Pavlov v. The New Zealand and Australian Lamb Company Limited, 2021 ONSC 7362

2021 ONSC 7362

COURT FILE NO.: CV-20-00644446-0000

DATE: 20211105

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

PYLYP (PHILLIP) PAVLOV

Plaintiff

– and –

THE NEW ZEALAND AND AUSTRALIAN LAMB COMPANY LIMITED

Defendant

Matthew A. Fisher, for the Plaintiff

Greg McGinnis, for the Defendant

HEARD: May 3 and 4, 2021

STEWART J.

Nature of the Action

1This action for damages for alleged wrongful dismissal has been brought by Pylyp (Phillip) Pavlov ("Pavlov") against The New Zealand and Australian Lamb Company Limited ("NZAL Co.").

2Pavlov was employed by NZAL Co. as Director of Marketing and Communication on June 12, 2017. His employment was terminated on May 28, 2020.

3There is no assertion made by NZAL Co. that Pavlov's employment was terminated for just cause entitling it to do so without notice. Rather, the only real issue is one of what reasonable notice, or pay in lieu thereof, Pavlov is entitled to in these circumstances. A related issue is raised by NZAL Co. as to the impact, if any, of the provisions of an agreement (the “Employment Agreement) entered into by the parties when Pavlov was hired.

4Pavlov also complains about damage to a USB key on his desk on which he kept important personal information. The USB key was found and reviewed by another NZAL Co. employee on the day of the termination of Pavlov's employment and was allegedly damaged in the process.

Evidence

5Pavlov was 47 years old when his employment with NZAC Co. was terminated. He had worked for NZAL Co. for only just under 3 years but maintains that he was recruited by it from his previous employer McCormick Foods by a cold call from a recruiter engaged by NZAL Co. and with inducements of greater responsibility and opportunity. Pavlov joined NZAL Co. bringing with him many years of experience in the marketing and public relations field built up with other organizations in the food industry.

6I accept Pavlov's characterization of the circumstances that led him to leave comparatively secure employment with an established large multi-national corporation to accept employment with NZAL Co. and his evidence that he was led to believe that such employment carried with it the opportunity for greater responsibility, authority and growth within the organization. As it turned out, during the 3 years that Pavlov was employed NZAL Co. determined that it did not need anyone to fill the role for which Pavlov had been hired and it would be cheaper for it to have the work performed by outside agencies.

7Although Pavlov's job title included the descriptor of "Director", he was neither a corporate director nor an officer of NZAL Co.. However, his formal title was Director of Marketing Communications & Public Relations which indicated the senior nature of the role he played, and his duties were significant ones within this organization of approximately 125 employees. Despite NZAL Co.’s efforts to diminish the role Pavlov played, I find that it was a comparatively senior and important position within the company.

8Pavlov initially reported directly to the President and CEO, and then to NZAL Co.'s COO in the United States and its Canadian Vice-President.

9At the time of the termination of his employment Pavlov was earning $131,943.00 plus bonus, as well as a generous benefits package that included a car allowance and participation in the company's defined contribution pension plan.

10The initial terms of Pavlov’s compensation are set out in the Employment Agreement entered into by the parties. Among those is an entitlement for consideration for an annual bonus, as set out in provision 2.04:

11Pavlov received a bonus in various amounts in 2017, 2018 and 2019.

Employment Agreement Termination Provisions

12At the time he was hired, Pavlov was required to execute an Employment Agreement which contained a termination provision, as follows:

13NZAL Co. does not appear to contest the law insofar as it applies to the unenforceability of the termination clause of the employment agreement but nevertheless takes the position that it is of some contractual effect when determining the length of reasonable notice that should apply in this case.

14I am of the view that the prevailing authority is determinative that the provisions insofar as termination for cause are concerned are contrary to the Employment Standards Act, 2000, S.O. 2000, c. 41 and therefore all of the provisions with respect to termination are null and void (see: Waksdale v. Swegon North America Inc., 2020 ONCA 391; Sewell v. Provincial Fruit Co. Limited, 2020 ONSC 4406). Further, I consider that the document is of little assistance in the determination of the appropriate length of reasonable notice, or pay in lieu thereof, to which Pavlov is entitled in these circumstances.

Reasonable Notice

15The non-exclusive list of factors to be considered when determining the length of reasonable notice is well-established (see: Bardal v. Globe & Mail Ltd., 1960 CanLII 294 (ON SC), 1960 CarswellOnt 144 (Ont. H.C.)). Among the many factors to be considered are the age of the employee, character of the employment, length of service and availability of similar employment. The latter factor may be affected by prevailing economic factors beyond the control of the parties (see: Paquette v. TeraGo Networks Inc., 2015 ONSC 4189 (Can LII)).

16At the time of Pavlov's dismissal, the initial effects of the global pandemic were being experienced by industries of all sorts, including those associated with international importing and distribution. It is a reasonable inference to draw from the evidence and the timing of the dismissal that the effects and uncertainties of the pandemic were obstacles to Pavlov's efforts to obtain alternate employment. These obstacles would, or should, have been known to NZAL Co. at the time of Pavlov's dismissal.

17Pavlov seeks a length of reasonable notice within the 9- to 12-month range in light of these various considerations. He also seeks inclusion of an amount representing the average annual bonus he had received during the years of his employment on a pro-rated basis, plus an amount to reflect the loss of the value of his benefits package over the applicable notice period as determined.

18NZAL Co. relies heavily on the comparative brevity of Pavlov's employment and takes the position that the period of notice that applies would be in the range of 3-4 months and certainly no more than 5 months.

19Although Pavlov had been employed for a comparatively short time his position, duties, responsibility, age and level of remuneration entitled him to a period of notice greater than that suggested on behalf of NZAL Co. and one which must be determined with reference to the prevailing economic uncertainties which had a negative impact on Pavlov’s ability to secure similar alternative employment.

20In my opinion, Pavlov was entitled in all of these circumstances to 10 months’ reasonable notice of termination, or pay in lieu thereof.

Bonus Entitlement

21NZAL Co. also argues that Pavlov's terms of employment entitled him only to be "eligible to participate" in a yearly bonus if there was one. As there were no bonuses paid for the 2020 fiscal year ending in September to anyone other than its very senior people, Pavlov would not have received any bonus and therefore none should be considered to be owing to him.

22I agree with NZAL Co.’s interpretation of the bonus payment entitlement to Pavlov and do not see it as amounting to an annual bonus guarantee. This approach is supported by the evidence that while employed Pavlov received different annual bonuses based on different calculations.

23There is no suggestion that the corporate decision in 2020 to pay bonuses only to a handful of top executives was motivated by any improper desire to deprive Pavlov of participation. Others who were similarly situated and still employed likewise received no bonus.

24That determination applies to any bonus consideration through to September 2020. If any bonus was paid to other employees related to the time frame in late 2020 or 2021 over which the applicable notice period is operative, Pavlov is entitled to such payment on pro rata basis.

25If there is any dispute as to the calculation of such bonus component of Pavlov’s damages, this may be the subject of written submissions by the parties or I may be spoken to in that regard.

Value of Benefits

26Pavlov is also entitled to a sum reflecting the loss of value of benefits over the notice period. This would include a car allowance, various health and dental benefits and employer contributions to a pension plan.

27Although counsel offered different methods of calculating the value of benefits, I would ask them to confer in an effort to determine an agreed-upon amount for inclusion in the judgment in view of the determination of the relevant notice period.

28It is expected that the value of benefits as well as the precise figure for damages for failure to provide reasonable notice of termination will reflect an offset in favour of NZAL Co. for amounts paid to Pavlov or benefits provided to him following termination of his employment.

USB Stick

29Pavlov also argues that the handling of his USB stick found on his desk by a human resources professional at NZAL Co. was so insensitive that it demonstrates bad faith such that he is entitled to an additional award of damages.

30NZAL Co. denies any bad faith on its part in the termination or the handling of Pavlov's USB key. The employee who testified provided compelling evidence as to the communication of the termination to Pavlov in a humane and professional manner, and also explained her examination of the USB key for the presence of any confidential information which would be normal and expected in the circumstances. The possibility that the USB key may have contained personal information and that it could be damaged in the process was not contemplated by her at the time and I am satisfied that if any damage occurred it was entirely unintended and accidental.

31As a result, no additional damages flow based upon how the termination of Pavlov’s employment was carried out or the treatment of his personal information on the USB key found on his desk.

Mitigation of Damages

32Following the termination of his employment by NZAL Co., Pavlov has diligently applied for more than 100 positions but without success.

33NZAL Co. takes the position that Pavlov somehow failed to mitigate his damages by seeking employment in positions for which he was not adequately suited.

34I accept Pavlov’s testimony that he made considerable efforts to secure similar alternate employment but to no avail. Evidence as to those efforts, which I consider to be adequate and bona fide, is contained in the volume of documentation provided by Pavlov. I am of the opinion that the kinds of positions he pursued were ones for which he was suited and not above his station or qualifications as NZAL Co. seems to be suggesting.

35Despite these extensive efforts, as at the time of trial Pavlov remained unemployed.

36Accordingly, I do not consider that the applicable notice period or amounts otherwise owing to Pavlov should be reduced as there has been no failure by him to try to mitigate his damages.

Conclusion

37For these reasons, Pavlov shall have judgment reflecting an amount equivalent to 10 months’ salary and benefits in lieu of notice, with adjustments as noted, less amounts already received by him.

38If any dispute arises as to the proper calculation of the amount owing, written submissions may be delivered to me for consideration or I may be spoken to.

39Having said that, it is my expectation that the parties with the assistance of their experienced counsel will be able to agree upon a figure that results from the application of the parameters of this decision.

Costs

40If the parties cannot arrive at an agreement on costs, which I urge them to make efforts to accomplish, written submissions on the subject may be delivered to me by Pavlov within 30 days of the date of this decision, and by NZAL Co. within 20 days thereafter.

Released: November 5, 2021

2021 ONSC 7362