Court File and Parties
COURT FILE NO.: CV-20-00640662-0000
DATE: 20210112
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DAN MARAZZATO
Plaintiff/Moving Party
– and –
DELL CANADA INC.
Defendant/Responding Party
Counsel:
Michael D. Wright and Brendan Scott, lawyers for the Plaintiff
Jeffrey P. Mitchell and Brad Hallowell, lawyers for the Defendant
HEARD: DECEMBER 9, 2020
G. DOW, J.
REASONS FOR DECISION
[1] The plaintiff, Dan Marazzato seeks summary judgment arising from termination of his employment with the defendant, Dell Canada Inc. (“Dell”) on March 4, 2020. Dell did not dispute that the termination was without cause or that summary judgment was not an appropriate method of assessing and calculating damages.
Background
[2] Mindful of the four factors identified in Bardal v Globe & Mail, 1960 CanLII 294 (ON SC), [1960] O.W.N. 253 (Ont. H.C.), Mr. Marazzato was 59 years of age at the time of his termination and is currently 60 years of age.
[3] His employment began January 3, 2006 which results in 14 years of service. His income at the time of his termination consisted of:
a) a base salary of $189,000.00 per year;
b) Sales Target Incentives (“STI”) that paid $231,941.12 in 2019;
c) Long Term Incentives (“LTI”) that paid Restricted Stock Units of which 15,639.54 were to vest on March 15, 2021 which had a value of $21,147.39 (Cdn) in March 2020;
d) matching contributions up to 5% of earnings for Retirement Savings and Deferred Profit Sharing Plan (“DPSP”) which Mr. Marazzato says was paid to the upper limit of $13,615.00 for 2019;
e) a car allowance in the amount of $600.00 per month; and
f) coverage for group benefits at $440.08 per month which I was advised continued to be paid plus long term disability premiums of $242.00 per month which were discontinued.
[4] Mr. Marazzato’s average income in his last three years of employment was remarkably similar ranging from $464,580.06 (in 2017) to $466,502.24 (in 2018). His income in 2019 was $465,695.75.
[5] With regard to the character of his employment, Mr. Marazzato’s title was Senior Manager Director Sales. He oversaw nine employees who reported directly to him. It appears he was the top executive of the defendant for direct sales in Canada.
[6] It was conceded before me that Mr. Marazzato had made efforts to find new employment subsequent to his dismissal and mitigation was not an issue. He remains unemployed. He acknowledged having invested in a cannabis dispensary business with his niece before his termination and has made an additional investment since. It is not expected to be cash flow positive until May or June, 2021. Mr. Marazzato acknowledged he was more active in the business since his termination and described his status before his termination as a passive investor. He has also been paid $5,000 for consulting services provided during a one month contract.
[7] Mr. Marazzato was paid for two weeks of working notice, 14.2 weeks of statutory service and eight weeks of termination pay pursuant to Employment Standard Act, S.O. 2000, c.41. Eight weeks of continuing benefits were also paid.
Issues
[8] The parties required determination of the following:
a) what is the proper length of notice;
b) is Mr. Marazzato entitled to include the anticipated value of his STI compensation;
c) is Mr. Marazzato entitled to include the anticipated value of his LTI Restricted Stock Units which would have vested in March, 2021 and at what value;
d) should the judgment for damages in favour of Mr. Marazzato be the subject of a trust and accounting order or partial summary judgment with payments over time as they would have occurred if Mr. Marazzato had been given and accepted working notice.
Issue: Proper Length of Notice
[9] Plaintiff’s counsel sought 20 months of paid notice applying the four factors summarized above and other reported decisions where similar aged individuals, with a similar length of service in executive positions being paid high incomes proceeded to trial. Counsel for the defendant relied on other decisions in support of a notice period of 16 months.
[10] Regarding the four factors identified in Bardal v. Globe & Mail, supra, the first is age. At 59 and now 60 years of age, this is not, by today’s standard “old” but certainly at the later stage of most working life careers. While it may make it harder for Mr. Marazzato to obtain “similar employment”, if one includes the longevity of its employment and the added experience gained from when Mr. Marazzato was hired by Dell, he may now qualify for other lucrative executive positions where that additional experience is an asset. Regardless, based on the decisions and assessment of this Courts, it favours a longer reasonable notice period.
[11] Mr. Marazato’s 14 years of service is the second factor to consider. This is not so long as to constitute being a “lifelong” employee but it does represent a substantial portion of most individual’s working life career. I find it also favours a longer reasonable notice period.
[12] The character of Mr. Marazzato’s employment is a third factor to consider. This brings into consideration his managerial role and his responsibilities. In submissions, both counsel addressed Mr. Marazzato’s title, which as “Senior Manager” described the position at a higher level. Further, his high income level placed him amongst a very small percentage of income earning Canadians. Overall, this favours a longer period of reasonable notice.
[13] The final factor is the availability of similar employment having regard to the experience, training and qualifications of the employee. As noted, Mr. Marazzato has made efforts to find such employment without success. There is no issue of mitigation. It does appear Mr. Marazzato’s range of skills and direct sales provides a range of alternatives that were not available to some of the individuals in decisions relied on by Mr. Marazzato’s counsel and that were noted to be highly specialized positions.
[14] I was also asked to take into consideration the economic downturn caused by the COVID pandemic as part of this factor. This would be on the basis there would be extra difficulty in finding and obtaining a new position. In this regard, I would note no evidence of same was presented to me. Further, it would not be appropriate to speculate on that submission without evidence. For example, while there has been an economic downturn for many, Mr. Marazzato’s former employer and his skill set is in the computer business which may have actually benefited from the COVID pandemic and its resulting greater use of computers for access to the internet and remote practices. The only evidence that touches on this area before me was Dell’s strong financial performance to October, 2020 as reflected in its increased share price. That is insufficient to make any concrete determination. Overall, I would conclude this factor does not favour a longer period of notice.
[15] I return to the Bardal v. Globe & Mail, supra decision where the four factors to be considered are prefaced with the statement “the reasonableness of the notice must be decided with reference to each particular case”. To that end, based consideration of the entire factual circumstances, and the decisions referred to by the parties, I find 18 months to be the proper notice. That is, until September 4, 2021.
Damages
[16] Regarding the bonus known as STI, it formed a substantial part of Mr. Marazzato’s total compensation. The law is clear, the damages for employees in these cases are predicated on the “compensation for the income, benefits, and bonus they would have received had the employer not breached the implied term to provide reasonable notice” (Matthews v. Ocean Nutrition Canada, 2020 SCC 26 at paragraph 53). Dell disputes Mr. Marazzato was entitled to have this compensation included in his assessment of damages on the basis of the wording of Section 4 of Dell’s Sales Compensation Policy which states:
“Terminations: If a sales maker’s employment terminates (Voluntary or Involuntary), the sales compensation payout shall be paid if the criteria for the sale’s compensation payout calculation are met on or before the employee’s last day worked. Attainment and Sales Commissions will be calculated based on original quota and Target Incentive (TI) assigned for the period*. If no quota has been assigned for the quota performance period, the departing sales maker may be paid at 100% of their Target Incentive (TI), prorated, through their last day worked as approved by Global Business Operations.”
[17] Compensation on what the employee would have received had the employer not breached providing reasonable notice is consistent with both statements by the Court of Appeal decision in Dawe v. Equitable Life Insurance Company of Canada, 2019 ONCA 512 (at paragraph 48) and in Matthews v. Ocean Nutrition Canada, supra (at paragraph 55). If the first question to be addressed regarding whether there was entitlement to the bonus as part of the compensation during the reasonable notice is answered in the affirmative, the second question to answer is whether the terms of the agreement between the employee and employer “unambiguously” excluded that part of the common law damages. While the clause in question appears to address termination of the employee whether “Voluntary or Involuntary” and provides for payments only to the “last day worked”, I conclude the answer is found in the statements found in the Supreme Court of Canada in Matthews v. Ocean Nutrition Canada, supra (at paragraph 51) which relied on the analysis contained in the decision of Paquette v. TeraGo Networks Inc., 2016 ONCA 618 (at paragraph 31). That is, would Mr. Marazzato had been entitled to the additional compensation had Dell not breached their requirement to give him reasonable notice. I conclude Mr. Marazzato would have earned that compensation.
[18] I also rely on, by comparison, the comments in Dawe v. Equitable Life Insurance Company of Canada, supra (at paragraphs 52 through 65) where the wording of the employment contract successfully or “unambiguously” removed the right to recover compensation from a bonus plan (but awarded same on the grounds it was successfully proven that it was not brought to the attention of Mr. Dawe). The wording used in that bonus plan specifically addressed termination without cause, payments being made only until the last day of active employment and that such “awards actually paid shall not be considered in determining any entitlement to termination, severance or common law notice or payments in lieu of notice”. The wording in the STI compensation policy between Mr. Marazzato and Dell fails to include what I find are the necessary statements in order to be applied.
[19] Mr. Marazzato is entitled to his STI bonus for 2020 and, based on my finding reasonable notice would extend to September 4, 2021 or the first eight months of that year, two-thirds of his usual STI bonus for 2021.
[20] For clarity, I note the monthly average of STI payments for 2017-2019 inclusive to be $20,291.87. For 18 months, this becomes $365,253.60.
[21] Similarly, Dell disputed any entitlement to the bonus known as LTI or Restricted Stock Units. Again, the analysis begins with determining whether the compensation would have been received if Mr. Marazzato had worked until the end of the reasonable notice period. The parties do not dispute that Mr. Marazzato had available 15,639.54 Restricted Stock Units that were to vest and have value as of March 15, 2021 or within the reasonable notice period. Mr Marazzato sought recovery of this compensation at its March, 2020 value or $21,147.39 (Cdn). The second part of the analysis requires reviewing the terms of the LTI Award Agreement which sets out, in Section 2, the employee’s entitlement to receive the award in the event of termination due to death or permanent disability. Section 10.6 of the Long Term Incentive Plan does attempt to exclude payment where employment ends after granting the units but before the vesting of same.
[22] However, Section 8 of the LTI Award Agreement appears to specifically address the issue before me stating:
a) the acceptance of the LTI Award Agreement was voluntary and not a condition of employment;
b) such payments were not compensation for services rendered and were outside the scope of the employment agreement; and
c) the units are “not to be used for calculating any severance, resignation, redundancy, end of service payments, bonus, long-service awards, pension or retirement benefits or similar payments, and you waive any claim on such basis”.
[23] I have concluded this is sufficiently “unambiguous” to exclude this part of Mr. Marazzato’s compensation from his damages arising from Dell’s breach in providing reasonable notice.
Issue: Trust and Accounting or Partial Summary Judgment
[24] As the reasonable notice period extends beyond the delivery date of this decision, (and would have also extended beyond the submission by Dell of a 16 month notice period), counsel made submissions on how the award of damages should be structured. Counsel for Dell submitted in these circumstances a partial summary judgment approach was appropriate with payments on a monthly basis. Such payments would be reduced by any income earned by Mr. Marazzato over the notice period.
[25] Mr. Marazzato has acknowledged his earnings post termination ($5,000.00) and agreed it be deducted from his award. Similarly, there should be deducted payments made post-termination for the working notice provided, benefits paid, car allowance received as well as severance and termination pay.
[26] There was no issue raised regarding Mr. Marazzato’s mitigation efforts As a result, there appears to be no basis to have concern about Mr. Marazzato’s motivation to continue with mitigation efforts or willingness to report any success in this regard.
[27] I agree with the submissions of counsel for Mr. Marazzato that the trust and accounting approach is the appropriate method to apply in these circumstances. Mr. Marazzato is to be granted judgment but with a trust in favour of Dell impressed on the judgment funds for the balance of the notice period requiring Mr. Marazzato to account for any mitigation earnings.
Conclusion
[28] Judgment shall issue using 18 months as reasonable notice from March 4, 2020 (that is, to September 4, 2021). Judgment will be in an amount that recognizes Mr. Marazzato’s base salary, STI bonus (based on the 2017 – 2019 average monthly value being $20,291.87), RRSP matching contributions for the 18 months awarded, the value of benefits and long-term disability premiums and the monthly car allowance of $600.00. The Judgment shall be reduced for payments made by Dell for compensation after March 4, 2020 and the $5,000.00 earned elsewhere post-termination. The court imposes a trust in favour of Dell for Mr. Marazzato to account for all amounts earned for the balance of the notice period.
Costs
[29] I urge the parties to agree on costs. If they cannot, the party seeking costs (or the plaintiff if both parties are seeking costs) shall submit to me not more than five (5) double spaced, typed pages in a readable font (see Rule 4.01) containing their submissions excluding a (required) Costs Outline and any Offer to Settle being relied on within 30 days of the release date of these Reasons. The other party shall have 20 days to respond with the otherwise identical limitation.
Mr. Justice G. Dow
Released: January 12, 2021
COURT FILE NO.: CV-20-00640662-0000
DATE: 20210112
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DAN MARAZZATO
Plaintiff/Moving Party
– and –
DELL CANADA INC.
Defendant/Responding Party
REASONS FOR DECISION
Mr. Justice G. Dow
Released: January 12, 2021