Recently, Justice Dow of the Ontario Superior Court of Justice, was tasked with deciding a summary judgment motion brought by the Plaintiff in an employment law dispute cited as Mah v ARJ Investments Ltd., 2019 ONSC 4927.
The dispute arose out of the September 5, 2017 termination of the Plaintiff, Gary Mah, by his employer, ARJ Investments Ltd. (“ARJ”). Mr. Mah was 56 years old and a senior executive at ARJ.
ARJ maintained, throughout the course of litigation, that Mr. Mah had resigned from his employment and was thus not entitled to any pay in lieu of notice, benefits, unpaid vacation pay, or his bonus. ARJ’s argument was premised on letters of resignation signed by Mr. Mah wherein he resigned as a signing officer of ARJ and its associated corporations.
Mr. Mah maintained a diametrically opposed view: he had been terminated without cause by his employer and as such was entitled to reasonable notice and corresponding compensation. Mr. Mah responded that the alleged resignation letters were not intended to resign his employment but were merely good corporate governance practices. In those letters, Mr. Mah only resigned as a signing officer from the corporations to ease the transition after he was terminated, not as an employee.
Resignation Must be Unambiguous
Justice Dow found that these letters of resignation were not “clear and unequivocal” resignations of Mr. Mah’s employment (as opposed to signing authority), as required by the caselaw.
Justice Dow decided that Mr. Mah was terminated without cause by ARJ and was entitled to 9 months’ pay in lieu of notice, as well as associated unpaid vacation and health benefits during that time.
Justice Dow was also confronted with the issue of bonus entitlement. Following the recent decision of the Court of Appeal in Andros v Colliers Macaulay Nicolls Inc., 2019 ONCA 679, Justice Dow found that Mr. Mah’s evidence was compelling and that his annual bonus, though stated to be discretionary in nature, was an “integral aspect” of Mr. Mah’s compensation and therefore would be included in his compensation payable during the notice period. Mr. Mah was entitled to his 2017 bonus, as well as the pro rata portion of the 2018 bonus which would have vested during the five months of notice which fell in 2018.
In total, Mr. Mah was awarded $157,782.33 in damages, $2,000 in pre-judgment interest, and partial indemnity costs of $27,500 in costs.
While Justice Dow found that ARJ’s conduct “cannot be condoned”, he decided that this conduct did not amount to the exceptional conduct required to award punitive damages.
Employers Should Exercise Caution
Justice Dow’s decision confirms that in Ontario, absent communication of a clear and unequivocal intention to resign, an employee will be found to have been terminated. Employers should be cautioned against maintaining that their employees resigned absent such evidence.
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