Court File and Parties

COURT FILE NO.: CV-20-00637893-0000 DATE: 2023-08-28

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

VINCENT K. RAMCHARAN Plaintiff – and – WESDOME GOLD MINES LTD. Defendant

Counsel: Christopher E. Kim, for the Plaintiff Jeffrey B. Simpson and Ioana Pantis, for the Defendant

HEARD: February 23, 2023

A.P. Ramsay J.

REASONS FOR DECISION

I. Overview

[1] The defendant is a mining, exploration and development company based in Toronto, Ontario, focused primarily on gold. The plaintiff was employed by the defendant pursuant to an employment agreement in writing. The agreement contained a termination clause. The plaintiff was terminated without cause and without notice and the defendant relies on the termination provision. The plaintiff commenced this proceeding seeking damages for wrongful dismissal, including compensation for various benefits, vacation pay, bonuses and stock options. The parties dispute whether the termination provisions in both the employment agreement and the various stock option agreements are enforceable.

II. Nature of the Motion

[2] The plaintiff, Vincent Ramcharan, brings this motion for summary judgment pursuant to r. 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 against his former employer, the defendant, Wesdome Gold Mines Ltd (“Wesdome”).

[3] The plaintiff seeks judgment for the following:

a) Payment of $137,333.33 being equivalent to 10 months’ pay in lieu of notice b) 10% for pay in lieu of benefits c) Payment of $384,120.00 being the net difference in value between the strike price and the closing price of the Wesdome Stock Options that would have vested during the 10 months’ notice period d) Payment of vacation pay on bonuses received in 2018 and 2019 e) Payment of vacation pay on the ESA termination pay received at termination f) Prejudgment and post-judgment interest in accordance with sections 128 and 129 of the Courts of Justice Act, R.S.O., 1990, c. C.43, as amended, and g) Payment of the plaintiff’s costs on a substantial indemnity basis.

III. Background

[4] The plaintiff became employed with Wesdome on April 2, 2018. He had been unemployed at the time he was hired. The plaintiff had worked at Richmont Mines Inc. until November 2017. The plaintiff’s employment with Wesdome was governed by a written employment agreement dated February 16, 2018 (the “Employment Agreement”). The Employment Agreement contained a termination provision. The Employment Agreement was drafted by Wesdome.

[5] The plaintiff was 49 years old at the time of termination and held the position of Director of Sustainability. His compensation package was as follows:

a. a base salary of $164,800; b. eligibility to earn an annual discretionary bonus; c. eligibility to participate in stock option grants; d. entitlement to RRSP matching amounting to 5% of wages; e. employee benefits which included health, dental, life and disability insurance; and f. vacation of four weeks.

[6] The plaintiff was eligible to receive two bonuses. The Short-Term Incentive Plan (“STIP”) payments were based on “20% corporate and 80% personal” objectives. The Long-Term Incentive Plan (“LTIP”) was based on company’s performance as well as the individual’s performance and were stock options.

[7] In 2019, the plaintiff’s income from Wesdome was $299,320.07, which included severance pay, and consisted of (i) a base salary of $134,428.14; (ii) performance bonus of $25,712.00; and (iii) stock options granted/vested of $84,678.80.

[8] On May 7, 2018, Wesdome granted the plaintiff 100,000 stock options under Wesdome’s Equity Incentive Plan and Stock Option Award Agreement dated May 7, 2018, with an exercise price of $1.94, valid for five years, and granted/vested as follows:

a) 33% on May 4, 2019; b) 33% on May 4, 2020; and c) 34% on May 4, 2021.

[9] On February 26, 2019, Wesdome granted the plaintiff 50,000 stock options pursuant to Wesdome’s Equity Incentive Plan and Stock Option Award Agreement dated February 26, 2019, with an exercise price of $5.28, valid for five years and granted/vested as follows:

a) 33% on February 26, 2020; b) 33% on February 26, 2021; and c) 34% on February 26, 2022.

[10] On November 1, 2019, Wesdome terminated the plaintiff without cause.

[11] Wesdome paid the plaintiff two weeks’ pay in lieu of notice pursuant to the Employment Standards Act, 2000, S.O. 2000, c. 41 (“ESA”). Wesdome also paid the plaintiff his accrued vacation pay and made available to him health and dental benefits for six months (until May 16, 2020 or until such time as the plaintiff became eligible for benefits through a new employer).

[12] Upon termination, Wesdome advised the plaintiff that all of his unvested stock options would expire on December 2, 2019.

[13] Wesdome stocks were subject to two Stock Option Award Agreements (together, “Option Agreements”) and to an Omnibus Equity Incentive Plan (the “Plan”). The Option Agreements incorporate the Plan by reference.

[14] In his statement of claim, the plaintiff seeks damages as follows:

i. $164,800 for 10 months reasonable notice; ii. $5,124 for vacation pay owing on bonuses received for 2018 and 2019 and vacation pay owed under the ESA; iii. damages for benefits during the period of notice; iv. damages in the amount of $488,002.44 for cancelled stock options granted on May 7, 2018; v. damages in the amount of $199,000, for cancelled stock options granted on February 26, 2019.

IV. Position of the Parties

a) Plaintiff’s position

[15] The plaintiff contends that he was terminated without cause. He argues that he is entitled to common law notice, as the termination provision relied upon by the employer was unenforceable as it did not comply with the requirements of the ESA. The plaintiff submits that the termination provisions cannot be relied upon for any purpose.

[16] The plaintiff submits that he was never provided with a copy of the Plan until after he was terminated and was never made aware of its existence or its terms. The plaintiff argues that there were scant references to a document referred to as the “Plan” in the Option Agreements, including a statement that Wesdome would provide the plaintiff with a copy of the “Plan” only “upon reasonable request from time to time”. The plaintiff submits that the lack of notice would render a termination provision in stock options/LTIP documents unenforceable. He argues that the Employment Agreement was the only document presented to him when he was hired. The plaintiff argues that the bonuses and stock options are a significant component of his compensation.

b) Defendant’s position

[17] Wesdome submits that the plaintiff’s termination is governed by an enforceable termination clause in the Employment Agreement which rebuts the presumption of common law reasonable notice.

[18] Wesdome argues that the plaintiff received his statutory entitlements under the ESA and submits that they offered the plaintiff a four-month termination package and continued benefits for six and a half months. Wesdome paid the plaintiff a bonus for 2019 in the amount of $32,000. Wesdome submits that the plaintiff was aware of performance issues in 2018 and 2019.

[19] Wesdome relies on the termination provisions contained in the two Option Agreements and the Plan. Wesdome argues that the Option Agreements and Plan termination provisions intentionally anticipated all forms of termination, including the plaintiff’s dismissal without cause, and explicitly defined the termination date to exclude any period of notice. Wesdome submits that the principles of contractual interpretation must be construed in Wesdome’s favour.

V. Issues to be determined

[20] The following issues are raised on this motion:

i. Is summary judgment appropriate in this case? ii. Is the termination provision enforceable? iii. What is the length of reasonable notice? iv. Is the plaintiff entitled to a discretionary bonus? v. Is the plaintiff entitled to vacation pay? vi. What is the quantum of benefits in lieu of notice? vii. Is the plaintiff entitled to compensation for post-termination stock options?

i. Is summary judgment appropriate in this case?

[21] Pursuant to Rule 20.04(2)(b), the parties agreed that this case was an appropriate case for summary judgment. The court is not bound by any agreement between the parties, and it is incumbent on the court to decide whether it is appropriate to grant summary judgment: Royal Bank of Canada v. 1643937 Ontario Inc., 2021 ONCA 98, 154 O.R. (3d) 561, at para. 26.

[22] The court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence: subrule 20.04(2); Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 34.

[23] On a motion for summary judgment, the court must first decide whether there is a genuine issue requiring a trial based only on the evidence before the court, without using its fact-finding powers in subrule 20.04(2.1) of the Rules of Civil Procedure. If there appears to be a genuine issue requiring a trial, subrule 20.04(2.1) permits the motion judge to: (1) weigh the evidence, (2) evaluate the credibility of a deponent, or (3) draw any reasonable inference from the evidence unless it is in the "interest of justice" for these powers to be exercised only at trial: Hryniak, at para. 66. Alternatively, subrule 20.04(2.2) permits the motion judge to direct a mini-trial for the purposes of exercising their discretion under subrule (2.1). Summary judgment is only appropriate where it leads to “a fair process and just adjudication”: Hryniak at para. 3; Mason v. Perras Mongenais, 2018 ONCA 978 at para. 44.

[24] Wrongful dismissal actions without cause are generally well suited to summary judgment, but the appropriateness of the motion will depend on the particular circumstances of each case: Arnone v. Best Theratronics, 2015 ONCA 63, at para. 12; Aylesworth v. The Law Office of Harvey Storm, 2015 ONSC 6242 (S.C.), at para. 15, aff'd 2016 ONSC 3938 (Div. Ct.).

[25] In this case, aside from the claim for compensation for benefits under the LTIP, this is a straightforward claim for wrongful dismissal without cause. In my view, the case is amenable to a r. 20 summary judgment motion: Arnone, at para. 12. The parties had agreed that the issues could be determined by way of summary judgment, but the plaintiff subsequently raised the issue of not having received a copy of the Plan document until after his termination. Wesdome disagrees on this point, and now argues that the plaintiff’s position gives rise to an issue of credibility which cannot be determined on this motion for summary judgement. In this case, the summary judgment process is appropriate to address the issues raised on this motion, with recourse to a mini-trial or, alternatively, expedited trial, with respect to the issue of the stock options, as addressed below.

ii. Is the termination provision enforceable?

[26] The plaintiff submits that the termination provision in the Employment Agreement seeks to displace the test for termination without notice or termination pay as set out in section 2(1) of O Reg 288/01 (“the Regulation”) under the ESA and replace it with the common law test for “just cause” dismissal. Wesdome seeks to contract out of s. 60 of the ESA, which provides that every terminated employee is entitled to be paid accrued wages and accrued vacation pay. The plaintiff further contends that in contravention of sections 54 - 62 of the ESA, the Employment Agreement provides that termination in accordance with the ESA would specifically not apply if the employee were terminated for just cause or if the employee resigned. The plaintiff further submits that there is a provision of the Employment Agreement that requires that entitlement to notice of termination or pay in lieu of notice is dependent on the plaintiff’s execution of an agreement and release in favour of Wesdome in a form to be provided by Wesdome, which is in contravention of sections 11(5) and 54-62 of the ESA. The plaintiff argues the agreement is unenforceable and seeks reasonable notice at common law.

[27] Wesdome seeks to enforce the termination provision in the Employment Agreement. Wesdome submits that the language of the termination provision rebuts the common law presumption of reasonable notice. Wesdome submits that the termination provision complies in all aspects with the ESA.

[28] The termination provision in the Employment Agreement stipulates that the plaintiff would not be entitled to payment of any kind if he were terminated for “just cause”. The provision also indicates that the provision in the Employment Agreement that provides that the employer may terminate the Employment Agreement or the plaintiff’s employment “in accordance with the Employment Standards Act” does not apply where the plaintiff is “terminated for cause”.

[29] The termination provision reads as follows:

Termination

This Agreement and your employment with the Company may be terminated at any time for just cause, without prior notice or any payment in lieu of notice or payment of any kind whatsoever, either by way of anticipated earnings or damages of any kind, by advising you in writing.

The Company may at any time terminate this Agreement and your employment, in accordance with the Employment Standards Act, (Ontario) (the "ESA"). The provisions of this paragraph will not apply in circumstances where you resign from employment or are terminated for cause. [Emphasis added.]

[30] In my view, my determination that the Employment Agreement purports to disentitle the plaintiff to payment of any kind whatsoever if the plaintiff is terminated for just cause is dispositive of the issue as to whether the provision is enforceable. I find that it is not for the reasons below.

[31] Section 2(1) of the Regulation sets out employees who are not entitled to notice of termination or termination pay under the ESA. Clause 3 of s. 2(1) includes in this list “an employee who has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.”

[32] Section 9(1) of the Regulation sets out employees who are not entitled to severance pay under the ESA. Clause 6 of s. 9(1) mirrors the language in clause 3 of subsection 2(1), and, in the result, an employer is not obliged to pay severance under the ESA where the employee “has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.”

[33] Relying on Minott v. O'Shanter Development Co. (1999), 168 D.L.R. (4th) 270 (Ont. C.A.), at para. 27, Wesdome argues that misconduct under the ESA cannot automatically be equated with just cause for dismissal at common law. In Andros v. Colliers Macaulay Nicolls Inc., 2019 ONCA 679, 437 D.L.R. (4th) 546, the Court of Appeal acknowledged that the ESA contains employment standards distinct from those at common law.

[34] In the case before the court, Wesdome has not alleged in its statement of defence that the plaintiff was dismissed for cause. That of course does not impact the determination on the enforceability of the termination provision. While the common law permits dismissal of an employee without notice or pay in lieu of notice for just cause, the ESA provides minimum requirements for employers to compensate dismissed employees (termination pay or severance pay) even where an employee is terminated for just cause. The court has found that the term “for cause” in a termination clause incorporate the common law concept of “just cause”: Lamontagne v. J.L. Richards & Associates Limited, 2021 ONSC 8049 (Div. Ct.), at para. 15 and 19.

[35] There are exceptions to a terminated employee’s entitlement to termination pay in lieu of notice and severance pay under the ESA where the employee has engaged in “wilful misconduct, disobedience or wilful neglect of duty”. The jurisprudence makes it clear that an employer faces a higher test in establishing that an employee’s conduct to come within the exception under the Regulation. An employer may be able to establish cause for dismissal as in the case of Oosterbosch v. FAG Aerospace Inc, 2011 ONSC 1538, or “just cause”, as in the cases of Plester v. PolyOne Canada Inc., 2011 ONSC 6068, aff’d 2013 ONCA 47 and Render v. ThyssenKrupp Elevator (Canada) Limited, 2022 ONCA 310, but may still fail to establish that the employee’s conduct fell within the narrow statutory exception thereby excusing the employer from the statutory obligation to pay severance pay.

[36] Thus, it is well established that there is a marked difference between dismissal for cause at common law and “wilful misconduct” under the Regulation: see Render, at para. 80. In the result, even an employee dismissed for cause may be entitled to receive statutory termination pay and severance pay under the ESA: Render, at para. 80. The Employment Agreement here purports to remove the requirement for termination pay under the ESA if the plaintiff was terminated “for cause”. The Employment Agreement also suggest the plaintiff may be terminated “for cause” without any payment “of any kind whatsoever” and makes no exception to cases where the conduct of the plaintiff would fall within the exemption under the Regulation.

[37] In Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986, at p. 1003, Iacobucci J., writing for the majority of Supreme Court of Canada, stated, in relation to the ESA, that “an interpretation of the Act which encourages employers to comply with the minimum requirements of the Act, and so extends its protections to as many employees as possible, is to be favoured over one that does not.” To be enforceable, a termination clause must be clear and unambiguous: Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, 134 O.R. (3d) 481, at para. 40. “Any doubt arising from difficulties of language should be resolved in favour of the claimant”: Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 SCR 27, at p. 29.

[38] The ESA sets out the minimum employment standards that employers must meet under ss. 1(1), 5(1) and 57. Sections 54 and 55 of the ESA mandate that notice, and termination pay must be given for all terminations, even those for just cause, except for “prescribed employees”: Rahman v. Cannon Design Architecture Inc., 2022 ONCA 451, at para. 27. As noted by Gillese J.A. in Rahman, at para. 28, ESA notice and severance have been awarded in circumstances where the employer had cause to terminate the employee.

[39] An employment agreement must be interpreted as a whole. In analyzing the enforceability of a termination provision, the correct approach is to determine whether the termination provisions in an employment agreement, read as a whole, violate the ESA: Waksdale v. Swegon North America Inc., 2020 ONCA 391, 446 D.L.R. (4th) 725, leave to appeal refused, [2020] S.C.C.A. No. 292, at para. 10. The termination provision is unenforceable if it is in whole or in part illegal: Waksdale, at para. 10.

[40] Parties cannot contract out of these employment standards: ESA, s. 5; Rossman v. Canadian Solar Inc., 2019 ONCA 992, at para. 18; Andros, at para. 19. It is the wording of the termination provision which determines whether it contravenes the ESA: Rahman v. Cannon Design Architecture Inc., at para. 24.

[41] In Waksdale at para. 10, the Court of Appeal held that illegality in the “with cause” portion of the termination provisions renders all termination provisions in the employment contract unenforceable: “While courts will permit an employer to enforce a rights-restricting contract, they will not enforce termination provisions that are in whole or in part illegal. In conducting this analysis, it is irrelevant whether the termination provisions are found in one place in the agreement or separated, or whether the provisions are by their terms otherwise linked”: see also Rossman, at para. 18.

[42] In this case, Wesdome did pay the plaintiff two weeks’ severance under the ESA. The plaintiff submits, however, that Wesdome cannot rely on the termination provision in the Employment Agreement as the provision stipulating that he would not be entitled to any payment under these ESA if terminated for cause did not comply with the minimum requirements under the ESA, and the termination provision was unenforceable.

[43] A termination provision that does not comply with the ESA in any respect is void and cannot be relied upon for any purposes: Rahman, at para. 30. If any provision in an employment contract related to termination does not comply with the ESA, all provisions with respect to termination are null and void. Even if only a portion of a termination provision conflicts with the ESA, it is still not open to the Court to simply strike out an offending provision. Rather, it “taints the entirety of the termination provisions”: Gracias v. Dr. David Walt Dentistry, 2022 ONSC 2967, at para. 94; Rossman, at para. 18; Pavlov v. The New Zealand and Australian Lamb Company Limited, 2021 ONSC 7362, at para. 14.

[44] The court agrees with the plaintiff’s argument that in stipulating that the plaintiff would not be entitled to receive “payment of any kind whatsoever” if he were “terminated for cause,” the provision does not comply with the minimum requirement of the ESA, and therefore the termination provision is unenforceable. Let me explain.

[45] Wesdome argues that the termination provision complies in all respects with the ESA. It further submits that any mention of “just cause” in the termination provision is specifically in relation to the common law concept of just cause, and not the ESA “wilful misconduct” standard. In determining whether a termination provision contravenes the ESA, the wording of the contract alone should be considered, not what the employer might have done on termination: Rahman, at para. 24; Wood, at paras 43-44. The sophistication of a party and the subjective intentions of the parties are not relevant considerations in determining whether a termination provision is compliant with the ESA.

[46] The termination provision for cause did not restrict its application to situations governed by s. 2(1)((3) and s. 9(1) of the Regulation, and in the result the provision purports to apply to all dismissals for “cause” regardless of whether there was “wilful misconduct, disobedience or wilful neglect”. Moreover, the termination provision expressly stated that the provision of the paragraph related to Wesdome terminating the agreement or the plaintiff’s employment in accordance with the ESA did not apply in circumstances where the employment is terminated “for cause”.

[47] In my view, the termination provision does not comply with the minimum requirements of the ESA. If a termination provision in an employment contract violates the ESA – such as a “no notice if just cause” provision – all the termination provisions in the contract are invalid: Rahman, at para. 30; Waksdale, at para. 10; Rossman, at para. 18. In Rahman, Gillese J.A., speaking for the court, stated at para. 30: “In Waksdale, as in the present appeal, the employer had not purported to terminate the employee for just cause. However, the just cause provision in the employment contract violated the ESA. The invalidity of the just cause provision rendered the other termination provisions unenforceable”.

[48] As set out in Rossman, at para. 18:

“[I]f a provision within a termination clause conflicts with the minimum standards prescribed by the ESA, it is not open to this court to simply strike out the offending provision. In that situation, the entire termination clause is void. If even one provision contravenes the ESA and fails to “[substitute] a greater benefit”, that alone will render the termination clause void and unenforceable”.

[49] In this case, Wesdome did not purport to terminate the plaintiff for just cause but as the termination provision in the employment contract is void, it cannot be relied upon by Wesdome for any reason, including for the sake of defining the plaintiff’s notice period. Common law notice therefore applies.

iii. What is the length of reasonable notice?

[50] The termination provision being unenforceable, the plaintiff is entitled to pay in lieu of reasonable notice under the common law: Rossman, at para. 17, citing Andros, at para. 18; Amberber v. IBM Canada Ltd., 2018 ONCA 571, at para. 40; Wood, at para. 16.

[51] The plaintiff is seeking ten months reasonable notice.

[52] Wesdome submits that if the termination provision is unenforceable, the plaintiff is entitled to three to four months notice, less amounts paid.

[53] Mr. Ramcharan was 49 years old at the time of termination with a length of service of less than two years. He had a base salary of $164,800.00 and the potential to earn significantly more in compensation as a result of performance-based bonuses, stock options in the company, and other benefits, including the 5% matching contribution to his RRSP.

[54] The appropriate notice period must be determined on a case-by-case basis and having regard to the factors set out in the seminal case of Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.). The list of factors is not closed. A reasonable notice period is determined by considering such relevant factors as the character of employment, the length of service, the age of the employee and the availability of similar employment having regard to the experience, training, and qualifications of the employee: Bardal, at p. 145; Honda Canada Inc. v. Keays, 2008 SCC 39, [2008] 2 S.C.R. 362 at paras. 27-29. The determination of what constitutes reasonable notice “is an art not a science”; the court must weigh and balance a catalogue of relevant factors, and there is no one “right” figure for reasonable notice: Minott, at para. 62.

[55] At termination, the plaintiff was 49 years old and had approximately 25 years of experience in the mining industry not just in Canada, but also the United States, Guyana, Suriname, Guatemala, El Salvador, Bolivia, Venezuela, and Madagascar. The plaintiff also has over 10 years of experience in management roles, holds a Professional Engineer designation in Ontario, and has several university level degrees, including a Master of Engineering degree from the University of British Columbia.

[56] The plaintiff relies on Chambers v. Global Traffic Technologies Canada Inc., 2018 ONSC 2000. In Chambers, the plaintiff was 57 years old, and had been employed with the employer for two years and six months. I note that the length of service was one year more than the case before me. Based on the factors in that case, Glustein J. set the length of reasonable notice at nine months. The plaintiff also relies on Toy v. 0954516 BC Ltd., 2022 BCSC 1161. The decision is not binding on this court, and I note that the plaintiff was a five-year employee when he was terminated and was 62 years old. Further, the plaintiff relies on Pavlov, where the plaintiff had been employed for over three years and was 47 years old at the time of his termination. The case is distinguishable on its facts as Mr. Pavlov had been recruited from his previous employer whereas the plaintiff in this case had been unemployed at the time he was hired.

[57] The cases provided by Wesdome are in the three to six month range, which I find is more in keeping with the existing case law for a 49-year old employee with less than two years of service, and managerial responsibilities.

[58] Wesdome relies on Iriotakis v. Peninsula Employment Services Limited, 2021 ONSC 998, 154 O.R. (3d) 373. I find that this case is distinguishable as the plaintiff was a salesperson, was seven years (56 years old) older than the plaintiff, with a base salary out of $60,000 and commissions. In this case, the plaintiff’s base salary is $164,800.00, and the bonuses, stock options, and other benefits to which he was potentially entitled were significantly larger than in Iriotakis. In this case, the plaintiff had remuneration of almost $300,000 in 2019. A plaintiff’s substantial average annual compensation and the possibility of equity participation in his employer’s company are relevant considerations in assessing similar employment opportunities: Love v. Acuity Investment Management Inc., 2011 ONCA 130, at para. 22, citing Belzberg v. Pollock, 2003 BCCA 71, 10 B.C.L.R. (4th) 255. As noted by the Ontario Court of Appeal in Love at para. 22, these “considerations suggest that obtaining similar employment would be harder rather than easier.” Given the timing of the plaintiff’s termination and his substantial compensation package, this factor would tend to increase the period of reasonable notice.

[59] Wesdome relies on Fraser v. Canerector Inc., 2016 ONSC 6071. In that case, the plaintiff was awarded four and a half months as a reasonable notice period for almost three years of service. The plaintiff was involved in management, but his age is not known from the decision.

[60] Wesdome also relies upon Nogueira v. Second Cup, 2017 ONSC 6315. In that case, the plaintiff was a 47-year-old manager and was the senior person in a three-person marketing group, earning $125,000 per year. Her position with her employer lasted 8 and a half months. The plaintiff was awarded four months notice.

[61] The character of the plaintiff’s employment is also an important factor in this case in determining an appropriate notice period. The plaintiff had been in a senior management position and reported directly to the Chief Operating Officer. He had a corporate and advisory role to the Chief Executive Officer (on First Nations/Métis, ESG and Strategic Planning matters), the Chief Operating Officer (on Environment and Permitting/Approvals, Enterprise Risk Management, First Nations/Métis, and Budget matters), the Chief Financial Officer (Closure costs/Insurance, Enterprise Risk Management, and Budget matters), and the Board of Directors (on Environment and First Nations/Métis matters). He was responsible for liaising and coordinating with internal stakeholders to, inter alia, implement measures to ensure sustainability practices, build relationships with several First Nations and Métis communities and government entities, as well as facilitate environmental and permitting/approvals.

[62] At the time of the motion, the plaintiff had not yet found new employment. An economic downturn can justify a longer notice period: Paquette v. TeraGo Networks Inc., 2015 ONSC 4189, at para. 27, rev’d on other grounds, 2016 ONCA 618. However, notice must be determined by the circumstances existing at the time of termination and not by the amount of time that it takes the employee to find employment: Holland v. Hostopia.Com Inc., 2015 ONCA 762, 392 D.L.R. (4th) 650, at para. 61; Yee v. Hudson’s Bay Company, 2021 ONSC 387, at para. 21. In my view, a reasonable notice period in this case is six months. The plaintiff was employed for one year and seven months and was 49 years old when he was terminated. The pandemic was declared four months after he was terminated.

[63] As for the plaintiff’s mitigation efforts, the only sworn evidence before the court is that the plaintiff applied to numerous positions and was unsuccessful in securing a new job. He indicated that his mitigation efforts were impacted by the onset of the global pandemic. He appends to his affidavit various documents. The content of the documents is, of course, not sworn evidence and is not addressed in his affidavit.

[64] Wesdome has the onus of proving that the plaintiff has failed to mitigate his damages and has not advanced the argument of a failure to mitigate on this motion, nor presented any evidence to discharge its burden.

[65] Accordingly, I make no reduction for failure of the plaintiff to mitigate his damages.

iv. Is the plaintiff entitled to a discretionary bonus?

[66] Wesdome submits that after he was terminated, Wesdome paid the plaintiff his 2019 bonus in the amount of $32,000.

[67] Aside from the stock options, dealt with below, the plaintiff has not established that he would be entitled to receive any additional bonus beyond the discretionary bonus already received.

[68] Both parties to a summary judgment motion are obliged to put their best foot forward: Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753, at para. 9.

[69] Only after the moving party discharges its evidentiary burden of proving that there is no genuine issue requiring a trial for resolution does the burden then shift to the responding party to prove that its claim or defence has a real chance of success: Sanzone v. Schechter, 2016 ONCA 566, at para. 30; Connerty v. Coles, 2012 ONSC 5218, at para. 9.

[70] The responding party may not rely on the prospect of additional evidence that may be tendered at trial; the respondent must put its best foot forward in response to the motion for summary judgment: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, at para. 26, aff'd 2014 ONCA 878, leave to appeal to SCC refused, [2015] S.C.C.A. No. 97. On the evidence before me, I find that the plaintiff is not entitled to a discretionary bonus.

v. Is the plaintiff entitled to vacation pay?

[71] The plaintiff argues that Wesdome has not paid vacation pay under the ESA, amounting to $5,124.04. The plaintiff further asserts that Wesdome also failed to pay vacation pay on the two weeks’ termination pay, which amounts to $507.04. The only evidence in support of the plaintiff’s claim for vacation pay is the following: “I understand that Wesdome only paid vacation pay up until November 1, 2019, not until the end of the statutory notice period.” The plaintiff submits that bonuses that are based on performance-based metrics fall under the definition of “wages” under the ESA.

[72] Wesdome submits that it has paid the plaintiff the accrued vacation entitlements and has no additional entitlement to vacation pay on his 2019 bonus because it did not constitute “wages” as defined under the ESA; rather, it was a discretionary bonus not related to hours of work, production, or efficiency, citing ss. 1(1) and 35.2 of the ESA. Wesdome did not dispute the plaintiff’s argument that he is also entitled to vacation pay on the two weeks’ termination pay.

[73] Wesdome does not challenge the plaintiff’s calculation, only his entitlement.

[74] Entitlement to vacation pay under the ESA is determined as a percentage of the employee’s wages. Section 35.2 of the ESA, which governs vacation pay, reads as follows:

35.2 An employer shall pay vacation pay to an employee who is entitled to vacation under section 33 or 34, equal to at least,

(a) 4 per cent of the wages, excluding vacation pay, that the employee earned during the period for which the vacation is given, if the employee’s period of employment is less than five years; or

(b) 6 per cent of the wages, excluding vacation pay, that the employee earned during the period for which the vacation is given, if the employee’s period of employment is five years or more.

[75] “Wages” is defined in section 1(1) of the ESA as “monetary remuneration payable by an employer to an employee under the terms of an employment contract”. Under s. 1(1), “any sums paid as gifts or bonuses that are dependent on the discretion of the employer and that are not related to hours, production or efficiency” are excluded the definition of wages.

[76] In Bain v. UBS Securities Canada Inc., 2018 ONCA 190, at paras. 21-24, the Ontario Court of Appeal upheld a trial judge’s determination that the employee was entitled to have vacation pay calculated on discretionary bonuses received by the employee. The trial judge had “concluded that the bonuses here were ‘based in part on how an employee produced and how diligent he or she was in their work at UBS’ and that while the bonus was discretionary, there were definite factors on which it was based, including performance”: at para. 24. In this case, the plaintiff received a bonus in 2019 which was based on achievement of both corporate (20%) and personal objectives performance. In my view, there is therefore authority for concluding that vacation pay should also be calculated on the bonus.

[77] As for the termination pay, in my view, it would be caught under the basket clause in the definition of wages in s. 1(1) of the ESA: “any payment required to be made by an employer to an employee under this Act”. The plaintiff is therefore entitled to vacation pay, as claimed, less any amounts already received.

vi. What is the quantum for benefits in lieu of notice?

[78] A dismissed employee is entitled to the pecuniary value of lost benefits flowing from the dismissal, even though they are not replaced by the employee: Davidson v. Allelix Inc. (1991), 7 O.R. (3d) 581 (C.A.).

[79] Wesdome submits that health and dental benefits were continued for a total of six and a half months until May 16, 2020 (or the date the plaintiff became eligible for benefits through a new employer). Wesdome indicates that short term disability, long term disability and life insurance benefits terminated at the end of the two-week statutory notice period on November 16, 2019.

[80] The plaintiff’ is therefore entitled to damages as claimed for benefits during the notice period. Since Wesdome has not put forward an alternative approach to assess this head of damages, I would adopt the plaintiff’s approach, which is based on 10% of his base salary. This approach is amply supported by the case law: Groves v. UTS Consultants Inc., 2019 ONSC 5605 at para. 95; Yee, at para. 31; Andros, at para. 65; Bergeron v. Movati Athletic (Group) Inc., 2018 ONSC 885, at paras. 49-51; Beatty v. Best Theratronics Ltd., 2014 ONSC 3376, at para. 20, aff’d 2015 ONCA 247; Nasager v. Northern Reflections Ltd., 2010 ONSC 5840, at paras. 8, 23.

vii. Is the plaintiff entitled to post-termination stock options?

[81] The plaintiff submits that it was only after he was terminated that he took a closer read of the Option Agreements and noticed the reference to the Plan. The plaintiff has not pled that he was never given any copies of the Plan before termination. The plaintiff deposed in his affidavit that he was not given a copy of the Plan.

[82] Wesdome submits that when the parties agreed that this action was appropriate for summary judgment, Wesdome did not know of the plaintiff’s allegation that he was not aware of the Plan and did not become aware of that allegation until the plaintiff served his motion record containing his Affidavit, which was reinforced during his cross-examination on that Affidavit. Wesdome argues that the plaintiff has therefore recently raised credibility issues that were not apparent from his statement of claim or otherwise within Wesdome’s knowledge at the time it agreed to proceed via summary judgment.

[83] Wesdome also argues that the statement of claim does not allege that the plaintiff did not read the Option Agreements, nor does it allege that the plaintiff did not receive a copy of the Plan. Wesdome submits that the statement of claim asserts that all stock options granted were “pursuant to Wesdome’s Equity Incentive Plan and Stock Option Award Agreement[s]”. Wesdome points out that the statement of claim reproduces the full termination provision from section 7(a) of the Plan.

[84] There are several issues, however, raised by the evidence dealing with the stock options. First, is the court precluded from considering the issue raised by the plaintiff regarding his lack of knowledge of the Plan, since it was not pleaded? Second, what is the valuation of the stocks being claimed, and for what periods of time, and based on what evidence?; Have the parties come to an agreement on the Historical Gross Value, appended as an exhibit to the plaintiff’s affidavit for the truth of its contents? Third, is there merely an issue of credibility which does not amount to a “genuine” issue of credibility regarding notice of the termination provisions in the Option Agreements and Plan? Is oral evidence required, as Wesdome urges, to allow the court to evaluate the credibility, weigh the evidence, and draw an inference: subr. 20.04(2.1)?

[85] The court may assume that the record on a summary judgment motion contains all of the evidence that the parties would adduce if the matter went to trial: Sweda Farms, at paras. 26-27.

[86] I agree with Wesdome that oral evidence is required, and I direct an expedited trial on the issues, as framed above, pursuant to r. 20.05(2). On the evidence, it does not appear that a full-blown trial is required to deal with this sole outstanding issue, keeping in mind the principles articulated in Hryniak.

VI. Disposition

[87] I am directing a mini-trial pursuant to subrule 20.04(2.2), or expedited trial under rule 20.05(2), with respect to issues raised by the stock options, as identified above. Counsel for the parties may contact my assistant within ten days of the date of this decision to schedule a conference call to set a date for the hearing and a time estimate.

[88] The plaintiff is granted summary judgment at this time, as set out below:

i. The termination provision in the employment agreement is not enforceable. ii. The plaintiff is entitled to damages for six months’ notice less any statutory amounts paid. iii. The plaintiff is entitled to 10 percent of his base salary for benefits in lieu of notice, less any amounts paid or available to him; iv. The plaintiff is not entitled to any further bonus for 2019. v. The plaintiff is entitled to vacation pay based on the bonus received in 2019 and on severance pay, less any amounts paid.

A.P. Ramsay J.

Released: August 28, 2023