[1]              David Matthews worked for Ocean Nutrition Canada Limited or its predecessors from January 1997 to June 2011.  In June 2011 he resigned and sued Ocean Nutrition for wrongful dismissal and for an oppression remedy under the Canada Business Corporations Act, R.S.C. 1985, c. C-44.  The application eventually morphed into a determination of whether Matthews had been constructively dismissed.

[2]              The matter proceeded before Justice Arthur LeBlanc.  In a decision dated January 30, 2017 (2017 NSSC 16) and a supplemental decision dated May 12, 2017 (2017 NSSC 123), the hearing judge found Matthews had been constructively dismissed, found the appropriate notice period to be 15 months and awarded him damages of approximately $1.085M.  Most of the damages related to a Long Term Incentive Plan provided to executives of Ocean Nutrition.  The hearing judge found the plan would have crystalized if Matthews had remained employed throughout the notice period.

[3]              For the reasons that follow, I would allow the appeal, in part, and set aside the damages awarded under the Long Term Incentive Plan.  I would not disturb the hearing judge’s finding that Matthews was constructively dismissed.  I would decline to award costs to either party on this appeal.

[4]              In March, 1997, Clearwater Fine Foods Inc. purchased Laer Products, a business that manufactured fish oil (omega-3) for commercial sale.  Laer later became Ocean Nutrition, a wholly owned subsidiary of Clearwater.   Ocean Nutrition was incorporated federally in March 1997.  From June 2002 until October 25, 2005, Clearwater was Ocean Nutrition’s only shareholder.  (The record does not indicate the shareholdings of Ocean Nutrition between March 1997 and June 2002).

[5]              Ocean Nutrition’s head office was in Dartmouth, Nova Scotia.  It had production plants in Dartmouth and Mulgrave, Nova Scotia;  Arcadia, Wisconsin and Piura, Peru.  The plant in Peru was acquired in January 2012 after Matthews’ departure.

[6]              On October 26, 2005, Richardson Capital Limited acquired 22½% of Ocean Nutrition’s shareholdings.  On October 18, 2007, Richardson acquired a further 2½% of Ocean Nutrition.  On July 31, 2009, Richardson increased its shareholdings in Ocean Nutrition to approximately 45%.  The remaining 55% of the shares continued to be held by Clearwater.

[7]              Ocean Nutrition was sold to Royal DSM N.V. (“DSM”) on July 18, 2012. 

[8]              Robert Orr was President and CEO of Ocean Nutrition from its creation until July, 2010, when Martin Jamieson took on both roles.  From July 2010 until July 19, 2011, Orr was Chairman of the Board of Ocean Nutrition.  He was also a director from December 9, 2005 until July 19, 2011.

[9]              Jamieson remained President and CEO until the company was sold to DSM.  Jamieson also became a director of Ocean Nutrition on July 19, 2011, replacing Orr.

[10]         Matthews is a chemist who has worked in the omega-3 fish oil industry for decades.  He was the first employee hired by Orr at Laer Products.  On January 2, 1997, he started in the position of Operations Manager. 

[11]         Matthews became Senior Operations Manager of Ocean Nutrition on June 1, 2001; Vice-President, Healthy Food Ingredients on February 1, 2006; Vice-President, Engineering and Technical Services in October 2007; and lastly Vice-President, New and Emerging Technologies on July 17, 2009.

[12]         In June 2007, Ocean Nutrition hired Daniel Emond as its Chief Operating Officer. 

[13]         As Chief Operating Officer, Emond assigned duties and responsibilities to Matthews.  The relationship between Emond and Matthews was critical to the hearing judge’s finding of constructive dismissal.  I will address their relationship  in more detail later. 

[14]         In early 2007, Orr and the Board of Directors of Ocean Nutrition created a Long Term Incentive Plan.  Under the plan, 2% of the company’s value created on the sale or public offering of the company in excess of $100M would be distributed among the executives who were party to the incentive plan.  The plan was intended to be an incentive and a retention tool.  On September 10, 2007, Matthews and Ocean Nutrition entered into what was titled an Executive Incentive Agreement.  This plan has been referred to variously as the Executive Incentive Plan, the LTIP and the Long Term Incentive Plan.  I will refer to it as “the Long Term Incentive Plan” or “the Agreement”.

[15]         Also in 2007, Ocean Nutrition instituted what has been called a Short Term Incentive Plan structured around targeted company financial objectives.  It was intended to reward contribution to the achievement of those objectives by the management team, which included Matthews.

[16]         Matthews resigned from Ocean Nutrition on June 24, 2011.  He commenced employment with TASA, a Peruvian company on August 1, 2011.

[17]         On May 18, 2012, DSM and Ocean Nutrition issued press releases announcing that DSM had purchased Ocean Nutrition.  On July 19, 2012, DSM announced the completion of the acquisition.

[18]         I will provide additional background when addressing the grounds of appeal if the context requires it.

[19]         The appellant outlined nine issues in its Notice of Appeal.  The appellant reduced the grounds of appeal to five in its factum.  I would further reduce the issues on this appeal to four and restate and address them in the following order:

[20]         I will address the standard of review when considering the individual grounds of appeal.

[21]         A finding of constructive dismissal involves reviewing the evidence and drawing inferences or making findings of fact from that evidence.  In McPhee v. Canadian Union of Public Employees, 2008 NSCA 104, Justice Cromwell summarized the standard of review in such cases (the highlighted portions are of particular significance to the appellant’s arguments):

[22]         Here the appellant makes various allegations about the hearing judge’s use of the evidence including he made unreasonable findings of fact not supported by the evidence; misapprehended the evidence; ignored evidence; and, improperly relied on disputed evidence.  

[23]         The appellant alleges these errors led the hearing judge to mistakenly conclude that Matthews had been constructively dismissed.

[24]         Where the judge is said to have “forgotten, ignored or misconceived the evidence”, there is a presumption that the full record was before the judge and the judge reviewed it.  I refer to Housen v. Nikolaisen, 2002 SCC 33:

[25]         After extensive review of the documentary and viva voce evidence given at the hearing of this matter, the hearing judge made some very clear findings on credibility. 

[26]         He found that Matthews was, on the whole, a credible and reliable witness (¶279).

[27]         He found Orr, although not interested in participating in the proceedings, was also a reliable and truthful witness (¶280). 

[28]         These findings of credibility can be contrasted with the hearing judge’s opinion of Emond and Ocean Nutrition’s other witnesses.  To say the hearing judge considered Emond not to be a credible witness would be an understatement.  The hearing judge went so far as to find him to be self-serving, deceitful, defensive and evasive on cross-examination:

[29]         Considering that Emond was the Chief Operating Officer of Ocean Nutrition, to whom Matthews reported from June 2007 forward, the assessment of his credibility was a crucial factor in the determination of whether Matthews had been constructively dismissed.

[30]         The hearing judge also commented unfavourably on the evidence of Martin Jamieson who was the President and Chief Executive Officer of Ocean Nutrition from July 3, 2010 to November 9, 2012.  Jamieson provided a 358-paragraph affidavit and was cross-examined extensively during the hearing.  The hearing judge found, although Jamieson was a polished and articulate witness, his evidence on the key issues in the application was of questionable reliability (¶283). 

[31]         Stanley Spavold was a director of Ocean Nutrition.  His evidence was entered by way of discovery excerpts.   He was not cross-examined at the hearing.  The hearing judge was, similarly, unimpressed with Mr. Spavold’s evidence – finding that he had a significant animosity and contempt toward Matthews which was evident from his discovery:

[32]         Having made these findings on credibility, the hearing judge then made findings of fact.  I will summarize his findings insofar as they relate to the wrongful dismissal claim.  It is necessary to do so in considerable detail in light of the appellant’s arguments:

[33]         There are other factual findings which were made by the hearing judge; however, these are the most germane to the issue of wrongful dismissal. 

[34]         The appellant, in its factum, from ¶80 to ¶157 dissects the hearing judge’s findings, reviews the evidence in detail and asks us to come to a different conclusion, its theory being primarily that Matthews orchestrated his constructive dismissal so that he could have a claim for damages while going to work for TASA.  The arguments being made on appeal are essentially the same arguments which were made at the hearing and rejected by the hearing judge.  I agree with the respondent - the appellant is attempting to relitigate issues which have been decided.  The hearing judge outlined the competing arguments in his decision:

[35]         The hearing judge soundly rejected Ocean Nutrition’s argument. He found that the transfer of the PCB reduction project from Matthews to Empey on May 26, 2011, alone, was sufficient to amount to constructive dismissal:

[36]         After finding that Ocean Nutrition made a unilateral change amounting to a breach in the employment contract, the hearing judge went on to determine whether a reasonable person in the same situation as Matthews would feel that the essential terms of the contract had been substantially changed.  The hearing judge had no difficulty in finding they would:

[37]         In its factum, the appellant argues this finding by the hearing judge, i.e., that the removal of the PCB reduction amounted to a breach of contract, cannot be supported on any standard of review.   It says the hearing judge ignored relevant evidence or misapprehended the evidence.

[38]         With respect, I disagree.  The hearing judge had voluminous affidavit evidence, and viva voce evidence in a hearing that lasted nine days.  He made clear findings on credibility, rejecting, essentially, the evidence of all of Ocean Nutrition’s witnesses of any significance and accepting Matthews’ evidence.  He accepted this unilateral change in Matthews’ duties left him with very little responsibility and only two hours of work per day.  Those are findings which he was entitled to make and are amply supported by the evidence as summarized by the hearing judge.

[39]         The hearing judge went further.  In addition to finding this one incident amounted to constructive dismissal, he found that Ocean Nutrition pursued a course of conduct that demonstrated an intention to no longer be bound by the employment contract (¶345).

[40]          He concluded:

[41]         Again, the hearing judge’s findings on this point are supported by the evidence.  What is telling about the appellant’s argument on this ground of appeal is that it does not argue that the hearing judge erred in law in the test he applied to determine that Matthews had been constructively dismissed.  Rather, it seeks to have the hearing judge’s factual findings overturned so that their application to the legal test would have a different result.  Its arguments, on appeal, to a large extent, mirror its arguments before the hearing judge.  Other than to suggest that the hearing judge misapprehended or ignored evidence in reaching his conclusion, the appellant points to no legal error in his analysis.

[42]         The hearing judge reviewed the evidence in considerable detail in his decision.  It comprises the first 64 pages of his decision or 264 paragraphs.  He does this before he makes his findings of credibility and findings of fact.

[43]         There is no plausible or credible argument that he ignored, misunderstood or misapprehended the evidence.  His findings of fact are borne out by the evidence he accepted.

[44]         I would dismiss this ground of appeal.

[45]         The appellant argues the hearing judge erred in setting the period of notice at 15 months.  Although acknowledging that the determination of a period of notice is fact-driven and highly contextual and is, therefore, reviewable on a palpable and overriding error standard, it says the hearing judge “completely failed to consider several key facts in determining the notice” including:

[46]         In contrast to its argument on the first ground of appeal, its argument on the second ground of appeal occupies only two paragraphs of its factum and is unsupported by analysis or legal authorities.  Perhaps for good reason – the  submissions are devoid of any merit.

[47]         First, the hearing judge starts off his analysis by citing case law which sets out the factors to be included in determining reasonable notice, including the age of the employee:

[48]         Clearly, the hearing judge directed himself to the appropriate test in determining reasonable notice, including the age of the employee. 

[49]         If that were not enough, the hearing judge actually references Matthews’ age in a portion of his decision dealing with the determination of reasonable notice:

[50]         I fail to understand how the appellant can make any argument that the hearing judge “completely failed” to consider Matthews’ age when determining the period of reasonable notice.  His decision identifies it as part of the legal test and then references it in his analysis.

[51]         Second, the fact that Matthews was one of a handful of individuals worldwide with similar skill and knowledge in omega-3 was specifically acknowledged by the hearing judge.  In fact, he used the very words “handful of individuals”:

[52]         The hearing judge then addressed Ocean Nutrition’s argument that Matthews negotiated a 12-month termination period with it in 2009 or 2010 and, therefore, the notice period should be capped at 12 months.  It was not ignored by the hearing judge - he rejected it:

[53]         With respect to the other two factors, his negotiation of a 9-month termination period with TASA and having been sought out by TASA prior to resigning, the hearing judge was aware of this evidence.  He set it out in his narrative when he reviewed the evidence of the parties and their theories. He did not ignore it.  Furthermore, it is unclear to me how this evidence could possibly have any impact on the reasonable notice period for Matthews as a result of his dismissal from Ocean Nutrition.  The appellant’s submissions are of no assistance on this point. 

[54]         I would dismiss this ground of appeal.

[55]         The nature of the Long Term Incentive Plan was discussed in the hearing judge’s decision:

[56]         There is no evidence to suggest that there was any negotiation or consideration of the contents of the agreement with Matthews.  It applies to a number of employees and must have the same meaning for all.  The factual matrix is of little significance in the interpretation of the contract.  For these reasons, the hearing judge’s reasons will be reviewed on a correctness standard.

[57]         The comments of Wagner, J. (as he was then) in Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, are relevant in the context where employers decide to grant additional benefits to employees:

[58]         The Short Term Incentive Plan, like the Long Term Incentive Plan, came into being without negotiation or input by Matthews or other members of the management team.  Again, the standard of review that would apply to it is correctness.  However, as will become apparent, the amount awarded by the hearing judge under the Short Term Incentive Plan becomes a moot point.

[59]         The key provisions of the Long Term Incentive Plan are:

[60]         As noted earlier, Matthews resigned from Ocean Nutrition on June 24, 2011, approximately 13 months before the Realization Event.

[61]         The hearing judge said, before reviewing the terms of the Long Term Incentive Plan:

[62]         The hearing judge, in this paragraph, suggests that Matthews had a common law right to damages for the loss of the payout he would have received under the Long Term Incentive Plan unless the agreement limits this right.  With respect, the hearing judge starts off on the wrong premise. 

[63]         The hearing judge confuses an employee’s common law right to reasonable notice, with the employee’s ability to recover damages arising under an incentive plan.  The ability of Matthews to receive damages under the Long Term Incentive Plan is clearly governed by the words of the agreement.  It is not a situation where the employer is seeking to limit the amounts that an individual would be entitled to at common law, but rather, whether the employee qualifies pursuant to the terms of the agreement.

[64]         In any event, the hearing judge recognized the entitlement that Matthews had under the Long Term Incentive Plan was governed by the terms of that Agreement.  After reviewing the Agreement and the case law, he concluded the Agreement did not in any way limit Matthews’ right to participate in the Long Term Incentive Plan.  His reasoning is quite short and I will repeat it here:

[65]         In the end result, the hearing judge found that Matthews was entitled to a payout under the Long Term Incentive Plan as damages for his dismissal without cause.

[66]         To this extent, I would agree with the hearing judge - if the only condition precedent for a payout under the Long Term Incentive Plan were that the employee be a fulltime employee of Ocean Nutrition, that may not have been enough to preclude the damages under the Long Term Incentive Plan during a period of reasonable notice. 

[67]         However, the Long Term Incentive Plan does not stop there.  Immediately below the words cited by the hearing judge, s. 2.05 contains the following:

[68]         The hearing judge attempted to address this provision in the Agreement.  In doing so, with respect, he misstated or misunderstood the argument of Ocean Nutrition at the hearing.  For ease of reference, I will repeat what he said:

[69]         Before him, Ocean Nutrition argued that Matthews had not been constructively dismissed and, therefore, was not entitled to reasonable notice.  However, Ocean Nutrition argued even if he were entitled to reasonable notice and the reasonable notice period overlapped with the Realization Event, he was precluded from recovering under the Long Term Incentive Plan by the plain wording of that Agreement.  With respect, Ocean Nutrition was not arguing that reference to termination “without cause” meant that any common law right to notice would not apply to Matthews.  Its argument was, even if reasonable notice applied, the terms of the Agreement precluded payment. 

[70]         The hearing judge himself had earlier recognized that the terms of the Long Term Incentive Plan would govern Matthews’ entitlement to compensation.  However, with respect, he failed to properly analyze the actual terms of the Agreement.  His statement “termination without cause does not imply termination without notice” is true, however, it has no relevance or import in interpreting the Agreement.

[71]         The Long Term Incentive Plan provides that it is of no force and effect if an employee ceases to be an employee of ONC, whether the employee resigns or is terminated without cause.  In this case, Matthews resigned and there was a subsequent finding that he was dismissed without cause.  There is no ambiguity in that clause that the Long Term Incentive Plan ceased to be of any force and effect on his resignation or termination.

[72]         If there were any ambiguity with Paragraph 2.03 (and in my view there is not), 2.05 also addresses the issue .  It reads the Long Term Incentive Plan “does not have any current or future value other than on the date of the Realization Event and shall not be calculated as part of the Employee’s compensation for any purpose, including in connection with the Employee’s resignation or any severance calculation”. [Emphasis added]

[73]         Again, there is no ambiguity in this clause.  The Long Term Incentive Plan is not to be used in a calculation of any severance.  However, that is exactly what the hearing judge did.  He reasoned that the notice period was 15 months, the Realization Event occurred within that 15-month period, and therefore, Matthews was entitled to a payout under the Long Term Incentive Plan as part of his severance package.

[74]         With respect, that ignores the plain and unambiguous language of the Long Term Incentive Plan.

[75]         If the hearing judge was correct, it is difficult to imagine what other wording needed to be in the Long Term Incentive Plan to preclude its operation when someone resigned or was terminated without cause.

[76]         This is analogous to the situation in Kieran v. Ingram Micro Inc., 2004 CanLII 4852 (ON CA), [2004] O.J. No. 3118 (leave to appeal denied [2004] S.C.C.A. 423).  In that case, the Ontario Court of Appeal addressed the appellant’s entitlement to stock options that would have vested during his period of reasonable notice.

[77]         The plans in question (there were three of them), all contained similar wording that if the participant’s employment was “terminated for any reason”, subject to certain conditions, the right to exercise the options ceased.

[78]         One of the plans also provided that the employer could dismiss the employee at any time “free from any liability or any claim under the Plan or otherwise, unless, otherwise expressly provided in the Plan or in any Option Agreement”.

[79]         The Ontario Court of Appeal determined there was no ambiguity in the plans at issue and that Mr. Kieran’s right to exercise the options was not extended by the period of reasonable notice (¶61).

[80]         The hearing judge did not apply Kieran for two reasons:

[81]         Although the hearing judge was correct that Kieran was not binding on him, it is certainly persuasive.  It is difficult to suggest, as the hearing judge did here, that the Long Term Incentive Plan is ambiguous and could not include dismissal without cause when it specifically uses that term.  In Kieran, the court concluded the reference to “any reason” was broad enough to include wrongful dismissal.  I see no basis to distinguish Kieran.

[82]         The Ontario Court of Appeal found that Mr. Kieran had been wrongfully dismissed, but concluded he suffered no damages because he was not entitled to payment under the plans.

[83]         The hearing judge also distinguished the Alberta Court of Appeal decision in Styles v. Alberta Investment Management Corp., 2017 ABCA 1 on the basis that:

[84]         The wording of the long term incentive plan in Styles is very similar to the terms in Matthews’ Long Term Incentive Plan.  The Styles plan provides:

[85]         Like the Styles plan, the Matthews Plan makes it clear that to be eligible for payment, the employee must be a full-time employee of Ocean Nutrition and that the entitlement under the Long Term Incentive Plan shall not be used in the calculation of any severance package.

[86]         In fact, the Matthews’ Long Term Incentive Plan goes further to indicate that it is inoperative even if someone is dismissed without cause.

[87]         The Alberta Court of Appeal concluded at ¶6:

[88]         The hearing judge’s finding that Mr. Matthews was entitled to compensation under the Long Term Incentive Plan flies in the face of the very clear and unambiguous wording of the Agreement.  Whether Mr. Matthews resigned, or was dismissed without cause, once his employment terminated, any right he had to recover under the Long Term Incentive Plan ceased.

[89]          This may have been a different case if the hearing judge had concluded that Ocean Nutrition had orchestrated Matthews’ termination to avoid any liability it might have under the Long Term Incentive Plan.  Matthews made this argument before the hearing judge. 

[90]         The hearing judge rejected that argument and specifically found that was not the case:

[91]         I would allow this ground of appeal, set aside the hearing judge’s decision and reduce the damages awarded to Mr. Matthews by the sum of $1,086,893.36.

[92]         Whether Mr. Matthews was entitled to payments under the Short Term Incentive Plan is a moot point.  I say this because the amount he earned at TASA exceeded the amount he would have received for salary from Ocean Nutrition including the bonus.

[93]         In his supplementary decision, the hearing judge calculated the short term incentive payment for the 15-month notice period as being $64,225.  The hearing judge reasoned:

[94]         In his original decision, the hearing judge found that Mr. Matthews’ salary at Ocean Nutrition was $142,000 Canadian per annum.  His salary increased to $220,000 US when he joined TASA.  The hearing judge further found that any amounts earned at TASA would go to reduce the damages otherwise awarded to Mr. Matthews (¶430).

[95]         Returning to the supplementary decision, using the hearing judge’s numbers, he calculated Matthews’ damages to be one month’s salary he would have received from Ocean Nutrition ($142,000/12 = $11,833); the amount of the Short Term Incentive Plan ($64,125) and deducted from that amount the difference between his salary at TASA and the amount he would have received from Ocean Nutrition ($220,000 - $142,000 = $78,000).  Therefore, in summary, the damages for the 15-month notice period would have been $11,833 + $64,125 - $78,000 =    − $2,042.00.

[96]         As a result, even if one accepts that Matthews was entitled to an STIP, he suffered no damages during the notice period.

[97]         The hearing judge’s math on the calculation of damages is somewhat difficult to follow.  I say this because: 

[98]         Despite these discrepancies, it is abundantly clear that Matthews suffered no damages during the 15-month notice period.

[99]         Finally, in summarizing the damages, the hearing judge said:

[100]     As can be seen by this calculation, the hearing judge used the amounts earned at TASA to reduce the amount which he found was otherwise payable under the Long Term Incentive Plan.

[101]     I see no basis on which, even if the Long Term Incentive Plan was payable, to reduce that amount by the amount earned at TASA.  The Long Term Incentive Plan payment was based on a single discrete event (the sale of the company) and had nothing to do with Matthews’ income during that period.

[102]     In conclusion on this point, whether Matthews was entitled to payment of the amount of his salary and any bonus he may have been entitled to receive is of no significance as the amount he received from TASA during the notice period exceeded the amount payable under the Short Term Incentive Plan. Therefore, he has not proven any loss as a result of his inability to recover under the Short Term Incentive Plan.

[103]     I would allow this ground of appeal.

[104]     Deciding the specific amount to be remitted to CRA is an extricable question of law that can only be answered by interpreting the Income Tax Act, R.S.C. 1985, c. 1 (5^th Supp.) and its Regulations.  Therefore, this ground of appeal will be reviewed on the standard of correctness.

[105]     The hearing judge’s treatment of the deduction for income tax purposes is set out in his supplementary decision and is very short:

[106]     Although the hearing judge in his decision only required that Ocean Nutrition withhold the income tax, the subsequent order required it to be remitted to CRA.  It provides:

[107]     The parties were not given an opportunity to address the issue of what amount should be withheld and remitted to Revenue Canada. The hearing judge based his decision on evidence at the hearing that when payments were made to current employees under the Long Term Incentive Plan, Ocean Nutrition remitted 50% of those payments to the CRA.  However, the hearing judge did not consider whether a damage award would stand on the same footing as a payment made to individuals still employed with the company. 

[108]     I need not go into any detail with respect to the provisions of the Income Tax Act other than to say that the appellant argued convincingly in its factum, and at the appeal hearing, that the appropriate amount to be withheld should have been 30%.

[109]     Having not given the parties an opportunity to make submissions on this issue, and having made a determination on his own without regard to the Income Tax Act, the hearing judge erred. 

[110]     As it turns out, as a result of this decision, no funds should have been remitted to the CRA. 

[111]     I would also allow this ground of appeal.  Although from a practical point of view it does not impact the ultimate outcome of the  appeal, it may provide assistance to the parties in having the funds returned from CRA.

[112]     The appeal is allowed, in part, Matthews shall repay to Ocean Nutrition any amounts received from it, including any amount received under the Long Term Incentive Plan, any interest paid thereon and any costs paid by Ocean Nutrition as a result of the decision below. 

[113]     In its factum and on the oral hearing, the appellant spent most of its time arguing the issue of whether Mr. Matthews had been wrongfully dismissed.  The time spent at the hearing below also addressed the same issue.  Quite frankly, a lot of time at the hearing and a lot of time on this appeal could have been avoided by arguing the discrete legal issue that arose under the Long Term Incentive Plan, i.e., even if Matthews was wrongfully dismissed was he entitled to recover under the Agreement?  In any event, the appellant was unsuccessful in having the determination of wrongful dismissal set aside.  Success was divided on the appeal even though the end result is that Ocean Nutrition will not pay anything to Mr. Matthews.   As a result, I would decline to award costs to either party on this appeal.

[114]     I have had the benefit of reviewing Justice Scanlan’s dissent. With respect, his analysis misses the mark and ignores a key finding of fact made by the hearing judge.  I have cited it above in ¶88 and will repeat it here:

[115]     The dissent ignores this finding of fact by the hearing judge and, indeed, purports to make a contrary finding when he says:

[116]     There was a clear finding by the hearing judge that neither Ocean Nutrition nor Mr. Emond sought to prevent Mr. Matthews from recovering under the LTIP. 

[117]     The dissenting judge’s analysis is hinged on Ocean Nutrition or Mr. Emond making concerted efforts to prevent Mr. Matthews from recovering under the Long Term Incentive Plan.  As that theory was completely rejected by the hearing judge, it cannot be support for a finding of liability on the part of Ocean Nutrition.

[118]     On the issue of damages, my colleague misunderstands the nature of the Long Term Incentive Plan.  It was a contract.  In order to recover under the contract, its terms had to be met.  As I have outlined above, it required that Mr. Matthews be employed with Ocean Nutrition at the time of the sale of the company.  He was not.  As a result, he cannot recover damages under the agreement. 

[119]     Justice Scanlan suggests that this case is analogous to one of a stolen lottery ticket.  With respect, I fail to see any analogy between a contractual obligation which a company may have to an employee and a lottery ticket which depends on a fortuitous event.

[120]     Justice Scanlan goes on to say:

[121]     This is a distinction without difference.  The hearing judge determined damages based on what Mr. Matthews was entitled to receive from his employer as a result of being constructively dismissed.  The damages he calculated were intricately related to the Long Term Incentive Plan.  The hearing judge found that the wording of the Long Term Incentive Plan did not preclude it from being used to calculate severance for Mr. Matthews.  Thus, he was entitled to recover its value as part of his damages. I have found he was in error in making this determination.  The dissent would award damages based on an alternative theory which was not argued before the hearing judge and was not the basis of his damage calculation.

[122]     It was open for the hearing judge to have awarded Mr. Matthews additional damages as a result of the manner in which he was treated such as punitive damages.  However, given his finding that there was no bad faith on the part of Ocean Nutrition, he could not and did not do so.

[123]     For these reasons, I must respectfully disagree with my colleague.

[124]     If there were ever a case that cried out for resolution, it is a case such as this. As I will explain below, the breakdown in relations between the respondent and the appellant company was largely due to one rogue employee: Emond.  He went to great lengths to marginalize and diminish Ocean’s management’s view of the respondent.  Based on the findings of the hearing judge, another senior manager,  Jamieson, was either complicit or, at best, neglectfully unaware of Emond’s actions towards Matthews.  The best that can be said of Jamieson is that he had little interest in how Emond was treating Matthews as he had “bigger fish to fry”. According to the findings of the hearing judge, Emond lied to the respondent, lied to Ocean management and lied to the court about what he did in relation to Matthews.   Emond continues to be employed with Ocean, while Ocean has fought relentlessly to deny Dave Matthews any compensation for his constructive dismissal, going so far as to even deny that there was a dismissal.

[125]     On June 24, 2011, the only thing that stood between the respondent and his entitlement to collect $1,086,893.36 on a Long Term Incentive Plan (LTIP) was time, and at least one middle level manager in the appellant company: Daniel Emond, the Chief Operating Officer.  Emond was a central figure in dealings with Matthews after a new investor, Richardson Capital Limited, became involved in Ocean.

[126]     The evidence supports the hearing judge’s determination that Emond lied to Matthews, he lied to his superiors, and he lied to the hearing judge about his treatment of Matthews.  He lied and deceived as to his efforts to minimize  Matthews’ importance to Ocean.  He lied and deceived about his long term efforts to minimize Matthews’ role in Ocean.

[127]      Emond’s long history of attempting to undermine Matthews is illustrated in the situation where Matthews was asked to assist in bringing a new plant in Peru on line where others had failed.  Emond, in trying to minimize the importance of Matthews’ contribution, was not going to invite Matthews to the grand opening of that plant until he was directed by Robert Orr to do so.

[128]      Matthews has contributed much to the success of the appellant.  In a memo written in March 2009, then CEO of Ocean, Robert Orr, said of Matthews:

[129]     The respondent stayed with the appellant company, in part, because of the LTIP offered to only a few valued employees in 2007.  That occurred at or about the same time Ocean learned Matthews was a final candidate for a position with another company.

[130]     Only Ocean knows for sure why the company has fought so hard to prevent David Matthews from recovering under the LTIP.  The answer to that question cannot be in the fact that, after he was constructively dismissed by Ocean,  Matthews went to work for a competitor.  He was one of less than a handful of people in the world that had the skillset that allowed Ocean to become a world player in commercial Omega 3 production.  Upon dismissal by Ocean he used that expertise to support his family.  Ocean knew this was a very narrow area of expertise, and even tried to negotiate a non-compete clause as Matthews was leaving.  Matthews did not want to leave Ocean.  He wanted to stay and obtain his LTIP benefits.  He now works for a competitor in Peru, a continent away from where he wanted to live.

[131]     Aside from the fact that Matthews took his expertise to a competitor, Ocean now stands to indirectly benefit from his new employment because Ocean asks this Court to deduct any income Matthews earned from his new employer during the notice period, from any damages award made against Ocean. I agree with the majority that such a deduction should be made.

[132]     If one were to listen to Emond and a few others in the new management group, Matthews did not deserve much credit for the success of Ocean. That is at odds with their upset at him going to a competitor.  It cannot be both ways.

[133]     The hearing judge was convinced Matthews played a key role in Ocean’s early success.  It was little more than a start up company in 1997.   In 2012 the company sold for more that half a billion dollars ($540 million).  The hearing judge determined that Matthews was one of only a handful of people in the world that had the knowledge required for Ocean to commercialize the extraction process for Omega 3.  It was that very process which gave Ocean a competitive advantage on the world stage, eventually making it an attractive acquisition target for DSM.  The value of the process is reflected in the sale price as noted above.  I repeat what Robert Orr said of Matthews’ contribution; “…[e]veryone who has gotten any value created out of ONC in large part owes that in some measure to David.”

[134]     Ocean had a single shareholder during the initial development stage of the company: John Risley, through his company, Clearwater Fine Foods Limited. Once the extraction technology advanced, commercial production commenced.  The processing technology developed by Matthews gave the company a competitive edge in the world markets and there was an effort to maximize the sale value of the company.  To do that, Ocean decided that strategic alignments were required.  As part of this strategic realignment, Ocean took on new management team members.  The original sole shareholder, John Risley, allowed new investors to acquire an equity position in the company (at first (2005)  22.5 %; later (in 2009) increasing to 45%).  The new management team included Martin Jamieson, who became the President and CEO, as well as a director, replacing Robert Orr.   Orr became Chairman of the Board and a director.  Emond had previously joined the company as Chief Operating Officer in 2007.  By 2010 his duties included having Matthews report to him.

[135]     Even though John Risley continued to be the major shareholder, key management officials with the original group, including Risley and Orr were largely sidelined.  Even when it was to the detriment of the company,  they were ignored or marginalized.  Risley continued to be the majority shareholder but enough vetoes and management agreements were in place to ensure the true management and control of Ocean after 2007 was vested in the new Richardson Capital management team; not the majority shareholder, or members of the previous management team.

[136]     By December 2010, Emond told Orr that both Orr and Matthews had a time limited future in Ocean.  Orr was still Chairman of the Board and a director.  From Emond’s perspective, even before that, he felt that both Orr and Matthews would not be with Ocean for long.  This goes as far back as 2007.  In this regard, I refer to ¶79-80 of the hearing judge’s decision.  In ¶79 he refers to a plant in Arcadia.  Emond put a Mr. Empey in charge of that Arcadia plant.  Once he found out this had occurred, then CEO, Robert Orr told Empey he was not in charge.  The hearing judge then says:

[137]     By February 2011, Matthews knew he was going to be removed from the company sometime in 2011.  On February 18, 2011, he actually confronted Emond about rumours that his employment was going to be terminated.  Emond’s note to  Jamieson made it clear that Matthews wanted to stay in order to collect on his LTIP.  The hearing judge refers to the email at ¶194 of his decision (2017 NSSC 16) as follows:

[138]     Around the same time Matthews was convinced a buyer was doing a due diligence assessment leading up to a potential sale of the company.  Emond attempted to convince Matthews that there was no potential sale.  The hearing judge determined that Matthews was correct in his belief that he was being dismissed and that there was a due diligence underway.

[139]      Matthews held a number of positions over the years and the titles for his positions changed as did his work.  His job titles included:

[140]     By the time of Matthews’ dismissal, there were a number of persons in the management team who harboured significant animosity towards him. Witness the nasty email referred to in ¶287 of the hearing judge’s decision:

[141]     The hearing judge also noted:

[142]     The hearing judge referred to the evidence of Robert Orr as being fair and unbiased.  According to Orr, Emond’s dishonesty was a recurring source of tension between management and Matthews.  Emond was, according to the hearing judge:

[143]     Emond’s superior in Ocean was Martin Jamieson, who joined the company in 2010.  As noted in ¶283, even Jamieson’s credibility was questioned.  He was described by the hearing judge as “polished and articulate” but the judge was unimpressed with his evidence in some essential aspects of the case.

[144]     For all the promises made by Ocean to David Matthews over the years, that he would be looked after and share in the proceeds of any sale of Ocean if he stuck with the company, he has been left to fend for himself.  He had to move his family to another continent so he can work.

[145]     The shareholders, including those who made promises that he would be looked after, have divided up over half a billion dollars that may not have even existed but for Dave Matthews’ contributions and loyalty to Ocean. From a moral perspective that result is hard to digest.

[146]     The law has traditionally ended up on the fair side of moral dilemmas.  Ideally, fairness and justice arrive at the same destination, at the same time.  Some might say that as judges we are not entitled to consider the morality of the result.  To that I say that a result that is morally unconscionable is usually legally indefensible.  I am convinced that this case requires a contextual assessment of the entire LTIP contract and the situation that existed surrounding the execution of that Agreement. The LTIP does not contemplate a rogue manager arriving on scene and embarking upon a campaign to undermine, and root-out, a valued long time employee, resulting in the loss of LTIP benefits.  The terms of the LTIP make it clear that Matthews cannot recover under the LTIP Agreement.  The just and legal recovery is for the damages caused by the actions of Mr. Emond and the LTIP agreement is simply a means by which the damages are measured.

[147]     The evidence of Martin Jamieson and others is that Ocean had a place for Matthews that would have seen him through to the “realization date” in 2012.  It is hard to imagine that on the one hand the company wanted Matthews to stay with the company as a key person in “emerging technologies”, yet a manager was taking steps to constructively dismiss that same employee.  Either the CEO,  Jamieson, was complicit in the dismissal, or Emond was acting on his own.  At best, Emond was constructively dismissing an employee that the company wanted to retain.  That is not something that was contemplated in the terms of the LTIP.

[148]     Unlike the majority, I am satisfied there is a logical path of legal reasoning that provides compensation to Matthews based on what the parties intended at the time the LTIP was put in place.  I do not accept that the parties intended to agree that a rogue manager such as Emond could engineer the dismissal of a valued long-term employee through a series of lies, deceit and manipulation so as to result in that employee not being entitled to share in the value he was so essential in creating.  There was an implied agreement that the LTIP and the employment contract would be performed with honesty and integrity.  For the reasons that follow, I am satisfied that the lower court decision to award Matthews $1,086,893.36 for the LTIP should be upheld.

[149]     In order to support himself and his family, Matthews followed up on an earlier inquiry from a competitor of Ocean, TASA, in Peru, in relation to his working for that company.  That was only done when it became apparent to him that he would not be allowed to stay with Ocean.  Although he had discussed going to TASA earlier in 2011, as late as May 31^st, 2011, he had hoped the situation with Ocean could be resolved.

[150]     In February 2011, Matthews knew that if he could stay with the company he could share in the sale value through the LTIP.  He was of the opinion that due diligence was being conducted at that time.  His constructive dismissal resulted in him leaving the company before any sale (the “realization event”).  Ocean denies Matthews is entitled to share in the proceeds of sale based on the terms of the LTIP.  The LTIP required him to be an employee at the time of the sale. As my colleague notes, the LTIP provided that if he was dismissed, with or without cause, he could not collect under that agreement (see Clauses 2.03, 2.04, 2.05 as set out in the majority decision at ¶59).

[151]      Matthews sued Ocean Nutrition for wrongful dismissal and for an oppression remedy under the Canada Business Corporations Act, R.S.C.1985, c. C-44.  The application eventually morphed into a determination of whether  Matthews had been constructively dismissed.

[152]     As noted by the majority, Dave Matthews worked with the appellant company or its predecessors from January 1997 to June 2011.  This Court is unanimous in upholding the hearing judge’s finding that in June 2011 he was constructively dismissed by Ocean.

[153]     This Court, on appeal, is unanimous in upholding the 15-month notice period.

[154]     The matter proceeded before Justice Arthur LeBlanc.  In a decision dated January 30, 2017 (2017 NSSC 16) and a supplemental decision dated May 12, 2017 (2017 NSSC 123), the hearing judge found that Matthews had been constructively dismissed.  He determined that the appropriate notice period was 15 months, and awarded him damages of approximately $1.084M, plus interest.

[155]     Most of the damages related to the LTIP.  The hearing judge found the plan would have (did) crystalized during that notice period and said Matthews was entitled to collect the money as per the terms of the LTIP.

[156]     I will explain below that although I am in agreement with many conclusions of the majority, I would not have allowed the appeal in relation to the amount that would have been owing to the respondent as damages for the loss of the LTIP.  I am satisfied the monies Matthews would have been entitled to had he been employed by Ocean at the time of the sale to DSM are recoverable as damages under the employment contract.  As I stated earlier, the LTIP is simply the means by which to measure the damages resulting from the unlawful dismissal.

[157]     I agree with my colleague that the LTIP and loss of wages is to be reduced based on the income earned by Matthews during the notice period.

[158]     My colleague reviews the evidence related to issues of credibility and factual determinations as made by the hearing judge.  I agree with the majority that the evidence supports the facts as determined by the hearing judge.  There is a plethora of evidence to support the hearing judge’s findings as to credibility.

[159] Where I differ is in relation to the extent of the damages Matthews is entitled to as a result of his dismissal.  That divergence is based on our difference in application of the law to the facts as determined by the hearing judge.

[160]     I disagree with my colleague in relation to Matthews’ common law right to recovery.  At ¶61, my colleague says he is of the view that the terms of the LTIP preclude Matthews’ recovery under that plan, saying the plan required that Matthews be employed with Ocean at the time of the realization event.  I am convinced that it is wrong to end the analysis at that point.

[161]      Matthews was constructively dismissed from his employment through a prolonged and deliberate crusade by Emond.  His crusade was founded on his own lies and deception.  As I will explain below, there were two contracts in play in this case: one was the LTIP; and, the other was the employment contract itself.  I am satisfied that both contracts include terms of an implied duty of trust, honesty and good faith. 

[162]     I focus first on the state of the law with regards to the duty of good faith and honesty in the performance of a contract in Canada. The hearing judge referenced Bhasin v. Hrynew, 2014 SCC 71.  In the case at bar, Emond was largely responsible, or to blame, for how ONC performed its side of the employment contract/relationship with Matthews. Emond was dishonest in just about every material aspect of his relationship with Matthews.  Dishonesty is the most apt descriptor for Emond in his relationship with Matthews.

[163]     ONC is now to be held responsible for how Emond performed ONC’s end of the contract with Matthews. 

[164]     In Canada there is a duty to perform a contract honestly.  In Bhasin, Cromwell J., writing for the Court, explained the evolution of the implied duty of honesty in performance of contracts. The law has now morphed from a state of confusion into what Justice Cromwell has defined as principle of Canadian law:

[165]     A recurring theme in Bhasin was the reasonable expectation of honesty in the performance of contracts.  In referencing Keays v. Honda Canada Inc., 2008 SCC 39, it is clear that Justice Cromwell did not take employment contracts out of the scope of contracts that had an implied duty of honesty and good faith.  Whether it is in the employment contract or in the case of the LTIP which was interrelated to the employment contract in this case, there is an implied duty of honesty in the performance of both contracts. 

[166]     I am satisfied that each of the parties in this case had reasonable expectations of good faith and honesty when they signed the LTIP.  Recall that the evidence was that John Risley wanted to reward contribution and loyalty, and his word was thought to be his bond.  That evidence alone speaks of good faith.

[167]     I cannot envision Ocean or the LTIP contract having anticipated that a rogue employee, the likes of Emond, would, based on a series of lies and deceit, engineer the unlawful dismissal of Matthews.  I say this because the LTIP was an agreement aimed at engendering loyalty and ongoing commitment of the employee to the company.  Ocean would not have expected to gain the loyalty of key employees had they inserted or even hinted that a rogue manager could engineer their dismissal, preventing the employee from collecting on the LTIP.

[168]     Justice Cromwell in Bhasin suggests that a party to a contract is entitled to assume that the contract will be performed honestly.  Neither party should be able to rely upon lies, deceit and manipulation to deny the other side of the benefits of the contractual relationship, even if that was not the primary goal of the party acting dishonestly.  The hearing judge did not find that Ocean acted to intentionally deny Matthews’ entitlement to the LTIP benefits, but my colleague says a consequence of Emond’s action, which resulted in Matthews leaving, was the loss of the LTIP benefits. I am satisfied Emond’s actions are the type of dishonesty contemplated in Bhasin, and Ocean should be held liable for damages sustained by Matthews as a result of Emond’s dishonesty.

[169]     It is a less than happy irony that prior to July 2010 an agreement was reached at the Board level of Ocean that Emond was to be dismissed.  Members of the Board were not pleased with Emond’s overall performance, and were aware of then CEO, Robert Orr’s concerns about Emond’s leadership, character and the quality of his communications with him and others at the company (see hearing judge’s decision, ¶124).  Emond was not a trusted employee, even when Robert Orr was CEO.  

[170]     The only thing that prevented dismissal of Emond was the company’s concern for optics (¶128).  They elected to keep Emond, whom management did not trust, and whom the court has since determined to have lied to both management and the court.  Emond was the person most responsible for engineering the constructive dismissal of Matthews.  Without Matthews, Ocean would not likely have been a world leader on Omega 3 extraction.  A sad irony indeed.

[171]     The dismissal, as engineered by Emond, is not a termination as contemplated in the LTIP nor in accordance with the law of employment contracts.  Neither contract referred to management being able to lie and deceive within the context of the employment relationship and directly or indirectly profiting from their deceit and lies.

[172]     The current CEO, Martin Jamieson, testified that there was no dismissal and that Ocean, in fact, planned on Matthews being with the company, working on emerging technology.  That is inconsistent with the actions of Emond.   If there is a shred of truth to what Jamieson says, then Emond would have had to continue his crusade on his own as a rogue member of the management team.

[173]     I return to the point I made above, there are no implied or express terms in the LTIP or the general employment contract that suggest that an employee would be at the mercy of a rogue manager.  At a minimum, the termination cannot be said to have been according to law.

[174]     The law recognizes a continuation of employee rights after an unlawful termination.  In Veer v. Dover Corp. (Canada) Ltd., 1999 CanLII 3008 (ON CA), [1999] O.J. No. 1727 (C.A.) Justice Goudge stated:

[175]     The terms of the LTIP go to great lengths to close the door to any employee who is not in the active employment of Ocean at the time of a realization event. However, there was nothing in the LTIP Agreement which suggests either side intended it to be a parasitic arrangement.  Neither side was entitled to suck all the good they needed out of the other and then have one or two rogue parasites toss the host, in this case, Matthews, aside. On its face, the agreement was a symbiotic arrangement predicated upon the parties working in a long-term arrangement to the mutual benefit of both.

[176]     The main shareholder of Ocean, John Risley, did not like share options as a reward vehicle for valued employees. The LTIP showed he intended to reward both contribution and loyalty.  Even near the very end of the employment relationship, John Risley recognized the value of Dave Matthews’ contribution to Ocean and the value he still had to the company.  By that time, however, the actions of Emond had diminished Matthews’ role with Ocean to the point that he only had a few hours work per week.  Matthews simply had to stay with Ocean if he was to collect on the LTIP, but despite his desire to stay, Emond was not going to allow that to happen. 

[177]      Emond’s actions suggest that, from his perspective, Ocean had sucked all the company needed from Matthews. It was time to dispose of the carcass.

[178]     Emails suggest that during the final days when Matthews was still trying to salvage either his position or something from the LTIP, Ocean’s management was of the view that they were not liable to pay the LTIP amount.  They even questioned where Matthews was getting his advice when he was suggesting that he had been constructively dismissed.  They saw no downside to Ocean because they were of the mind that there had been no dismissal.  The court below, and this Court have determined otherwise. Matthews was constructively dismissed; it is not clear where Ocean was getting its advice.

[179]     Ocean is responsible for the actions of its employees, in this case, the actions of Emond. Ocean may well have failed to appreciate what Emond had done through his lies, manipulation and deception.  If he was on a frolic of his own, and he did not let his colleagues or superiors understand the extent to which he undermined Matthews, then one could appreciate that even by the time of the application, Ocean was pressed to understand that a wrongful dismissal had occurred.  That does not negate the effect of the lies in terms of Ocean’s side of the performance of the employment contract.

[180]     It is important that the context for the establishment of the LTIP be taken into account in deciding this case.  I refer to the decision of the hearing judge where it was noted by Robert Orr, the former CEO of Ocean, that:

[181]     Even though John Risley continued to hold the majority shares, he was no longer in effective control of the company.  He, and the original management team, was sidelined by the management team Richardson Capital had installed.  Matthews was just one of the original management team of loyal builders shunted to the side as the new Richardson team continued to build and market the company so as to maximize their profits.

[182]     As I have said, nothing in the LTIP contemplates a rogue employee, lying and deceiving both the employee and employer.  If there was an implied term of honesty and good faith in the LTIP that prevented a rogue manager like Emond from dismissing Matthews, then recovery could occur under the terms of the LTIP. If, as my colleague says, the terms of the LTIP were sufficiently clear and the court determined that it was necessary that the claimant be a full-time employee at the time of the Realization Event, I am satisfied this appeal should not stand or fall on that point alone.

[183]     There is a second path to recovery for Matthews.  This path is through the employment contract, which I suggest would include an implied term of honesty as part of the prohibition against unlawful dismissal without notice. As the hearing judge noted:

[184]     If Emond was on a frolic of his own, having misled his superiors as to what he was doing vis-à-vis Matthews, Ocean is not now entitled to gain from that deception.  The evidence, and the hearing judge’s findings, make it clear that Emond’s campaign to remove Dave Matthews extended over a number of years. The hearing judge said:

[185]       Even if clauses 2.03, 2.04 and 2.05 of the LTIP were sufficient to prevent  Matthew from recovering under the LTIP, the LTIP serves as a means to measure the damages for the unlawful dismissal.  In this regard, I accept the calculation of the damages as established by the hearing judge where he calculated the loss related to the LTIP as $1,086,893.36 .

[186]     The LTIP contract was one that the employer presented to Matthews and other key employees. It was not the result of negotiation, but it was intended to foster loyalty and commitment.  The contract spoke of the fact that it had no current value and that in order to collect Matthews had to be employed at Ocean and that it could not be used as a basis upon which to calculate severance. Severance and damages are distinct legal concepts.  The court is here calculating damages consequent to the unlawful dismissal, not severance.  In terms of wrongful dismissal the court is dealing with the issue of damages in an effort to make the aggrieved party whole again.

[187]     Blacks Law Dictionary, 10^th ed. (St. Paul, Thomson Reuters:2014), defines “damages,”  “contract damages” and “severance pay”:

[188]     The LTIP expressly limits the right of employees to claim severance based on the LTIP, if the employee is not actively employed at the time of the Realization Event. The failure to provide proper notice of termination or payment in lieu of notice may result in an employee being entitled to damages. Damages are meant to compensate an employee for the harm caused by their dismissal.  Those damages are meant to include all losses that are reasonably foreseeable, with the onus of proving both entitlement and quantum being on the claimant employee.

[189]     In the unique circumstances of this case, Ocean should not benefit from Matthews’ wrongful termination.  I repeat, the CEO, Jamieson, said he did not want Matthews dismissed, yet a rogue employee constructively dismissed Matthews.  If the operating mind of the company could be said to be Jamieson and other board members who testified, they did not want Matthews dismissed.  Only Emond, through lies and deception, acted in a way that constituted constructive dismissal.  Nothing in the LTIP even vaguely suggests that Ocean may avoid the payment of the benefit through lies, deception and engineering of the loyal employee by any member of the management team. That would, in this case, include Emond.

[190]     At common law, the objective of damages for breach of contract is to put the injured party in the position he/she would have been in had the contract been performed.  Here, had Matthews not been unlawfully dismissed, he would have benefitted from the LTIP.  But for the unlawful dismissal, he would have been in the employ of Ocean at the time of the sale of the company which was the “Realization Event” under the LTIP. 

[191]     I refer to Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (SCC), [1997] 3 S.C.R. 701:

[192]     Although McLachlin, C.J. makes this comment in dissent in part, it is nevertheless an accurate statement of the law in damages. See also, S.M.Waddams, The Law of Contract, 7^th ed., (Toronto: Thompson Reuters Canada Ltd., 2017) at p. 793.

[193]     The right to damages is based on what is also know as the compensation principle (see: Angela Swan & Jakub Adamski, Canadian Contract Law, 3^rd ed. (Markham, Ontario: LexisNexis Canada, 2012) at p. 381, s.6.11).

[194]     In many cases the difficulty lies in ascertaining the extent of pecuniary loss flowing from the breach of contract.  But in Haack v. Martin, 1927 CanLII 57 (SCC), [1927] S.C.R. 413 the court adopted the “general rule applicable to all breaches of contract” as stated in Robinson v. Harmin, (1848), 1 Exch 850, at 855:

[195]     The law does distinguish between direct and indirect damages and an injured party is entitled to recover for either type of damage.  This is noted by Swan and Adamski, supra at 6.15 – 6.16

[196]     The law on damages extends at least as far back as Hadley v. Baxendale (1854), 9 Ex. 341, 156 E.R. 145, where the court identified two cases where damages are recoverable:

[197]     I return to the Baxendale rule. This rule was endorsed more recently in Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30 and in Keays, supra (¶55).  In Fiddler the court said:

[198]     Honda and Fidler have changed the method used for assessing damages in wrongful dismissal cases.  In Jean v. Pêcheries Roger L. Ltée, 2010 NBCA 10, the court said:

[199]     In this case, Ocean knew that one consequence of Matthews leaving Ocean (the dismissal) was that his LTIP was at risk.  In fact, there is reference in the evidence to one Ocean employee saying the LTIP was a retention plan not an exit strategy; they refused to negotiate a payment related to the loss of the LTIP. (see page 3286 re notes of a May 2011 meeting.)

[200]     The loss of the opportunity to participate in the LTIP was a predictable loss. Emond was aware of DSM actively negotiating a purchase of Ocean at the time  Matthews was constructively dismissed.  Ocean was, at the time, in a better position to know what Matthews’ losses might be.  Matthews was struggling to stay with the company, until near the very end, in spite of all that Emond did to him over the years.

[201]     It would not be inappropriate to compare this case to one of a stolen lottery ticket.  The ticket is of nominal value before the winning numbers are drawn. If, however, a lottery ticket is wrongfully taken and the numbers on that ticket match, it is not the face value that the courts would order returned to the true owner.  A court would order the return of the winnings.

[202]     To continue the analogy, Matthews had paid handsomely for his lottery ticket, through many years of loyal service to Ocean.  He stayed, in part, for the LTIP.  He was dismissed as a result of the conniving actions of Emond. Like the lottery ticket that had nominal value on the day it was stolen, it was possible to calculate the value once the winning numbers were drawn.  Matthews’ losses, by the time of the application were easily calculable by reference to the LTIP.  To put it more succinctly, even if the LTIP could not be used to calculate severance, it is available to calculate damages as the hearing judge did in this case.

[203]     My colleagues and I agree with the hearing judge who determined 15 months was an appropriate period of notice in this case.  The lottery ticket matured within that time, but because it was stolen by Emond/Ocean, Matthews stands to lose everything he worked for over many years.  His many years of service was the price he paid for the ticket.  There was nothing more to be done by Matthews or Ocean for Matthews to collect.  What he lost was the opportunity to share in the value of the sale.  That sale did occur within the notice period as established by the court.

[204]     No amount of lies or deception by Emond should serve to deny Matthews of that benefit. Damages for wrongful dismissal are no longer limited to loss of wages.  As noted by David Harris in Wrongful Dismissal, loose-leaf (consulted on 15 February 2018, last updated 2018) (Toronto, Ont: Thompson Reuters, 1997, 2017). vol. 2, ch. 4, s. 4.19,  p.4-67:

[205]     In the context of this case, the LTIP was not a bonus or profit sharing agreement or even a stock-option agreement.  It was an essential part of his compensation package as was evidenced in a meeting he had with C. Wilson in May of 2011:

[206]     As I said earlier, the LTIP came into existence when senior management felt the sole owner of the company was a person whose word was his bond.  He was thought to be a person who could be trusted to look after his loyal employees, not use them, undermine them, and then dispose of them. Had that use and disposal approach been hinted at in the LTIP there is little doubt that the management team would have departed long before this became a half billion dollar company.

[207]     My colleague says the hearing judge was wrong to distinguish Kieran.  In that case, the Ontario Court of Appeal was addressing the appellant’s entitlement to stock-options that would have vested during his period of reasonable notice.  The majority decision here, however, fails to take into account the unique aspect of the present case.  This case is an exception in that the dismissal was engineered over a period of years by a rogue manager.  The dismissal was the result of a series of lies and deception.  The court must not condone the avoidance of contractual obligations that are founded on such a lack of integrity.  On that basis alone, this case should be distinguished from Kieran. The same can be said of Styles even though the wording of the long term incentive plan in Styles is very similar to the terms in Matthews’/Ocean Long Term Incentive Plan. 

[208]      My colleague at ¶87 says:

[209] It is not clear what the scope of that reference was, but I take it as meaning that there is an implied term in either the LTIP or the employment contract that provides that it would be unconscionable to dismiss Matthews simply to avoid payment under the terms of the LTIP and that Matthews could recover.  With the greatest respect to my colleague,  in this case this is a distinction without a difference.  What difference would it make in the context of this case had Ocean set out to avoid the payment of the LTIP by firing Matthews, verses a rogue manager in the company setting out to get rid of him in a campaign that lasted a number of years?  The damages are the same for Matthews. Ocean knew that Matthews stood to lose his LTIP and did nothing to right Emond’s wrongs.  A dismissal for the sole purpose of avoiding the payment of the LTIP would be contrary to an implied duty of good faith.  The lies and deception employed by Emond, a person who was both an employee and director of Ocean, in his crusade against Matthews is no less offensive and contrary to an implied duty of good faith vis-s-vis both the LTIP and the employment contract.

[210]     In summary, I am convinced Emond’s actions, and the pivotal role he played in Matthews’ dismissal, are of sufficient import to support the hearing judge’s finding that Matthews is entitled to damages under the common law.  There is nothing in the LTIP or the employment contract that implicitly allows Ocean to terminate Matthews based on lies and deception.  The common law duty of honesty is implicit in both the LTIP and the employment contract.  In spite of the terms of the LTIP, in the unique circumstances of this case, I am satisfied that Matthews is entitled to recover full damages for his wrongful dismissal. The LTIP provides a simple means by which to measure the damages.  I would have maintained the award in relation to the loss of the LTIP.

[211]     Based on success being largely in favor of Matthews, had I been in the majority I would have awarded costs on this appeal to Matthews in the amount of 30% of appropriate trial costs.