on November 5, 2018, he was 55 years old and held a position with much greater responsibility, that of Director, Customer Development, Retail Sales. At the time of termination, his base salary was $166,806.61 per year together with a bonus which had averaged $22,854.35 each year over the last 3 years, six weeks vacation, a company car valued at $8,060 per year and a comprehensive group health plan and pension.
[5] In his factum, Mr. Devlin asked for the sky with respect to the length of reasonable notice. He requested 26 months. Case law since the time the factum was filed effectively capped notice in all but exceptional circumstances at 24 months: Dawe v. The Equitable Life Insurance Company of Canada, 2019 ONCA 512, 435 D.L.R. (4th) 573 at paras. 31-44. Furthermore, the chart of notice periods from earlier cases prepared by counsel for Mr. Devlin prior to the release of Dawe cites no case that had gone higher than 24 months.
[6] In the leading case of Bardal v. Globe & Mail Ltd., 1960 294 (ON SC), 24 D.L.R. (2d) 140, [1960] O.J. No. 149 (Ont. S.C.) at para. 21 (O.J.) it was held that the catalogue of factors helpful in calculating a fair notice period include the “character of the employment, the length of service … and the availability of similar employment” given the employees experience, training and qualifications: also see Machtinger v. HOJ Industries, 1992 102 (SCC), [1992] 1 S.C.R. 986 at para. 22.
Character of Employment
[7] In the position he held just prior to termination, Mr. Devlin reported directly to the Vice President, Marketing and Sales. There are 40 employees in total in this division. Of these, 12 reported directly to the Vice President, including Mr. Devlin.
[8] Mr. Devlin was solely responsible for selling to an Ontario based account with locations across the country. This account represented 3.9% of the Canadian retail sales.
[9] Mr. Devlin also directly managed an Ontario Sales Supervisor who in turn supervised a team of six part-time sales representatives. He also supervised a Key Account Manager, who, in another capacity, was also supervised by another director. The portfolio that this manager had authority over, and which Mr. Devlin supervised, constituted about 9.6% of Canadian retail sales. Mr. Devlin also supervised a Field Sales Supervisor who in turn directly supervised six part-time sales representatives. These employees were responsible for displays, price audits and ensuring product was in stock.
[10] Mr. Devlin had input but did not have the authority to hire and fire. His responsibilities were split 60% sales, 40% managerial supervision.
[11] Mr. Devlin’s compensation of about $200,000 per year including benefits befit a high ranking employee at the company.
Length of Employment
[12] Mr. Devlin worked for High Liner for 25 and a half years before his employment was terminated at age 55. Although there are cases in which employees have worked longer, this length of service is in the upper echelon.
The Prospects of Finding Similar Employment with Similar Compensation
[13] The position of High Liner is that the plaintiff has marketable skills and experience and has “access to the largest job market in the country at a time when unemployment is low and the market for similar positions is strong.” He has valuable experience and skills in the consumer-packaged goods and food industries. Sales skills are readily transferable from one area of sales to another. Mr. Devlin also has educational qualifications related to general business and sales which will put him in good stead in the retail world.
[14] With respect, this goes too far. There is some transferability of skills to be sure but care must be taken not to overstate it. No one could seriously suggest that Mr. Devlin could easily switch to any retail sales job, such as selling cars for example. The product being sold must be understood as must the selling environment, including the specifics of supply and demand. Indispensable is an understanding of the psychology of a potential buyer and his or her objectives. Then there are the intangibles that could make or break a salesperson’s success, many of which are context specific.
[15] Mr. Devlin has been working for High Liner for a quarter century and knows the ins and outs of the business. In a new job, he would have to develop new knowledge and new skills. Sales is based on relationships with people and, unless he gets a job in a very similar niche, he is going to have to start again from the beginning.
[16] The Vice President says in her affidavit that the job market for Mr. Devlin is good. Accepting that as true, it is strictly theoretical. The question to be resolved here is not about theory and projections. Mr. Devlin has been shopping his resume around for some time. He has thus far not had any job offers or interest. There is no suggestion that this is any fault of his own. A better test than an armchair executive saying that he should have no difficulty finding a job is whether he has, after reasonable efforts, found a job.
[17] I am unconvinced that at his age and with the type of job he has been in for 25 plus years, he will have an easy time finding comparable employment. This is confirmed by the fact that he has not yet found one. The industry is relatively specialized and Mr. Devlin is not a young man. He has spent much of his working life in one environment. Hopefully he can transfer to another similar job but his passage is far from guaranteed.
Conclusion on Reasonable Notice Period
[18] Counsel for High Liner suggests a notice period of 18 to 20 months. Mr. Devlin asks for 24 months. High Liner’s caselaw, in accord with counsel’s submissions, ranges from 18 months to 20 months: Skov v. G&K Services Canada Inc., 2017 ONSC 6752, 2017 CarswellOnt 18853 (ONSC); Boccia c. Bata Industries Ltd., [1989] O.J. No. 972, 1989 CarswellOnt 2828 (ON HCJ); Pagliaroli v. Rite-Pak Produce Co., 2010 ONSC 3729, 2010 CarswellOnt 5175 (ON SCJ); Kolcun v. Carsten Electronics Ltd., [1993] O.J. No. 2371, 1993 CasrwellOnt 3324 (On CJ(GD)); Braiden v. La-Z-Boy Canada Ltd., [2006] O.J. 2791 (ON SCJ), 2006 CarswellOnt 4201; Wilson v. Goodyear Canada Inc., 2005 BCSC 1024, 2005 CarswellBC 1645. These cases do not generally have a plaintiff as old as Mr. Devlin combined with the years of service he has put in.
[19] Mr. Devlin’s cases all grant a notice period of 24 months: Bell v. Izaak Walton Killam Hospital for Children, 1986 123 (NS SC); Chorny v. Freightliner of Canada, 1995 16111 (BC SC); Halliday v. Hanover Kitchens (Canada) Inc., [1997] OJ No 4575; Mitchell v. Westburne Supply Alberta, 2000 ABQB 377; Moody v. Telus Communications Inc., 2003 BCSC 979; Younger v. Canadian National Railway, 2014 BCSC 1258. Most of the employees in those cases have even longer years of service than Mr. Devlin.
[20] Neither set of cases yield a clear answer to the circumstances here. There is no magic formula. In my view, the 24 months requested by Mr. Devlin, effectively the maximum notice period, is too long. High Liner originally offered 20 months and now comes to court with a range of 18-20 months. This range does not fully reflect Mr. Devlin’s age, the relatively specialized niche he has inhabited at High Liner and, ultimately, the likely difficulty he will have at securing a similar job.
[21] I would set the notice period at 22 months.
II. IS MR. DEVLIN ENTITLED TO DAMAGES FOR HIS LOSS OF BONUS, BENEFITS AND PENSION PARTICIPATION THROUGHOUT THE NOTICE PERIOD?
[22] Mr. Devlin received an annual bonus incentive in a similar amount in each of the last three years. He claims that he is entitled to his 2018 bonus to the date of termination on November 5, 2018 and, moreover, throughout the notice period. I agree.
[23] The incentive plan stipulated that the employee must have been “actively employed” as of December 31, 2018 to be eligible unless the employee retired during the year. Mr. Devlin bonuses in the three years before termination (2015-2017) averaged $22,854.35 per year.
[24] The Court of Appeal’s judgment in Paquette v. TeraGo Networks Inc. 2016 ONCA 618, [2016] O.J. No. 4222 is controlling. There were three aspects to that decision: 1. The incentive plan must be an integral part of the plaintiff’s compensation; 2. If the plaintiff had been given reasonable notice due under contract, he would have been “actively employed” within the bonus plan language and entitled to his bonus; and 3. There was no language in the bonus plan which ousted the plaintiff’s common law right to damages compensating him for the breach of contract.
[25] The case at hand is indistinguishable. The incentive plan had paid Mr. Devlin almost 15% of his base salary in the previous 3 years. It was directly tied to his performance. A bonus had been paid for many years. Bonus plans are commonplace for executives and often an important part of remuneration. The plan here was clearly an integral part of Mr. Devlin’s compensation.
[26] It was common ground that High Liner breached Mr. Devlin’s common law contractual right to reasonable notice. High Liner admits that they should have continued to have employed Mr. Devlin for a notice period. However, counsel submitted that the company could have terminated Mr. Devlin one day before the December 31, 2018 vesting of the bonus and by this means could have averted the legal obligation to pay the bonus. This ignores High Liner’s contractual obligation to adhere to the bonus plan during Mr. Devlin’s employment. A unilateral termination by High Liner of his employment cannot be relied upon to take away the bonus entitlement. It would be manifestly unfair for High Liner to benefit from their breach of contract. Lastly, the bonus plan included no language indicative of an intention to not pay the bonus in the circumstances of a termination.
[27] Mr. Devlin was entitled to his full monetary compensation during the reasonable notice period of 22 months including the bonus due. High Liner’s further argument is that, in any case, Mr. Devlin performance in 2018 would not have earned him a bonus. In making this argument, it does not appear that High Liner is incorporating, as they must, the fact that since he was terminated on November 5, 2018. Mr. Devlin’s results were only for a 10-month period, not for a full year.
[28] It appears clear that Mr. Devlin would at most have received on the individual part of his bonus. The individual goals component of the bonus was $14,855.34 in 2018. Commercial excellence constituted 50% of this, profitable growth was 25% and people leadership was 25%. High Liner says that Mr. Devlin’s target invoice sales were about roughly $27,000,000 but he fell short because the actual invoice sales were only $23,338,000. However, based on these figures, Mr. Devlin would have met his goals over a full year if his employment had not been terminated. The profitable component growth would not have been met, however. The people leadership criteria are unclear but the High Liner Vice President testified in cross-examination in her affidavit that he was not likely to meet the target threshold.
[29] This is somewhat vague. The question of the bonus going forward for the additional 20 months from the beginning of 2019 is also difficult to ascertain. To project what the bonus would have been in 2019 and the first 8 months of 2020 is to engage in speculation.
[30] In my view, in light of this difficulty, the only way to resolve the matter is by resorting to the burden of proof. High Liner breached the contractual obligation to give a reasonable notice period before termination. The termination has hindered Mr. Devlin’s ability to prove damages because projections need be made into the future. For this reason, the evidentiary onus should be on High Liner with respect to damages. If it is accepted that Mr. Devlin would have met the commercial goal in 2018 and it cannot be disproved that he would have met the personal leadership goal, then he should have received 75% of the $14,855.34. This would amount to $11,141.25.
[31] This is the individual amount that I would order High Liner pay to Mr. Devlin prorated throughout the 22 month notice period.
[32] With respect to health benefits and pension participation, it must be remembered that Mr. Devlin should be put back in the position he would have been in if High Liner had not breached its obligations to him: Sylvester v. British Columbia, 1997 353 (SCC), [1997] 2 S.C.R. 315 (S.C.C.), at para. 1; Davidson v. Allelix Inc. (1991), 1991 7091 (ON CA), 7 O.R. (3d) 581 (Ont. C.A.), at para. 21. These pension benefits and health benefits should continue for the 22 month notice period in the same manner as if Mr. Devlin’s still worked at High Liner.
III. DID MR. DEVLIN FULFILL HIS OBLIGATION TO MITIGATE HIS DAMAGES?
[33] To support its position that there was a failure to mitigate damages, High Liner must establish: 1. Mr. Devlin did not take reasonable and diligent steps to find new employment; and 2. If he had, he could have procured comparable employment: Benjamin v. Cascades Canada ULC, 2017 ONSC 2583, 2017 C.L.L.C. 210-041 at paras. 94-96, Michaels v. Red Deer College, 1975 15 (SCC), [1975] 5 W.W.R. 575, [1975] S.C.J. No. 81, [1976] 2 S.C.R. 324, 57 D.L.R. (3d) 386.
[34] It took Mr. Devlin 5 months to begin his new job search. During this 5 month period, Mr. Devlin availed himself of services supplied by High Liner to instruct him on building a resume and in other facets of looking for a new job. In my view, making allowance for a period of recovery from High Liner’s breach of contract in terminating his employment without notice and for time to network and put his resume together, this length of time was simply too long. Two months should have been sufficient to gather himself and start the search.
[35] Since that time, Mr. Devlin has worked hard. As of July 12, 2019, he had submitted 23 applications. He has not received any offers of employment nor has he been interviewed for any positions. While High Liner has adduced evidence of a great many job postings on website Workopolis for “director sales” in the province and in Mississauga, this was a vague and desultory search which ought to be given virtually no weight.
[36] The onus on High Liner to show a lack of meaningful steps in mitigation is a significant one. Given Mr. Devlin’s efforts and the lack of even mild interest in hiring him, High Liner has failed to live up to its high burden to show a failure to mitigate.
IV. ORDER TO BE MADE
[37] An order will go,
a) Awarding Mr. Devlin a notice period of 22 months from the date of termination during which he is entitled to bi-weekly payments of his base salary ($166,806.61 annually) and, over the same period, for loss of the company vehicle ($190.25 bi-weekly).
b) A bonus of $11,141.25 will be paid with respect to the 2018 calender year. After that point, 20 months of the notice period will remain. For the 2019 year, the same $11,141.25 will be paid. For 2020, 8 months of the notice period will remain. Therefore, two-thirds of the yearly bonus should be paid: $7,420.07.
c) Continuation of participation in High Liner’s defined pension plan during the 22 month notice period.
d) Continuation of his participation in the group benefit coverage during the 22 months.
e) Mr. Devlin has a duty to mitigate his damages. If he makes insufficient efforts to mitigate or if he does succeed in at least partial mitigation, either party can apply to me to vary this order. I retain jurisdiction.
f) Interest on all sums.
g) Off-setting the award in a. against all amounts and benefits already provided to the plaintiff, excluding the professional outplacement services.
[38] The parties are urged to come to an agreement on costs. Failing that, written submissions of a maximum of two double spaced pages can be submitted in writing by the plaintiff 10 days from the release of these reasons. The defendant can file responding submissions of the same length within 10 days of the plaintiff’s submissions.
D.E HARRIS J.
Released: November 29, 2019
COURT FILE NO.: CV-19-001-00
DATE: 2019-11-29
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
DAVID DEVLIN
Plaintiff
- and –
HIGH LINER FOODS INCORPORATED
Defendant
REASONS FOR JUDGMENT
D.E HARRIS J.
Released: November 29, 2019