Bhavsar v Canadian Natural Resources, 2016 ABQB 471

Court of Queen’s Bench of Alberta Citation: Bhavsar v Canadian Natural Resources, 2016 ABQB 471 Date: 20160824 Docket: 1501 03962 Registry: Calgary Between: Pareshkumar Bhavsar, Partha Paul, Ashwinkumar Patel and Kanaiyalal Darji Plaintiffs - and - Canadian Natural Resources Ltd. Respondent _______________________________________________________ Memorandum of Decision of J.B. Hanebury , Master in Chambers _______________________________________________________ [ 1 ] This is an application for

summary judgment to establish the heads and amounts of damages for the wrongful dismissal of three of the Defendants. The claim of Mr. Bhavsar has been settled. It is acknowledged that the plaintiffs were dismissed without cause, and their efforts to mitigate their losses have not been disputed. FACTS [ 2 ] The Plaintiffs were employed by Canadian Natural Resources Ltd. (CNRL) at the Horizon Site north of Fort McMurray. They were dismissed from their employment on January 21, 2015 as a result of the downturn in the economy.

While CNRL does not argue that they were dismissed for cause, it does look to their performance as a defence to some of the claims made for damages. [ 3 ] In September, 2014 managers were asked to identify the lowest performer in their groups. The plaintiffs were among those identified. They were said to have “marginal performance” with the result that they advised in December that they would receive no annual cash bonus. Mr. Darji was out of the country, and was advised upon his return.

Bonuses were normally paid out in January, the month the Defendants’ employment was terminated. [ 4 ] As there are multiple plaintiffs, I will first describe each of their employment situations, and then consider the principles underlying an entitlement to each of the types of damages sought. I will consider the situation of each of the three employees to make a determination as to his entitlement to those damages.

Employment Situations Mr. Paul [5] Mr. Paul was employed as a reliability specialist for two and half years. He is a mechanical engineer with 22 yearsexperience in reliability maintenance and operations and design related to rotating equipment in the oil and gas industry. His dutiesincluded plant integrity and the provision of support to enhance the effectiveness of operations and maintenance systems, in addition todeveloping reliability strategies and programs for operating systems and equipment. He was 49 years old at the time of the termination ofhis employment.

He obtained new employment effective June 1, 2015 as a reliability engineer. Mr. Patel [6] Mr. Patel was employed as an electrical maintenance technician and worked at the site for four years and two months. Hebecame a certified industrial electrician in 2004 and had over 20 years experience in electrical and instrumentation for plant equipment inthe oil and gas sector. He worked for the company as an electrical maintenance technician and as a planner. The first position requiredhim to install, isolate, troubleshoot, clean, inspect and maintain electrical equipment.

As a planner he worked as a manager to define andimplement reporting and documentation requirements to communicate the status and issues that arose in relation to the dailyimplementation schedules and scope of work. He was 43 years old at the time of the termination of his employment. Mr. Patel obtainednew employment in April, 2015. He was laid off on June 3, 2015 and recalled on July 15, 2015. Mr. Darji [7] Mr. Darji was employed as an electrical engineer for 2 1/2 years. He is a member of the Association of ProfessionalEngineers and Geoscientists of Alberta.

He has over 13 years of experience in reliability, design, troubleshooting, operation, andmaintenance of electrical equipment in the oil and gas industry. He worked first as a specialist electrical, and then as an electricalengineer. He was 38 years old at the time of the termination of his employment.

He obtained new employment on July 13, 2015 as anelectrical engineer. [8] Their compensation packages included a number of components: salary; benefits; vacation; an annual bonus which wasprovided in the form of cash, shares, stock options, and stock option allocation; stock savings plan; location allowances and a busallowance or fly in/fly out allowance; and vacation. In addition, Mr. Patel had scheduled and unscheduled overtime and a shiftdifferential. [9] Upon the termination, CNRL paid them only the obligatory sum pursuant to the Employment Standards Code, RSA 2000, c.E – 9.

As well, it imposed a site ban preventing them from being on the CNRL Horizon site. The plaintiffs allege that their coworkerswere advised that their terminations resulted from poor performance and that they had been banned from the site for life. They allege thatthis resulted in additional stress and humiliation. [10] With this background, I turn to their claims for damages. As this is an application for

summary judgment, thesedeterminations can be made only where there is no genuine issue of merit that requires a trial: 776826 Alberta Ltd. v. Ostrowercha, 2015ABCA 49, paras. 10-13. A “credibility contest” usually raises a genuine issue for trial: Access Mortgage Corporation

(2004) Limited v.Arres Capital Inc., 2014 ABCA 280, paras 6, 45. See as well: Urbanski v.

Ramara (Township), 2016 ONSC 111, para. 47 DAMAGES CLAIMED Base Salary [11] When determining the reasonability of notice, or pay in lieu thereof, the Supreme Court of Canada has set out the followingfactors for consideration: age; length of service; the nature of employment and attendant responsibility; the employee’s experience,status, training and qualifications; the availability of equivalent alternate employment in light of the employee’s experience,qualifications and training; and any other specific factors particular to the case: Bardal v.

Globe & Mail (1960) (ONSC), 24 DLR (2d) 140, at p. 142.; Machtinger v. HOJ Industries Ltd., (SCC), [1992] 1 SCR 986, at 998-99. Weighingthese factors is an art, not a science, and wide variations can be found in the case law. There is no “rule of thumb”, such as one month foreach year of service. The facts of each situation must be considered. [12] Before examining each employee’s situation, I note that in the case of all of these employees, obtaining equivalent alternateemployment in the same industry was problematic due to the downturn in the price of oil. Mr.

Paul [13] The following cases were cited by the parties as similar to the situation of Mr. Paul: Lederhouse v. Vermillion Energy Inc.,2015 ABQB 387; Teitelbaum v. Global Travel Computer Holdings Ltd., [1999] O.J. No. 546 (Ont. Court Gen Div.); Butler v. PotashCorporation of Saskatchewan Mining Ltd., (SKQB); Short v. Surveyer, Nenniger & Chenevert Inc., (QC C; Board v. Shawinigan Energy Consultants Ltd., [1985] O.J. No. 1205; Sarton v. Fluor Canada Ltd., 1986 CarswellAlta615; Baker v. Vecima Networks Inc., 2011 SKQB 368.

The notice periods in these cases ranged from 3 months to 9 months. [14] None of these cases is on all fours with the facts in this case. One case, Board, is merely provisional on the amount of noticeto be given. In others, the age of the employee was an important consideration. In still others, either the employee’s work or the period ofemployment were not comparable. [15] Mr. Paul was 48 years old at the time of his termination, was a mechanical engineer with 22 years of experience and held thenon-management position of reliability specialist.

He was not a member of APEGGA and had been employed for two and a half years.

[16] It was not argued that Mr. Paul was in a position where it was likely that his age would be detrimental to his re-employment.His years of experience were an asset. While he was not a manager, he held a professional position as an engineer. In these circumstancesa notice period of 5 months is appropriate. Mr. Patel [17] The following cases were cited by the parties as similar to the situation of Mr. Patel: Ghate v. Acres Consulting Services Ltd.,[1086] O.J. No. 1389 (Ont. H.C.); Kelly v. Monenco Consultants Ltd., [1987] O.J. No. 563 (Ont. H.C.); Koropeski v. American BiaxisInc., 2007 MBQB 33; Enns v.

Mohawk Oil Co., [1992] M.J. No. 493 (MCQB); Butler (supra); Porter v. Amok Ltd., [1986] S.J. No.354 (SKQB); Sommerard v. I.B.M. Canada Ltd., (ON CA), [2006] OJ. No. 1209 (Ont. CA); Ratzlaff v. MedstarVentures Inc., [2006] SJ (SCQB) No 218; Fredericks v. 2753014 Canada Inc., [2008] NSJ No. 570 (NSSC). The notice period in thesecases ranged from 4 months to 12 months. [18] In most of these cases the plaintiff had greater educational qualifications, or supervised others or was significantly older oryounger than Mr. Patel. In one, Enn, the notice period was provisional. [19] The case most similar to Mr.

Patel’s situation is Fredericks, where a pipe inspector technician, aged 46, with 5 years ofemployment was granted a 5 month notice period. [20] Mr. Patel was 43 at the time of his termination, was an electrical maintenance technician with 20 years experience and hadworked for CNRL for over 4 years. In my view, in these circumstances an award of 5 months is appropriate. [21] Mr. Patel also earned scheduled overtime amounts and unscheduled overtime amounts, and a shift differential.

In 2014 heearned $9049 in scheduled overtime, $20,979.36 in unscheduled overtime, and $1020 in a shift differential. [22] Mr Patel’s counsel argues that shift premiums during the reasonable notice period have been allowed as part of the damagesfor wrongful dismissal and cites McIlveen v. British Columbia, (BC SC) However, I could find no clear statement ofthat principle in the case and in fact, the amount of damages was agreed to by the parties. [23] However, in the case of Mr. Patel, his employment offer included scheduled overtime and a night shift premium.

It followsthat he is entitled to this component of his compensation as well, at the 2014 level, prorated for the notice period. Mr. Darji [24] The following cases are cited as similar to the situation of Mr. Darji: Lederhouse (supra); Teitelbaum (supra); Butler (supra);Short (supra); Board (supra); Sarton (supra); Baker (supra). All of them are distinguishable from Mr. Darji’s situation. In all instanceseither age was a factor, or the length of employment varied, or the employee supervised others or had a less-skilled position. In one thedetermination was provisional. [25] Mr. Darji, like Mr.

Paul, was employed for two and a half years as an engineer. However, he was younger than Mr. Paul andhad only 13 years experience. He had obtained the designation of Professional Engineer. In light of these factors a reasonable period ofnotice is 4 months. Vacation Pay [26] The plaintiffs claim vacation pay calculated on any any notice period awarded. They rely on the decision in Tanton v.

CraneCanada Inc., 2000 ABQB 837, where the Court held that unless the employee was required to take his or her vacation on a regular basis,awarding vacation pay would not result in double recovery and vacation pay should be paid for the reasonable notice period awarded.There is other case law to the same effect: O’Donnell v. Soldan Fence and Metals

(2009) Ltd., 2015 ABQB 764. [27] As noted in O’Donnell, the concern of the courts is double recovery and the question is evidentiary. Was the employeeobliged to use up his vacation or could he receive pay in lieu thereof? See as well: Turner v. Westburne Electrical Inc., 2004 ABQB605, par’s 80-83; Bagby v.

Gustavson International Drilling Co., Ltd., (1980), 1980 ABCA 227 , 24 A.R. 181, para. 32. [28] Other case law has held that vacation cannot be claimed for the notice period where the employer could have reasonablyinsisted that the employee take vacation during that time. [29] CNRL argues that its vacation policy was “use it or lose it”.

It did not allow for the carry over of vacation, other than oneweek, and the Plaintiffs regularly took their vacation. [30] On the facts of this case, where there is a policy of requiring vacation to be taken, there is no history of paying out vacationtime to these employees, and the employer could have insisted that their vacation be taken during the notice period, the Plaintiffs havenot established their claims to pay for vacation calculated on the notice period.

Other Benefits [31] Various group benefits were paid for the Plaintiffs during their employment and CNRL does not deny liability for thosebenefits during the period of reasonable notice. Location Allowance [32] In Allison Parker v. Canadian Natural Resources Ltd., Prov. Ct. Alta, (December 15, 2015) [unreported], para. 25, the Courtnoted that a terminated employee is entitled to the compensation paid by CNRL for living in Fort McMurray for the notice period oruntil the employee leaves Fort McMurray, whichever first occurs. See as well: McIlveen v. British Columbia, (BCSC), para. 55.

[ 33 ] The Plaintiffs residing in Fort McMurray are entitled to this allowance for the notice period or the date they left Fort McMurray, whichever first occurred. [ 34 ] The fly in/fly out allowance compensated employees who did not live in Fort McMurray for the cost of travelling from their homes to the site for work. CNRL argues that this allowance is analogous to a car allowance for business purposes and Mr. Paul, the employee who received it, is not entitled to that benefit during his notice period: Bagby (supra), at para. 31; Turner v.

Westburne Electrical Inc. , 2004 ABQB 605 , para’s 84-85. [ 35 ] I agree that the Plaintiff’s have not established Mr. Paul’s entitlement to this allowance. Potential Loss on Sale of House [ 36 ] Mr. Darji relocated to Ontario to secure new employment. He put his house on the market in Fort McMurray and had to drop the price to less than the outstanding mortgage. It remained unsold at the time of this hearing. He alleges that CNRL encouraged him to buy a house in a more expensive area of Fort McMurray and move from low cost housing. He seeks the anticipated loss on the sale of his house and relies on: Earl v.

Northern Purification Services (Eastern) Ltd., (1980) 1 CCEL 267 (Ont. H.C.J.) , aff’d. 1 CCE: 267 n (C.A.), leave to appeal to SCC refused 42 NR 353 n.; Rajakaruna v. Peel (Regional Municipality), (1981) 10 ACWS (2d) 522 (Ont. Co. Ct.) [ 37 ] However Rajakaruna does not seem to support the Plaintiff’s proposition. The Court said at para.33 : … In my view, the plaintiff is entitled to recover actual expenses incurred by him to obtain new employment and to move to his new place of employment. Transactions of a capital nature relating to the rental or sale of a former residence are not to be included.

The plaintiff is no more entitled to recover a rental loss or the expense of selling a home than he would be required to account for a rental profit or a capital gain on the sale of his house. Those claims are not allowed [ 38 ] I agree with that conclusion and the argument of CNRL that this loss is speculative. [ 39 ] Therefore I have come to the conclusion that Mr. Darji has not established his entitlement to this prospective loss. Bonus Plan, Employee Stock Savings Plan and Stock Option Plan [ 40 ] Each year CNRL awarded discretionary bonuses, based on performance.

The bonus included four components: cash bonus; share bonus; stock options; and, stock option allocation. In each year employees were eligible to be considered for all four components. Different components would be awarded depending on the employee’s circumstances. [ 41 ] The employment agreements executed by the Plaintiffs provided: The Company awards annual Performance Bonuses based on individual and Company performance, subject to approval from the Board of Directors.

At the discretion of the Board of Directors, the company may offer a stock option grant and/or stock bonus grant as part of the company's annual compensation review program. [ 42 ] Each year the Company's Board of Directors set a total bonus pool, which was then initially automatically allocated amongst employees based on a number of factors including, individual performance ratings, compensation group, and base salary. The performance rating was assigned to each employee during the final quarter of each year.

After the automatic allocation amongst employees, management has the discretion to alter the allocation and determine individual employees bonus amounts CNRL says that this occurred frequently. [ 43 ] However, as a discretionary award, the employer is under an obligation to exercise its discretion reasonably and in good faith: Devlin v. NEMI Northern Energy & Mining Inc ., 2010 BCSC 1822 , para’s 106-107; Watermand v. IBM Canada Limited , 2010 BCSC 376 , aff’d 2013 SCC 70 , para. 31 ; Hansen v. Altus Energy Services Parnership , [2010] A.J.

No. 1505, para. 31 . [ 44 ] Each type of bonus awarded raises different issues for consideration. Cash Bonus [ 45 ] A part or all of the bonuses was paid in cash. Employees were advised of their bonus in December and the cash portion was paid the following January. [ 46 ] For each year prior to their termination, the plaintiffs received cash bonuses. None of the Plaintiffs received a bonus just prior to their termination.

CNRL says that in each case the Plaintiff’s performance was marginal and advises that there were other employees who remained employed by the company who also received no cash bonus. [ 47 ] The plaintiffs all acknowledged on cross-examination that they were aware that receipt of a bonus was contingent on good individual performance. They all argued that their performance entitled them to a bonus. [ 48 ] CNRL provided affidavit evidence by the supervisors of Mr. Paul and Mr. Darji alleging issues in relation to their performance. No such evidence was provided in relation to Mr. Patel.

The only evidence was the unsupported allegation of the employee who was the Lead, Human Resources Advisor of CNRL at the Horizon site in January, 2015. She provided the letter given to Mr. Patel at the time he was told he would receive no cash bonus. That letter also gives no specifics of his alleged poor performance.

[49] A bonus scheme that becomes part of an employee’s salary structure can be included in damages: Hansen (supra), para. 30. [50] A cash bonus pool was made available for the 2014 year and cash bonuses were paid to others. To raise a genuine issue ofmerit requiring a trial as to Mr. Patel’s entitlement to a portion of that cash pool, there should be evidence of a specific problem with Mr.Patel’s performance. There is not. [51] Therefore, Mr. Patel is entitled to a cash bonus. Mr. Patel had received a cash bonus of $2700.00 in 2012 and $2935.00 in2013. He is entitled to a cash bonus of $3000 for 2014.

The other two Plaintiffs have not established their entitlement to a cash bonus asspecific concerns as to their alleged poor performance were provided by CNRL. Employee Stock Savings Plan, Stock option Allocation, Share Bonus [52] As part of their employment and benefits package, employees could contribute up to 10% of their annual salary to CNRL’semployee stock savings plan. CNRL would contribute 1.5 times the employee contribution and the total funds were used to acquirecommon shares, which were deposited in the employee stock savings plan.

The employee's contributions to the plan vested immediately.The company’s contributions vested to the employee during the following one or two years, depending on the employee's length ofservice. [53] Stock option allocations received by employees were subject to their election. The employee could exchange the allocation forstock options, for CNRL common shares (share election) or for a cash amount. [54] Any share bonus awarded or a share election chosen by the employee under the stock option allocation was deposited into theemployee stock savings plan and governed by its terms.

Share bonuses usually vested to employees over a period of three years. [55] Stock options, awarded or elected through the stock option allocation, were governed by the Amended Compiled and RestatedStock Option Plan.

Stock options were usually awarded at a specific strike price and scheduled to vest to the employee over five yearswith 20% of the issued stock vesting on each anniversary of the grant date and pursuant to the terms of the stock option plan. [56] The Plaintiffs argue that the law grants a terminated employee damages for whatever amounts or entitlements would havevested over the reasonable notice period. Where there is wording in a stock option plan or employee share purchase plan that attempts tolimit an employee’s entitlement to those damages, it will be looked at closely: Veer v.

Dover Corp. (Canada) Ltd., (1999) (ON CA), O.J. No 1727 (Ont. C.A.), para’s 11 – 18. [57] In Veer, the case relied upon by the Plaintiffs, the agreement provided that when an employee’s employment was terminatedwhether voluntarily or involuntarily, the options were cancelled. The Court examined the wording of the contract and held that anunlawful termination was not included in this language. The Court found that it could not presume that the agreement provided for anunlawful triggering event as there was no clear language to that end. [58] In its reasons the Court referred to the decision in Brock v.

Matheson Group Limited et al., (1991) 34 C.C.E.L. 50 (Ont.C.A.), a case that it distinguished, saying that the wording in the relevant agreement was clearly different. [59] In Brock the agreement held that upon the employee “ceasing to be an employee or servant of the corporation…the option …shall forthwith cease and terminate and ….be of no further force or effect” unless it had already been exercised.

The Court in Brocklooked at the specific wording and held that the date the employee ceased to be an employee was the date of the actual dismissal of theemployee regardless of whether the dismissal was lawful or unlawful, and therefore there was no further entitlement to stock options. [60] CNRL does not disagree with the Plaintiff’s position that the wording of the contract will determine whether the benefits of astock option or incentive plan are payable during the reasonable notice period. [61] It points out that when faced with clear language curtailing the employee’s entitlement, the courts will not grant such benefitsduring the notice period: Jivraj v.

Strategic Maintenance Ltd., 2014 ABQB 463 , para’s 35, 66-73; Dunstee v. Sobeys Inc., (Ont SC), para. 12; Dieran v. Ingram Micro Inc., (Ont CA); Love v. Acuity InvestmentManagement Inc., 2011 ONCA 130, para’s 40, 52-53. [62] The two most relevant Alberta decisions on point are Jivraj (supra) and Hansen (supra). In Jivraj the Court found that abonus was not payable when the employment contract stipulated that if the employee’s employment ceased for any reason he would notreceive any bonus amount not yet payable.

In Hansen the stock option agreement provided that it would terminate at the earlier of 90days after the optionee ceased to be an employee or was provided with written notice of dismissal that he would cease to be an employee.The Court found the agreement was clear and unambiguous in its intent to terminate the option where the employee is provided withwritten notice of dismissal or ceases to be in active employment. [63] In this case the employee stock savings plan deals first in s. 7 with the treatment of the savings plan in the case of disability,retirement or death.

It then provides: 8.1 If by written notice, effective as of the date set out therein (the "termination date") the service of a participant is terminated for anyreason other than normal retirement, total and permanent disability or death,… Notwithstanding anything elsewhere contained herein,the portion of his participants Corporation account and the participant’s Corporation bonus account that has not vested in theparticipant… prior to the termination date shall be returned to the corporation and the participant shall have no entitlement there to.[emphasis added] [64] Similar to Jivraj and Hansen, the wording in this case is unambiguous.

When the employee’s services are terminated for anyreason by written notice, other than for retirement, death or incapacity, clause 8.1 is applicable. The Plaintiffs’ entitlement to theunvested employer’s contribution to the stock option savings plan ends upon the date of the termination. As a result the Plaintiffs havenot established their entitlement to the ongoing benefits under the employee stock savings plan.

[65] The wording in the Stock option plan is different. It provides: 2.07(

c) if an optionee is given written notice of termination by the corporation… whether such termination is for cause or without cause,and with or without adequate notice and irrespective of whether the optionee is entitled to or received at that time or in the future, anycompensation in respect of such termination, any vested option … shall be exercisable for a period of 30 days from the notice date..

Anyoptions which have not vested as of the notice date shall terminate on such notice date and the optionee shall thereupon have no…entitlement to, such terminated options. [66] The wording of the stock option plan is also clear. The plaintiffs lost all entitlement to benefits under the stock option plan,other than any options that had vested prior to their termination. In the latter case, they had 30 days to exercise those options. As a result,they have not established their claim to ongoing benefits under the stock option plan.

Aggravated and Punitive Damages [67] The Plaintiffs allege bad faith by CNRL in its determination that no bonuses would be paid, and on the basis that there weremeetings with remaining employees during which they were advised the Plaintiffs were terminated for poor performance. They allegethe actions of CNRL in terminating the Plaintiffs were capricious and arbitrary. They seek aggravated and punitive damages: HondaCanada Inc. v. Keays, 2008 SCC 39 , [2008] 2 SCR 362; Truckers Garage Inc. v. Krell, [2003] OJ No. 3141; Gordon v.

AltusGroup, 2015 ONSC 5663. [68] CNRL denies these allegations and, more specifically, the supervisor of one of the Plaintiffs states that no such advice wasgiven to the remaining employees. [69] It is troubling that, despite CNRL’s detailed policy for management outlining their obligation to give ongoing feedback toemployees on their performance, it seems that the Plaintiffs were deemed to be marginal employees and denied bonuses without anyprior consultation or discussion.

However, the issue of the appropriateness of aggravated or punitive damages, in light of the alleged badfaith in the exercise of CNRL’s discretion, is intertwined with the factual dispute as to what was told to other employees. In the result,this issue cannot be determined in this application. CONCLUSION [70] All of the plaintiffs are awarded their base salaries and the benefits paid for by the Company for the aforementioned noticeperiods. Mr. Patel is awarded a bonus of $3000.00. [71] Vacation pay for the notice period is not awarded. The speculative loss on the sale of Mr. Darji’s house is not awardedsummarily.

Benefits under the stock option savings plan and the employee stock savings plan are not awarded. [72] The claims for the payment of a bonus for Mr. Paul and Mr. Darji and for aggravated and punitive damages for all of thePlaintiffs cannot be determined in this application. [73] The plaintiffs have obtained new employment and it was not disputed that the resultant income and benefits must be used tooffset any damages awarded for a period they were employed. [74] Counsel for CNRL provided damage calculation tables. I did not hear any objection from counsel for the Plaintiffs as to theiraccuracy.

However, I am uncertain if it included the overtime and shift premium to which Mr. Patel is entitled. Should those sums not beincluded, an adjustment must be made. Further, a 5 month notice period calculation was not provided for Mr. Paul. CNRL is to providethat calculation within 15 days of this decision. [75] Should there be a concern with the calculations, counsel should contact the clerk within 45 days to arrange an appointment toresolve the matter. [76] If the parties cannot agree to costs, they may be spoken to by contacting the clerk within 45 days of the date of this decision.

Heard on the 21st day of June, 2016. Dated at the City of Calgary, Alberta this 23rd day of August, 2016. J.B. Hanebury M.C.C.Q.B.A. Appearances:

Matthew R Laurich for the Applicants/Plaintiffs Alison M. Adam and Danielle Emmett McLennan Ross LLP for the Respondent/Defendant