Court File and Parties

COURT FILE NO.: CV-18-611477 MOTION HEARD: 20230612 DECISION RELEASED: 20230614

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Michael Kahu, Plaintiff AND: First General Service Solution Inc. and Integricon Property and Construction Group Inc. and Integricon Property Restoration and Construction Group Inc., Defendants

BEFORE: Associate Justice Jolley

COUNSEL: Nick Goldhawk, counsel for the plaintiff Christopher Hendry, counsel for the defendants

HEARD: 12 June 2023

Reasons for Decision

[1] Both parties brought motions in this wrongful dismissal action. The plaintiff seeks an order for leave to further amend his statement of claim; for production of the defendants’ civil and environmental division’s gross profits for 2016, 2017 and 2018; and for a further and better affidavit of documents. The defendants seek an order directing the plaintiff to authorize his lawyer on a prior wrongful dismissal claim to deliver his file to the defendants. The parties have settled all other relief sought in their respective motions.

A. The plaintiff’s motion

(a) Leave to further amend his statement of claim

[2] The plaintiff seeks to add amend paragraph 49 of his pleading to claim that, based on assurances and certain figures provided by the defendants, he is entitled to 2.5% of the gross profit generated by First General Service Solution (“First General”) during his employment and over the notice period, in an amount to be determined at trial. He also seeks to add paragraph 60.1 which sets out conduct of the defendants that the plaintiff alleges was undertaken in bad faith. This includes being allegedly ill prepared for discoveries, failing to produce relevant documents and refusing generally to participate in the discovery process. There are other minor consequential amendments to the pleading. The defendants do not oppose the relief sought.

[3] As noted in Galea v. Walmart 2017 ONSC 245 and Humphrey v Mene Inc. 2022 ONCA 531, affirming 2021 ONSC 2539, while a pleading of litigation conduct is generally an issue for costs, there may be an exception in the employment context to permit a plaintiff to plead that conduct in support of a claim for moral damages. As noted by Emery, J. “[i]t is my view an exception can be made for moral damages to respond where the evidence proves on the balance of probabilities that an employer has acted in bad faith, and that bad faith is manifested by the decisions and conduct of an employer or counsel acting on the employers’ instructions to frustrate or deny the rights of an employee.” The amendments sought are granted to permit the plaintiff to plead this cause of action.

(b) Motion for production of documents

[4] A party is obliged to produce documents relevant to any matter in issue in an action, as determined by a review of the pleadings.

[5] The plaintiff claims that First General promised to pay him an annual bonus equal to 2.5% of its gross profit during his employment and over the notice period. This is alleged throughout the pleading, and, in particular, in paragraphs 6, 9, 14, 19, 20, 21, 31, 45(e) and 48 of the amended statement of claim and paragraph 49 of the proposed further amended statement of claim.

[6] The defendants deny that First General stated that the plaintiff would receive a bonus equal to 2.5% of gross profit or a bonus based on any percentage of gross profit (paragraphs 7 and 8 of the statement of defence). They plead that any bonus payable to the plaintiff was entirely discretionary (paragraphs 9 and 10).

[7] Based on the plaintiff’s claim for a bonus based on company gross profits, the defendants produced financial statements for the years in question that set out First General’s gross profit numbers.

[8] The plaintiff now seeks an order compelling First General to produce records of each of its division’s gross profits for 2016, 2017 and 2018. He seeks related relief in the form of an order that First General produce a further and better affidavit of documents containing original documents and records prepared to determine or estimate gross profits for each of First General’s divisions for 2016-2019 inclusive.

[9] First General indicated that, in determining whether and how it exercised its discretion in awarding a bonus, it first determined whether the company division numbers met a certain threshold. In particular, to start the discussion, according to the defendants, the plaintiff’s bonus threshold was 1.75% of gross profits in excess of $600,000 on jobs in his division that had commenced after the start of his employment.

[10] The plaintiff argues that this makes division profit relevant. I do not agree. The plaintiff has not pleaded an alternative claim for a bonus based on division profit and the defendants have not pleaded that the plaintiff was entitled to any percentage of division profit. The defendants’ theory is not that the plaintiff was entitled to a bonus based on a division gross profit basis. Their defence is that, if a threshold was met, the plaintiff may be entitled to an entirely discretionary bonus. First General may have used the division numbers as the starting point for its exercise of discretion but no party has pleaded entitlement to a bonus on that basis. The plaintiff will win or lose on his pleading that he is entitled to a yearly bonus equal to 2.5% of the entire company’s gross profits.

[11] First General has deposed that it has no further documents that it could produce. It does not keep records of gross profits on a division basis, other than what was noted in the 2017 bonus plan document, which it has produced. The defendants deposed that, when it came time to set the bonus, someone would determine the gross profit for the civil/environmental division but the spreadsheet prepared is no longer available. While that portion of the assessment was “math related”, in the words of the defendants, it was only the starting point to determine the baseline and did not determine if and how First General would exercise its discretion in awarding bonuses. Lastly, First General argues that, even if it had the documents, further production would be disproportionate, as it has already produced hundreds of documents relating to profit and loss, a 2017 document of 3,000 rows detailing project profits, emails, excel files, etc.

[12] The plaintiff’s claim is based on company profit and those documents showing gross company profit for each year in question have been provided. I find that, even if they did exist, the gross profit per division is not relevant to the plaintiff’s claim of entitlement to 2.5% of gross company profit. I am satisfied, in any event, that the defendants have no further documents to produce. For all of these reasons, this portion of the plaintiff’s motion is dismissed.

(c) Further and better affidavit of documents

[13] The plaintiff seeks the original un-altered documents prepared for determining or considering the plaintiff’s bonus entitlement, including any un-altered version of the bonus plan. Based on the evidence adduced on this motion, I find there are no other documents other than the bonus plan itself, which was produced at A377 of Caselines.

[14] It appears that the bonus plan excel spreadsheet produced was altered in May 2022 before it was produced, most likely to redact the names of other employees who received bonuses. I agree this was appropriate as the plaintiff does not claim that he was treated unfairly relative to other employees. In fact, while roughly half of the listed employees in 2017 received or were proposed to receive a bonus in the $250-$500 range (with the highest in 2017 being one bonus of $70,000 and in 2018, one bonus of $27,609), the plaintiff seeks a bonus in excess of $500,000.

[15] The defendants have agreed to provide the bonus plan at A377 of Caselines in its original, unaltered form with the exception of the employee names, which will remain redacted.

[16] The plaintiff also seeks production of a schedule C listing the documents that are no longer in the defendants’ possession. The defendants advised on discovery and in answer to this motion that the plaintiff’s work emails were lost when the defendants carried out an email transition in late 2018. As noted in Blais v. Toronto Area Transit Operating Authority, 2011 ONSC 1880, where a party has not listed purged documents in its schedule C, it is required to do so by way of a further and better affidavit of documents. While arguing it was not meaningful to do so, the defendants agreed to provide that answer in its schedule C and it is so ordered.

B. The defendants’ cross motion

[17] The defendants seek an order compelling the plaintiff to authorize the former counsel who acted for him in a wrongful dismissal complaint to deliver up his file to the defendants. The defendants argue that the plaintiff has a history of making erroneous and unsubstantiated claims for bonuses from his employers. When he parted ways with his former employer, he retained counsel and sent a demand letter seeking $500,000 in damages and payment of a $60,000 bonus. The plaintiff has produced the demand letter to that former employer and a release that he and the employer signed.

[18] The defendants argue that the plaintiff’s lawyer’s file will demonstrate both a similar pattern by the plaintiff in making unsubstantiated demands and will show that he is aware that his claim for a $500,000 bonus in this instance is unreasonable. He held a similar job with his prior employer and his demand in that instance was for a $30,000 annual bonus.

[19] The motion is dismissed for three reasons. First, as noted in Tanner v. McIlveen Estate at paragraph 18, “in the absence of a pleading which sets out the framework for similar fact evidence, the questions concerning prior [conduct] do not meet the semblance of relevance test” (being the test that was in place at the time the motion was argued). The defendants in this instance have not pleaded that the plaintiff has a history or pattern of behaviour of making inflated or insupportable claims for wrongful dismissal damages and bonuses. As such, documents concerning his demand to his former employer for wrongful dismissal damages are not relevant, based on a review of the pleadings.

[20] Second, the lawyer’s file sought is privileged. The defendants seek disclosure of the lawyer’s reasons for making a claim for $500,000 and his discussions with his client about the amount. This information is obviously privileged and the motion is dismissed on that basis alone. Even if it were relevant, which I find it is not, the prejudice in compelling a party to disclose his strategic discussions with his counsel vastly outweighs any probative value the file might have.

[21] Third, the defendants already have the demand letter confirming the claim for $60,000 (being an annual $30,000 bonus), unlike the $500,000 bonus he claims in this action and also have the release confirming the plaintiff settled for $15,000.

C. Costs

[22] Each party filed an omnibus bill of costs. The defendants seek $10,860 for both motions on a partial indemnity basis and the plaintiff seeks $31,192.46. I find the work done disproportionate to what was at stake. The plaintiff has already examined two representatives of the defendants for discovery, cross-examined the defendants’ deponent on this motion and filed a lengthy factum.

[23] Further, neither party had much success on their motion. The defendants’ motion was dismissed and the plaintiff succeeded in only the minor aspects of his motion. Each party shall bear his or its own costs.

[24] Order to go in terms of the draft order, which I have signed and is released concurrently with this decision.

Associate Justice Jolley Date: 14 June 2023