Blydo v. One Exploration Inc., 2012 ABQB 153

Court of Queen ’ s Bench of Alberta Citation: Blydo v. One Exploration Inc., 2012 ABQB 153 Date: 20120302 Docket: 1001 05020 Registry: Calgary Between: Vance Blydo Plaintiff - and - One Exploration Inc. and Trioil Resources Ltd. Defendants _______________________________________________________ Memorandum of Decision of Jodi L.

Mason, Master in Chambers _______________________________________________________ Introduction [ 1 ] The Plaintiff, Vance Blydo was employed as Manager, Operations for the Defendant, One Exploration Inc. (“OneEx”) pursuant to a written employment agreement dated March 26, 2009 (“OneEx Agreement”). [ 2 ] In December, 2009, OneEx entered into a corporate transaction with TriOil Resources Ltd.(“TriOil”) (the “Transaction”). TriOil was investing $10 million into OneEx and in turn OneEx used the funds to acquire TriOil. Under the Transaction, the current management of OneEx, including Mr.

Blydo, would be replaced with a new management team that would run OneEx after closing. OneEx would change its name to “TriOil Resources Ltd.”. The Transaction was to close January 13, 2010.

[ 3 ] Mr. Blydo understood his employment with OneEx would end. He would receive a retiring allowance pursuant to

Article 8 of the OneEx Agreement as liquidated damages for termination without cause. Under

Article 8, Mr. Blydo was not required to mitigate his damages. [ 4 ] On December 14, 2009, TriOil’s President and CEO, Russell Tripp, had discussions with Mr. Blydo regarding taking a position following the closing of the Transaction. Mr. Tripp told Mr. Blydo that the position would not jeopardize his receipt of the retiring allowance. Also, the position would include the ability to participate in a private placement in TriOil. [ 5 ] Mr. Blydo accepted the offer on December 15, 2009.

He completed and returned subscription agreements as directed by TriOil for 250,000 shares at $1.00 per share and made arrangements on January 7, 2010 to deliver the funds on January 11, 2010. [ 6 ] On January 11, 2010, OneEx terminated Mr. Blydo’s employment. Later that day, Mr. Tripp told Mr. Blydo that he would not be permitted to commence the position he had been offered in December. Mr. Tripp also told him he would not receive any employment benefits from TriOil, including the opportunity to participate in the private placement. There is no suggestion that Mr. Blydo’s termination was for cause. [ 7 ] Mr.

Blydo was offered the retiring allowance as provided under the OneEx Agreement, but on the condition he sign a release that included a release of any other claim, including any claim he may have against TriOil. Mr. Blydo refused to sign the release. [ 8 ] Mr. Blydo commenced this action in April 2011 for wrongful dismissal against OneEx and TriOil. He alleges that he is entitled to the retiring allowance from OneEx and to participate in the TriOil private placement as part of his damages. Mr. Blydo further claims for oppression as against OneEx and TriOil. [ 9 ] OneEx and TriOil allege that Mr.

Blydo was only employed by OneEx and terminated in accordance with the OneEx Agreement. They say that under those terms, he is only entitled to a retiring allowance calculated in accordance with a formula, and he is not entitled to participate in the private placement. The defendants apply for

summary dismissal of the claim for wrongful dismissal against TriOil, and the oppression claim against OneEx and TriOil. [ 10 ] For the reasons that follow, the application for is dismissed. There are genuine issues for trial. The test for

summary judgment [ 11 ] Rule 7.3 of the Alberta Rules of Court provides that a party may apply for

summary judgment in respect of all or part of a claim, on the ground that there is no merit to a claim or part of it. [ 12 ] The bar on a motion for

summary judgment is high: Canada (Attorney General) v. Lameman , 2008 SCC 14 , [2008] 1 S.C.R. 372. A party bringing a motion for

summary judgment bears the legal onus of showing no genuine issue for trial: Murphy Oil Co. v. Predator Corp. , 2006 ABCA 69 , 384 A.R. 251. It must be “plain and obvious” or “beyond doubt” that the action will not succeed: Murphy Oil Co. v. Predator Corp . at paragraph 24 .

Summary judgment should not be granted if opposing affidavits clash on relevant facts. A Justice or Master in chambers should not assess the quality and weight of the evidence, as this is a function reserved for a trial judge: De Shazo v. Nations Energy Co. , 2005 ABCA 241 , (2005), 48 Alta. L.R. (4 th ) 25 (C.A.). [ 13 ] In the context of this application, OneEx and TriOil must establish that it is plain and obvious or beyond doubt that Mr. Blydo is restricted to the dismissal benefits under the written employment agreement with OneEx. That agreement limits both what Mr. Blydo can claim and from whom.

OneEx and TriOil must also establish that it is plain and obvious or beyond doubt that Mr. Blydo has no claim in oppression.

Is it plain and obvious or beyond doubt that Mr. Blydo is restricted to the dismissal benefits under the OneEx Agreement? [ 14 ] As noted, OneEx and TriOil submit that Mr. Blydo was only an employee of OneEx and is restricted to the retiring allowance under the OneEx Agreement. [ 15 ] Mr. Blydo asserts that he reached an agreement with TriOil prior to the closing of the Transaction, to commence employment with it upon closing. [ 16 ] Both Mr. Tripp and Mr. Blydo addressed this agreement in their respective affidavits. [ 17 ] Mr. Tripp deposes that on December 14, 2009 he had discussions with Mr.

Blydo about his “potential continued employment” with OneEx , on substantially similar terms as the OneEx Agreement. He says that “[a]ll of these discussions related solely to [ Mr. Blydo ]’s potential of continued employment post-Acquisition with the reorganized version of OneEx, and not to new employment with a separate and distinct entity”. OneEx and TriOil emphasize that no new entity was being created and that on closing of the Transaction, OneEx would change its name to “TriOil”. [ 18 ] Standing against Mr. Tripp’s evidence is Mr. Blydo’s evidence that on December 14, 2009, Mr.

Tripp and Andrew Wiacek, TriOil’s Vice President, Exploration, met with him and invited him to join TriOil as Vice President, Operations. He submits it was not presented as an offer with OneEx. [ 19 ] Mr. Tripp made notes during the meeting of the terms of the position offered to Mr. Blydo, as follows: Salary of $120,000, to be reviewed once first major acquisition closed; Title/position - VP Operations; Four weeks holidays, plus shut down at Xmas to New Years; Benefits equivalent to what Mr.

Blydo received at OneEx; Severance from OneEx would not be jeopardized; and Participation in the private placement on the same terms offered to the other members of the TriOil management team and the TriOil board. [ 20 ] Mr. Blydo says that on December 15, 2009, he spoke with Mr. Tripp on the phone and accepted the position of Vice President, TriOil. Mr. Blydo then sent an e-mail to Mr. Tripp confirming his wish to participate in the private placement in the amount of $250,000.00. Mr. Tripp replied that “[w]e assume that means you are the new VP Operations of TriOil”. Moments later, Mr.

Blydo received a further e-mail from Mr. Wiacek stating “Welcome Aboard”. Later that day, Mr. Blydo attended TriOil’s offices to “shake hands” with Mr. Tripp and to meet other members of the TriOil management team. [ 21 ] Mr. Blydo also emphasizes that on January 11, 2010 he received a termination letter from Walter Vrataric, President and CEO of OneEx and then later that day, was told verbally by Mr. Tripp that he was not going to be permitted to commence his position with TriOil. Mr. Blydo submits this further underlines that the two corporations were distinct.

He also argues that at that time, neither of these corporate representatives had authority over the other.

[ 22 ] In their amended defence, OneEx and TriOil describe the Transaction as a “reverse-takeover recapitalization” and plead that TriOil became a subsidiary of OneEx at closing. They emphasize in their written submissions that OneEx continued to exist post-closing, but in a re-organized form. A certificate of name change is in evidence showing that OneEx did in fact later change its name to “TriOil Resources Ltd.” on April 1, 2010. Their written submissions state that TriOil was “wound up” effective January 1, 2011 (at paragraph 7).

All of this suggests that while certainly OneEx continued to exist post Transaction, so too did TriOil, at least until the end of the year. [ 23 ] The December 20, 2009 agreement between OneEx and TriOil recording the Transaction does not include Mr. Blydo as part of the new management team of OneEx or among the TriOil shareholders/investors, but the December 21, 2009 Press Release and the December 19, 2009 Material Change Report does. [ 24 ] It is difficult to ascertain what was going on at this time with respect to Mr.

Blydo’s position. [ 25 ] It is not clear on the evidence before the court which entity was extending the offer of employment to Mr. Blydo on December 14, 2009, that he accepted on December 15, 2009. The evidence raises a genuine issue as to whether Mr. Blydo made an agreement with TriOil [1] to commence a position with it post closing of the Transaction, or with OneEx to continue his employment post Transaction, but with a change of terms. It is not plain and obvious that he was restricted to the retiring allowance under the OneEx Agreement. [ 26 ] OneEx and TriOil submit in any event that Mr.

Blydo’s agreement with Mr. Tripp was “conditional and effective” on closing of the Transaction and since Mr. Blydo was terminated prior to the closing, the agreement is ineffective. [ 27 ] Mr. Blydo’s first day of work under the agreement with Mr. Tripp was deferred to the closing date of the Transaction. The Transaction closed. The fact that Mr. Blydo did not get the chance to commence his new position on the deferred date does not take away from the fact that an agreement was reached. As noted, questions remain as to whom Mr.

Blydo was contracting with, and what he was entitled to as at January 11, 2010. [ 28 ] OneEx and TriOil also emphasize that an employee cannot claim separate and distinct severance entitlements for the same periods of employment over the same notice periods, as that would amount to double recovery. They rely on Major v. Phillips Electronics Ltd. , 2005 BCCA 170 , 39 C.C.E.L. (3d) 200. [ 29 ] In Major v. Phillips Electronics Ltd. , Mr. Major had worked for Phillips Electronics Ltd. for many years, most recently at a plant in Richmond, British Columbia. In July 2001, Phillips notified Mr.

Major that it was selling the plant and he would be terminated effective August 31, 2001. The sale closed. Mr. Major accepted a job with the new owner, who agreed that his seniority would run from his original employment with Phillips. Mr. Major soon had differences with his new employer and was terminated on October 9, 2001. He accepted 17 weeks pay in lieu of notice and then commenced an action against Phillips. [ 30 ] The Court held that while Mr.

Major retained a cause of action for wrongful dismissal against Phillips, the damages had to be reduced by the amounts paid to him by the new owner in wages and severance, so as to avoid double recovery. [ 31 ] The facts of this case are distinct and unique. Mr. Blydo relies on the express terms of a new agreement reached in December 2009 that entailed both the preservation of his retiring allowance from OneEx and a position that carried the entitlement to participate in a private placement in TriOil. It is not clear whether Mr.

Blydo agreed with OneEx to carry on his employment with it after the Transaction, but on new terms, or whether he agreed to work for TriOil. It is not clear whether the OneEx Agreement was modified or supplanted. That determination will inform Mr. Blydo’s entitlement to damages, and against whom. The argument against double recovery must be considered in the context of those findings. Private Placement

[32] In specific claims for stock options or other forms of equity benefits over a notice period, the entitlement depends on thewording and

interpretation of “the agreement involved” - see for example, PCL Construction Management Inc. v. Holmes (1994), 1994ABCA 358 , 157 A.R. 306 (C.A.). Here, the agreement involved is not limited to the subscription agreements that give OneExand TriOil the ability to reject the subscription at their sole discretion.

As noted, there is some evidence of an agreement reached inDecember, 2009 regarding the private placement. [33] Further, it is a basic principle of employment law that an employer is entitled to terminate employment at any time, providedthat reasonable notice or pay in lieu are provided: see for example, Soost v. Merrill Lynch Canada Inc., 2010 ABCA 251, 487 A.R.389. On the evidence before the court at this juncture, it is at least arguable that Mr.

Blydo’s pay in lieu could include something that hewould have been entitled to during a reasonable notice period, such as the private placement, that he was blocked from by virtue of histermination without cause. Mr. Tripp confirmed at questioning that Mr. Blydo’s subscription was the only one that was not approved. All the other TriOil subscriptions were honoured. [34] OneEx and TriOil also rely on the requirement in

section 5.6 of the OneEx Agreement that Mr. Blydo had to remain “activelyemployed” in order to be entitled to participate in any equity incentive plan. As noted, the evidence of the discussions between Mr.Blydo and Mr. Tripp raise an issue as to whether the OneEx Agreement governs entitlement on termination. Oppression [35] OneEx and TriOil submit that the Transaction was in the best interests of OneEx, and effected for a valid corporate purpose.They further assert that the rejection of Mr. Blydo’s subscription agreement was in accordance with the complete discretion granted toTriOil thereunder.

They also suggest that Mr. Blydo could have had no reasonable expectation that he would be allowed to participate inthe private placement once he was terminated, given that it was a perk granted only to the incoming management team. [36] These submissions overlook the evidence of the agreement reached between Mr. Tripp and Mr. Blydo in December, 2009. [37] The Court of Appeal has commented that

section 239(

b) of the Business Corporations Act, R.S.A. 2000, c. B-9 gives the courtthe discretion to recognize parties outside the listed categories as complainants for the purposes of oppression, and that in certain cases,dismissal from employment can be considered

an act of oppression: Instant Magic Holdings Ltd. v. Buchfink, 2005 ABCA 371 atparagraph 5. [38] In limited circumstances where there is an “intimate connection” between an employment contract and a shareholder’sagreement, a wrongful dismissal may ground a finding of oppression: 2082825 Ontario Inc. v. Platinum Wood Finishing Inc., (2009), (ON SCDC), 96 O.R. (3d) 467 (S.C.J., Div. Ct.). [39] In the unique circumstances of this case, it is not plain and obvious that Mr. Blydo cannot be a “complainant” for thepurposes of oppression, nor that oppression cannot be found. I decline to remove this cause of action from consideration at trial. Conclusion [40] The application for partial

summary dismissal is denied. There are genuine issues for trial as to what Mr. Blydo was entitledto upon his termination without cause on January 11, 2010, and from whom, and whether his termination supports allegations ofoppression in the circumstances. [41] If the parties cannot agree on costs, they can approach me. Heard on the 24th day of January, 2012.

Dated at the City of Calgary, Alberta this day of 2 nd March, 2012. Jodi L. Mason M.C.C.Q.B.A. Appearances: Blake, Cassels & Graydon LLP Maxwell J. Brunette for the Defendant MacPherson Leslie & Tyerman LLP S.Leonard Polsky for the Plaintiff [1] If the reference to TriOil being “wound up” is a colloquial reference to dissolution under the Alberta Business Corporations Act , R.S.A.2000, c. B-9, section 211(2.1) indicates that TriOil’s liabilities would have been assumed by OneEx.