COURT OF APPEAL FOR ONTARIO

CITATION: Singer v. Nordstrong Equipment Limited, 2018 ONCA364

DATE: 20180413
DOCKET: C64472

Feldman and Benotto JJ.A. and Sachs J. (ad hoc)

BETWEEN

Andre Singer

Plaintiff (Appellant/
Respondent by way of cross-appeal)

and

Nordstrong Equipment Limited

Defendant (Respondent/
Appellant by way of cross-appeal)

Jeff C. Hopkins and Kristen Pennington, for the appellant/respondent by way of

cross-appeal

Gerald Griffiths, for the respondent/appellant by way of cross-appeal

Heard: March 26, 2018

On appeal from the judgment of Justice James F. Diamond of the Superior Court
of Justice, dated October 6, 2017, with reasons reported at 2017 ONSC 5906.

Feldman J.A.:

[1] The respondent terminated the appellant's employment as President and

General Manager of one of two of its divisions, the East Division, without just cause

in December 2016. The appellant was 51 years old at the time, and had been
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employed by the respondent for 11 years, 4 years as President. He reported to the

Chief Financial Officer of the respondent's parent company, Canerector Inc.

[2] The appellant brought a motion for summary judgment to determine the

issues of reasonable notice, loss of bonus for the 2016 year that he had worked,

loss of bonus during the notice period, and loss of benefits during the notice period.

[3] The motion judge awarded the appellant 17 months' salary in lieu of

reasonable notice, as well as an amount for his bonus for 2016. The motion judge

denied the appellant's claim for his bonus during the 17 month notice period in

2017 and part of 2018, as well as any amount for the loss of his benefits package

during the notice period.

[4] The appellant appeals the dismissal of his claims for his bonus and benefits

during the 17 month period of reasonable notice. The respondent cross-appeals

from the award of 17 months' reasonable notice, saying it should have been

between 12 and 15 months, and from the award of a bonus for 2016. It will be most

convenient to address the two issues on the cross-appeal first.

A. ISSUES ON THE CROSS-APPEAL

(1) Reasonable notice period of 17 months

[5] The respondent submits that the motion judge erred in principle by awarding

a period of reasonable notice that is outside the reasonable range for an employee
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in comparable circumstances, and by overemphasizing one of the Bardal factors1,

the character of the employment, while underemphasizing the other Bardal factors,

such as length of service and the availability of similar employment.

[6] The motion judge began his analysis at para. 13 of his reasons by reciting

all of the Bardal factors, and instructing himself to assess reasonable notice "in a

holistic manner", without giving disproportionate weight to one factor over another.

He was clearly alive to the very error the respondent alleges he committed.

[7] Furthermore, in his analysis, the motion judge cited a passage from Fisher

v. Hirtz, 2016 ONSC 4768, where Perell J. explained that a longer notice period is

generally justified for older, long term employees who are often at a competitive

disadvantage in securing new employment. The motion judge's reliance on this

passage demonstrates that he considered the other Bardal factors - age, length

of service, and availability of similar employment - in determining the appellant's

reasonable notice period.

[8] The motion judge also referred to the recent decision of Grace J. in Day v.

JCB Excavators Ltd., 2011 ONSC 6848 as a comparable. In Day, where a 51 year

old regional business manager's employment was terminated after over 14 years,

1 The Bardal factors, which are relevant to determining the period of reasonable notice
on wrongful dismissal, are derived from Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R.
(2d) 140 (Ont. H.C.),atp. 145.
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Grace J. set the reasonable notice period at 17 months. The respondent objects

that in that case, there was evidence of poor prospects in the industry for re-

employment at the time. However, in this case, there was significant evidence of

the appellant's attempts to mitigate and his inability to find a comparable position.

This evidence addresses the factor of availability of similar employment that the

respondent is concerned about.

[9] The respondent also refers to three other cases from 1988, 2002, and 2009,

where damages based on reasonable notice periods of 14 months, 15 months,

and 12 months were awarded respectively. It submits that those cases delineate

the correct range as 12 to 15 months. The same submission was made to the

motion judge. The motion judge was entitled to reject this submission, to refer to

the Day case as a very recent comparable, and to apply the Bardal criteria as he

did. I see no error in the approach taken or the result reached by the motion judge

and no basis to intervene.

(2) Claim for 2016 bonus

[10] The appellant produced in evidence a document provided to him and other

employees in 2009 entitled "Canerector Inc. Corporate Culture", which describes

the bonus or profit sharing plan of the parent company. The motion judge

considered that document, other email correspondence between Canerector's

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operations manager and the appellant, and the appellant's past record of receiving

bonuses of between 3.87% and 6.02% of pre-tax profit, and found at para. 25 that:

While there was some inherent variability in Singer's

bonus payments from year to year, the language used in
the Corporate Culture document, together with
[Canerector's operations manager's] responding email of
February 8, 2013, make it clear that, as Nordstrong
East's President, Singer was entitled to a share of the
bonus pool created by the earning of a positive pre-tax
profit (a bonus typically falling within the "25 to 50%
range").

[11 ] The motion judge awarded the appellant a bonus for 2016 based on 4.634%

of 2016 pre-tax profit.

[12] Before the motion judge, the respondent submitted that the appellant should

receive no bonus, on the basis that it discovered in 2015 that the appellant was

not a good manager and that they hoped he would improve in 2016 but he did not,

and was therefore not entitled to any bonus. In rejecting this submission, the

motion judge noted that the appellant's termination letter made no mention of any

concerns regarding his job performance. We note that in oral argument on the

appeal, counsel advised that the appellant was not told about any performance

concerns either in 2015 or after.

[13] The respondent argues on appeal that the motion judge erred by awarding

the appellant a bonus for the 2016 year because: his division was not profitable

enough, it was underperforming, he had not created expected efficiency gains, and
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the company had denied other division heads a performance bonus in the past for

poor performance.

[14] By this submission, the respondent is essentially attempting to reargue the

motion. It identifies no error of law or palpable and overriding error of fact by the

motion judge. There is no basis to interfere with the finding of the motion judge that

the appellant was entitled to share in the profit pool designated for bonuses for the

2016 year that he worked.

B. ISSUES ON THE APPEAL

(1) Claim for benefits during the notice period

[15] The motion judge denied the appellant's claim for the loss of his benefit

package on the basis that the appellant did not prove that he suffered a loss. The

appellant gave no evidence that he replaced the benefits during the notice period.

[16] The motion judge cited no authority for this approach to the benefits issue.

However, the law in Ontario was settled by this court: in 1991 in Davidson v. Allelix

Inc. (1991), 7 O.R. (3d) 581 (C.A.), where the court stated at p. 589:

Allelix cross-appealed against the award of damages for

loss of benefits proposed by the trial judge relying on a
line of British Columbia decisions. They held that the loss
of benefits from termination of employment is limited to
losses or expenses actually incurred, the sum of
$6,052.97 referred to above for which Dr. Davidson was
entitled to be compensated under the benefit coverage:
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see Sorelv. Tomenson Saunders Whitehead Ltd. (1987),

16 C.C.E.L. 223, 39 D.L.R. (4th) 460 (B.C. C.A.), Wilks v.
Moore Dry Kiln Co. of Canada (1981), 32 B.C.L.R. 149
(S.C.), and McKilligan v. Pacific Vocational Institute
(1981),28B.C.LR.324(CA).

Counsel for Allelix candidly acknowledged that there was

conflicting jurisprudence on this point. In my opinion the
British Columbia decisions do not apply in Ontario where
the law is settled that a wrongfully dismissed employee
may claim, in addition to lost salary, the pecuniary value
of lost benefits flowing from such dismissal. This principle
was referred to with approval by this court in Peck v.
Levesque Plywood Ltd. (1979), 27 O.R. (2d) 108, 105
D.L.R. (3d) 520, where Dubin J.A. said at pp. 113-14
O.R., pp. 525-26 D.L.R.:

In a successful action for wrongful dismissal, an

employee is entitled to damages for the breach of
his contract of employment.

In Batt, Law of Master and Servant, 5th ed. (1 967),

at p. 263 the following proposition is enunciated:

. . . in Savage v. British India SS. Co.,

(1930), 46 T.L.R. 294, Wright, J, appears to
have given the plaintiff twelve months' salary
as damages because the plaintiff was
entitled to twelve months' notice. But clearly
the servant's damages ought not to be so
limited; the master has committed a breach
of contract and so all damages naturally
flowing therefrom ought to be recoverable.

In the case of Lawson v. Dominion Securities

Corp., June 30, 1977 and September 30, 1977,
unreported, this Court held:

The recovery of lost income is not limited to

salary. In this case the appellant conceded
that pension plan benefits should also be
included. . . . other income items should be
admitted including contractual profit-
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sharing, a share purchase option, and many

fringe benefits such as a company car, club
membership, pension, disability and medical
plans .. . McGregor on Damages (13th ed.),
para. 885 at 595.

[17] The respondent refers to the 2010 decision of the New Brunswick Court of

Appeal in Jean v. Pecheries Roger L Ltee, 2010 NBCA 10, 354 N.B.R. (2d) 300

and submits that this court should follow that decision. The court there stated at

para. 56:

[T]he method of assessing damages for wrongful

dismissal applied in the past must undergo fine-tuning to
accord with the principles enunciated in Fidlerv. Sun Life
and Honda Canada v. Keays. Compensation in lieu of
notice must now be calculated in accordance with the
principles that inform the assessment of all damages for
breach of contract. The purpose of such damages is to
place the aggrieved employee in the same position he
would have been in but for the breach by the employer of
the implied term of the contract of employment to give
reasonable notice. Therefore, courts must focus on the
loss sustained by the employee by reason of the
employer's failure to give proper notice instead of what it
would have cost the employer had the employment
continued throughout the notice period: Covered Bridge
Recreation Inc. v. Shurman.

[18] I would not accept this submission. The argument asserted by the

respondent and accepted by the motion judge was specifically considered and

rejected by this court in the Davidson decision. If the law were to be changed, it

would have to be by a five-judge panel of the court, upon the order of the Chief

Justice.
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[19] The motion judge erred in law by rejecting the appellant's claim for benefits

during the reasonable notice period. The appellant proved on the motion that the

cost to replace his benefits for one year was $6,676, and is therefore entitled to

damages of $9,458, the replacement cost of his benefits over the 17 month notice

period.

(2) Claim for bonus during the notice period

[20] The motion judge rejected the appellant's claim to receive an amount to

compensate him for the loss of his bonus during the reasonable notice period. His

reasoning is at paras. 41-42:

The purpose of reasonable notice is to provide a

terminated employee with sufficient time to locate
comparable employment. Historically, bonuses were
earned and calculated at the conclusion of the
defendant's fiscal/calendar year, and no doubt granted
on the basis of an employee's positive efforts and
contributions to Nordstrong East's business.

Subject to successful mitigation efforts, Singer's

employment with the defendant would have ended in or
around May 2018. The purpose of the defendant's
incentive plan is to maximize efforts to generate profits.
As in Fulmer [v. Nordstrong Equipment Limited 2017
ONSC 5529], I do not find it to be within Singer's
reasonable expectation to be able to earn a bonus for the
2017 and 2018 fiscal years while he searched for
alternative comparable employment.

[21] I agree with the appellant that the motion judge erred in law by failing to

apply the two-part test set out by this court in Pacquette v. TeraGo Networks Inc.,
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2016 ONCA 618, 352 O.A.C. 1, at paras. 30-31 for determining whether an

employee is entitled to be compensated for the loss of his bonus as part of his

damages for wrongful dismissal:

1) Was the bonus an integral part of his compensation

package, triggering a common law entitlement to
damages in lieu of bonus?; and

2) If so, is there any language in the bonus plan that

would restrict his common law entitlement to damages
in lieu of a bonus over the notice period?

[22] Had the motion judge applied the two-part test, based on his analysis

regarding the bonus owed for the 2016 year, he would have found that the bonus

was an integral part of the appellant's compensation package. Nor is there

anything in the Canerector Inc. Corporate Culture document that would limit that

right over the notice period.

[23] The respondent submits that the appellant would have known that it was the

company's policy not to pay any bonus to employees after their employment was

terminated, and that this was justified by the fact that part of the purpose of the

bonus was to incentivize employees to perform.

[24] Although that may have been the company's de facto approach, it was not

written into the document that governs the bonus payment scheme. Further, any

bonus plan will include both an aspect of incentive, as well as an aspect of reward

for performance, neither of which continue to apply to any employee who is no

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longer working for the employer. Nevertheless, where a bonus is considered an

integral part of a compensation package and there is nothing in the bonus plan

that negates entitlement to a bonus during a period of reasonable notice, damages

for wrongful dismissal include compensation for loss of the bonus: Paquette, at

paras. 17-18; and Un v. Ontario Teachers' Pension Plan, 2016 ONCA 619, 402

D.L.R. (4th) 325, at paras. 84-86.

[25] As the motion judge erred in law, his decision on the issue of bonus during

the notice period will be set aside and the amount claimed by the appellant,

$166,945, will be awarded for the 17 month notice period. This amount is based

on the average monthly value of the appellant's bonuses from the two years

preceding the termination of his employment (which were $120,000 for 2015 and

$115,687 for 2016), pro-rated to the end of the 17 month notice period.

Result

[26] In the result, I would allow the appeal on the issues raised by the appellant

and dismiss the cross-appeal. The appellant is entitled to damages for loss of his

2016 profit entitlement, for his loss of salary during the 17 month reasonable notice

period awarded by the motion judge, and also for the loss of the other components

of his employment compensation during the 17 month notice period he claims:

bonus in the amount of $166,945 and benefits in the amount of $9,458.

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[27] I would award the costs of the appeal and cross-appeal to the appellant,

fixed in the amount of $25,000 inclusive of disbursements and HST. As requested

by the appellant, I would refer the issue of costs of the motion back to the motion

judge to award based on the outcome of the appeal and on any offers to settle that

he determines are appropriate to consider.

Released:^ APR 13 2018

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