Rajotte v. National Bank Financial Inc., 2017 ABQB 697

Court of Queen’s Bench of Alberta Citation: Rajotte v. National Bank Financial Inc., 2017 ABQB 697 Date: 20171115 Docket: 1601 05876 Registry: Calgary Between: Denis Rajotte Plaintiff - and - National Bank Financial Inc. and National Bank of Canada Defendants _______________________________________________________ Memorandum of Decision of J. Farrington , Master in Chambers _______________________________________________________ Background [ 1 ] This employment related action involves cross

summary judgment applications by the plaintiff Denis Rajotte and his former employer National Bank Financial Inc. (“National Bank”). There were additional matters dealt with by way of consent. The plaintiff’s amendments to his Statement of Claim were consented to, and the plaintiff agreed to only pursue National Bank Financial Inc. rather than National Bank of Canada as well. In addition, National Bank agreed to withdraw its counterclaim. What is left is an action by the plaintiff claiming dismissal related damages against National Bank, primarily on the basis of a written employment agreement. [ 2 ] Mr.

Rajotte is an investment banker. He has a law degree. He initially worked as a lawyer at large commercial law firms in Canada and the United States before he left the private practice of law to work as an investment banker. Immediately prior to his employment with National Bank, he worked at CIBC World Markets for a period of time. By all accounts, his employment with CIBC World Markets was successful, and he made what most would see as a substantial income by way of salary and bonuses. Pre-Employment Matters

[ 3 ] Mr. Rajotte entered into negotiations with Mr. MacInnis of National Bank about joining National Bank. The parties eventually entered into an employment agreement dated February 27, 2015. There was discussion leading up to the execution of the employment agreement, and Mr. Rajotte had at least some independent legal advice during the negotiation of the agreement.

Neither of the parties to the agreement can be described as “unsophisticated”. [ 4 ] These are some of the important terms of the employment agreement: Compensation: Your salary will be supplemented by discretionary bonuses that will depend on your performance and contribution to the Division, as well as the Firm’s profitability. Currently, our compensation system is based on our fiscal year of November 1 to October 31.

Your compensation will include the following: 1) A base annual salary in the amount of $175,000, payable in the normal course of payroll deposits… 2) A discretionary performance bonus (“Discretionary Performance Bonus”), payable in cash or, at the Firm’s discretion, in a mix of cash and deferred compensation… The Discretionary Performance Bonus will be based on your performance and the performance of the Firm… 4) For clarity, Paragraphs 2,3 and 4 above are subject to the following:

b) If you resign or your employment with the Firm is terminated for cause, you will not be entitled to any payment under paragraphs 2 and 3 unless you are actively at work on the date on which the Discretionary Performance Bonus payment is made. 13) If at any time during your employment with National Bank Financial your employment is terminated by the Firm for reasons other than cause- which for greater certainty, excludes scenarios involving your decision to leave the Firm or your employment ending as a result of your death or disability- (a “Specified Termination”), you will be entitled to a notice period, severance payment and/or other financial arrangement that is based on then current market practice. a.

If such termination takes place in the first 36 months of your employment with the Firm, 10 months based on the average salary and Discretionary Performance Bonus paid to you while employed by the Firm; b.

If such termination takes place at any time after the first 36 months of your employment with the Firm, 10 months plus 1 month for every completed year of service with the Firm after 36 months, up to a maximum of 18 months, based on the three most recent full fiscal years’ compensation (salary and Discretionary Performance Bonus) with the Firm or, if you have not completed three full fiscal years, the greater of the annual compensation paid or $1,000,000 . 14) Prior notice of at least 90 days on your part or that of National Bank Financial will be required before termination your services, except in the case of dismissal for just cause, failure to respect National Bank policies, or providing false information the time of your hiring, at which time you shall be subject to immediate dismissal without notice. [ 5 ] One of the contentious parts in finalizing the terms of the employment agreement was the termination clause.

Mr. Rajotte says that he had concerns that he might encounter difficulty with respect to payment of his bonus upon a termination that was not for cause, and he says that he sought protection for that possibility. [ 6 ] The underlined words in paragraph 13 were the result of negotiation regarding the wording of paragraph 13. The underlined words were added to paragraph 13(

b) rather than to paragraph 13(a). Much was made of that in argument, but I am left to deal with what the words say, and how they should be interpreted. Neither party seeks rectification in its pleadings. The Termination and Calculation of Severance [ 7 ] Mr. Rajotte commenced employment with National Bank on May 1, 2015. This was halfway through National Bank’s fiscal year which ends on October 31. He was terminated without cause on February 11, 2016. He received a severance payment that was based upon ten months of base salary as described in clause 13(

a) plus the bonus of $500,000 that had been declared for the fiscal year that ended on October 31, 2015 that he received during his tenure. [ 8 ] Mr. Rajotte says that his total severance payment should have been more than that amount, arguing that it should have been based upon his normal anticipated bonus for which part of the bonus amount was still outstanding, plus his annual base salary for ten months, and at the very least a minimum of $1,000,000 as described in clause 13(b). He argues that clause 13(

b) of the employment agreement guarantees him that amount, and that the wording of clause 13 of the employment agreement as a whole was designed to protect him in situations exactly like this one, namely a termination before a track record of yearly income and bonuses had been established. [ 9 ] National Bank argues that only declared bonuses ought to be factored into the termination provision, and that the matter is covered by clause 13(

a) of the employment agreement, and that it has paid all that is owed to Mr. Rajotte based upon the clear wording of clause 13(

a) of the employment agreement. Other Issues [ 10 ] There are other issues which impact the result. [ 11 ] The first is whether clause 14 of the employment agreement, which provides for 90 days notice of termination in a without cause setting, provides additional protection and compensation to Mr. Rajotte. Mr. Rajotte argues that it does, and National Bank argues that it does not, and that as long as the overall severance payment is more than 90 days compensation, it is subsumed in the severance payment. Factually, there is no issue that Mr. Rajotte was not given 90 days notice of termination. He was given no notice.

[12] Another critical issue is whether Mr. Rajotte is entitled to any additional bonus amounts. Mr. Rajotte argues that bonuses werean integral part of his compensation package and that they formed the largest part of his compensation package. He further argues thatboth parties proceeded on that basis, and that he was entitled to a bonus for the portion of the year that he was not able to work as a resultof his termination.

He says that the correct amount is that the $500,000 amount that had been declared for the first six months of hisemployment ending October 31, 2015 should be used as a calculation benchmark moving forward until his termination. National Banksays that no further bonuses were declared, and as such no further compensation is owed on account of bonuses, either for the bonusitself, or on account of the calculation of the appropriate severance amount. [13] Mr. Rajotte also claims Wallace v.

United Grain Growers Ltd., (SCC), [1997] 3 SCR 701 damages arisingfrom what he says was particularly high-handed or egregious conduct on the part of National Bank.

In particular, he refers to items suchas National Bank paying out his severance in instalments, including purporting to be able to terminate payments upon reemployment,National Bank attempting to require a form of non-compete clause upon termination for which it had not bargained, and other matters. [14] There is no doubt that National Bank, in referring to its internal termination policies, attempted to foist things upon Mr.Rajotte that they had not bargained for in the employment agreement.

Notwithstanding that, National Bank says that nothing in thisaction rises to the level of typical cases in which aggravated or punitive damages have been awarded and it seeks

summary dismissal ofthe aggravated damages and punitive damages claim of Mr. Rajotte. The Law on

Summary Judgment [15] There is no particular dispute between the parties on the applicable law on

summary judgment applications. As held byKarakatsanis, J. in Hryniak v. Mauldin, 2014 SCC 7 , [2014] 1 SCR 87 at paragraphs 49 and 50: There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion forsummary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows thejudge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result. These principles are interconnected and all speak to whether

summary judgment will provide a fair and just adjudication. When asummary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not beproportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be theproportionate way to resolve a dispute.

It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as atrial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as toresolve the dispute. [16] This application begins with a consideration of whether the record is sufficient to allow for a fair and just disposition of thecross

summary judgment applications in a way that the Court can have confidence in the result and that there has been a fair and justmethod of disposition of the matter. The plaintiff argues that he should be entitled to

summary judgment for the amounts that he seeks,but that the aggravated and punitive damages claim should proceed to trial. My inclination is that if I cannot deal with all of the claimssummarily, the entire matter should be sent to trial because to decide any part of the matter, most of the evidence needs to be heard,particularly on the aggravated and punitive damages claim.

It is difficult to conceive of that claim being heard in a trial setting withoutthe parties having had an opportunity to tell their whole story. [17] As Karakatsanis, J. held in Hryniak at paragraph 60: The “interest of justice” inquiry goes further, and also considers the consequences of the motion in the context of the litigation as awhole. For example, if some of the claims against some of the parties will proceed to trial in any event, it may not be in the interest ofjustice to use the new fact-finding powers to grant

summary judgment against a single defendant. Such partial

summary judgment mayrun the risk of duplicative proceedings or inconsistent findings of fact and therefore the use of the powers may not be in the interest ofjustice. On the other hand, the resolution of an important claim against a key party could significantly advance access to justice, and bethe most proportionate, timely and cost effective approach. [18] I see no economies or cost saving for the parties by dealing with part of the case and still requiring a trial on other substantialissues. Accordingly, I intend to consider whether I can decide all matters between the parties at this stage at

summary judgment levels ofconfidence. If I can, the matter will be resolved. If I cannot, the matter will need to proceed to trial. By way of foreshadowing, I find thatI am able to determine all of the necessary issues summarily and that there are no material disputes on the facts which would require vivavoce evidence. The Bonus Issue [19] I begin with the bonus issue because that issue has ramifications for the other issues. Mr. Rajotte had a declared bonus of$500,000 for the period ending October 31, 2015. This represented six months of working time. Mr.

MacInnis was the individual atNational Bank who spoke to appropriate bonus compensation and presented the bonus case for Mr. Rajotte at the meeting at which hisfirst bonus was considered. After termination, the evidence is that no one spoke on behalf of Mr. Rajotte at the next bonus considerationmeeting which was for the next six month period ended April 30. 2016. Upon termination, Mr. MacInnis washed his hands of the matterand said in questioning that that was now a matter for human resources. [20] Clause 4(

b) of the employment agreement makes it clear that bonuses can still be declared notwithstanding that an employeeis no longer working. Bonuses are only precluded in dismissals for cause or resignations. Neither is the case here. [21] Bonuses were an integral part of the compensation package. Mr. Rajotte was specifically compensated by National Bank forthe bonus that he was losing in leaving CIBC World Markets to join National Bank. While National Bank denied knowledge as to whatMr.

Rajotte was making at CIBC World Markets, the total combination of salary and bonus at National Bank closely matched his formerpackage at CIBC World Markets. In addition, the uncontradicted evidence of Mr. Rajotte appears to be that compensation packages inthe industry, at least with respect to the two employers involved with Mr. Rajotte, carried a large bonus component as an integral part of

the compensation package. There is nothing in the evidence to the contrary. [ 22 ] In Bain v UBS , 2016 ONSC 5362 , Wilson, J. held at paragraphs 90 and 91: Simply because a bonus is awarded in the sole discretion of an employer does not mean that it can be done in an arbitrary or unfair fashion or that the employer can decide that an employee should not get a bonus without following a fair, identifiable process.

The employer may adjust the weight given to various factors, given the market conditions and other changeable criteria, but that does not obviate the requirement that the exercise must be done in a fair manner. The court must analyze the evidence in a particular case and decide whether the process that was followed was fair and reasonable. As I have noted, UBS had a detailed compensation scheme in place and had the stated goal of transparency and fairness in the granting of bonuses.

The fact that the bonus was solely in the discretion of management did not relieve UBS from its obligation to follow a process that was fair and reasonable, using objective criteria applied consistently among employees. [ 23 ] The best foot forward principle is very much a part of the law of

summary judgment of Alberta (see Windsor v Canadian Pacific Railway Ltd ., 2014 ABCA 108 and many other cases). National Bank has put forward no evidence showing that it gave any consideration whatsoever to any bonus for Mr. Rajotte. It argued speculative points about allegations of an inability to relate to younger employees and other matters, but there is no evidence of any bona fide consideration of a bonus for Mr. Rajotte’s post October 31, 2015 employment. National Bank appears to have simply taken a position that it need not consider a bonus because he was no longer employed at National Bank.

That is not what the agreement says, and that does not meet the principles set out in Bain . [ 24 ] In my view a bonus ought to have been given or at least bona fide considered. Mr. MacInnis of National Bank simply abandoned the bonus issue and considered it a matter for human resources. There is no evidence that human resources considered the bonus issue in good faith. I refer to the previous $500,000 declared bonus, the consistent value of the overall compensation package based upon the numbers as between CIBC World Markets and National Bank, and the fact that no cause was alleged or made out on the dismissal.

Assuming, as I must, that National Bank has put its best foot forward on the bonus issue, its argument that Mr. Rajotte is not entitled to a bonus is weak at best, and I find that Mr. Rajotte would have been entitled to a bonus commensurate with his overall compensation package and the prior history between the parties, however short. I will address the amount shortly. The 90 Day Notice Issue [ 25 ] The next issue to consider is the effect of the 90 day notice clause for all terminations pursuant to clause 14 of the employment agreement. [ 26 ] The wording of cause 14 is clear on its face.

It provides for 90 days notice of termination, except for termination for cause. That is what the parties agreed upon. The argument that the clause is somehow subsumed in clause 13(a), with respect, makes no sense. Clause 13(

a) is a payment clause dealing with the calculation of severance. Clause 14 is a contractual right to 90 days notice of termination. It extends Mr. Rajotte’s employment in non-cause situations by 90 days. There is no wording in the agreement that links the two clauses together, and during argument it was difficult for National Bank to formulate a theory as to how the two clauses could be linked together. [ 27 ] Mr. Rajotte was entitled to 90 days notice of his termination. He did not receive that agreed upon notice.

If he had received that notice he would have had a further 90 days of employment for all purposes, including his normal benefits package, and bonus consideration. In fact, with the 90 day notice provision, it brings Mr. Rajotte to slightly more than a year of employment which has ramifications for the bonus issue in that he then would have been employed to the end of the fiscal year which would include the entire second half of the year for bonus calculation purposes. [ 28 ] I find that I can summarily determine the issues that arise from the lack of a 90 day notice of termination.

Clause 13 and Ambiguity- Calculation of Severance [ 29 ] That leaves the court to deal with the meaning of clause 13(

a) and 13(b). While Mr. Rajotte argues that the additions to clause 13(

b) were intended to protect him in this very situation, the Court must first try to ascertain the clear meaning of the words chosen. Rectification was not sought as a remedy. If the clause is clear, the Court can summarily determine the issue. If the cause is ambiguous, the court can either summarily determine the issue notwithstanding the ambiguity, based upon the case law requiring consideration of context and circumstances if possible, or if the Court cannot summarily determine the issue, require that the matter proceed to trial. [ 30 ] The clear wording of clause 13(

a) is that for terminations prior to 36 months, clause 13(

a) applies. While Mr. Rajotte argues that the amended words in clause 13(

b) were also to be read as part of 13(

a) as a guaranteed minimum severance payment, an

interpretation in that way simply does not make sense based upon the clear wording of the agreement. The amended words were clearly included as part of clause 13(b), and clause 13(

a) would have no meaning if clause 13(

b) effectively covered all situations. [ 31 ] I must give effect to the words as written. In my view, the words as written clearly mean that clause 13(

a) describes this termination situation. There is no ambiguity as written. It is not necessary to refer to prior e-mails and the process of negotiation of the employment agreement about which there was much debate. [ 32 ] So where does that leave the matter? Mr. Rajotte’s Entitlements [ 33 ] Mr. Rajotte’s first declared bonus for six months of work was $500,000. With the 90 day notice question decided in Mr. Rajotte’s favour, I find that Mr.

Rajotte’s anticipated bonus should have been a further $500,000 based upon the previously declared bonus, the structure of the compensation package wherein a large component was left to the bonus aspect, and with the previous history at National Bank and even CIBC World Markets providing a helpful check on the calculation. Recall that compensation for the foregone

bonus was an important part of the package which resulted in Mr. Rajotte leaving CIBC World Markets in favour of National Bank. As a result, Mr. Rajotte is entitled to his $500,000 bonus for the period ending April 30, 2016, which was a few days prior to the proper date for his termination if it is extended by the 90 days to which he was entitled. [ 34 ] That means that Mr. Rajotte’s annual compensation for the purpose of calculating the severance amount was $1,175,000 consisting of base salary of $175,000 and $1 million in bonuses. That amounts to $97,916.67 per month. Under clause 13(

a) his severance payment for 10 months should be $979,166.67. He therefore is also entitled to the difference between that amount and what he actually received as a severance payment. [ 35 ] He is also entitled to payment of his pro-rated base salary from his termination date to May 11, 2016 which is when his work would have ended with a proper 90 day notice of termination. [ 36 ] He is also entitled to benefits for the 90 day notice period which he valued at $5,305.00 and for which there is no evidence to the contrary. [ 37 ] He is also entitled to interest pursuant to the Judgment Interest Act , RSA 2000, c.

J-1 for all of these amounts from May 11, 2016, which should have been the correct termination date (with 90 days notice of termination) upon which these amounts should have been paid. Aggravated and Punitive Damages [ 38 ] That leaves the Court with the issue of the additional and punitive damages claims.

In my view, I can also determine those claims summarily. [ 39 ] There is no doubt that National Bank took a hard line on some matters such as purporting to pay severance in monthly instalments, seeking a non-compete clause which it is not entitled to, and purporting to unilaterally enforce its internal termination policy on other matters.

Having said that, I do not think that any of those matters rise to the level of conduct for which punitive or aggravated damages have been granted in a wrongful dismissal context. [ 40 ] The termination was done in private, and by all accounts every attempt was made to keep it from becoming a public spectacle in the workplace. Transition counselling was offered. Mr. Rajotte is a well-educated man who was well able to handle any intimidation by National Bank in terms of things such as monthly payments, non-compete clauses and items of a similar nature in deviating from the agreement between the parties.

In fact, the best indication of that was the fact that he did not tolerate those things. [ 41 ] In addition, one of the matters that is often associated with aggravated damages or punitive damage claims in a wrongful dismissal setting is emotional distress, and that would typically be accompanied by medical evidence. No medical evidence was tendered here, and just as National Bank had a best foot forward obligation with respect to responding to the bonus claim, Mr. Rajotte has a best foot forward obligation with respect to the punitive and aggravated damages claim.

No issues requiring a trial have been shown on a punitive and aggravated damages claim, and that claim is dismissed. Conclusion [ 42 ] I find that there are no material points in dispute for which viva voce evidence is necessary and that this case can be resolved by way of the

summary judgment applications. I also find that the damages figures can be resolved by mathematical calculations that do not require a discretionary assessment. Accordingly, Mr. Rajotte is entitled to judgment in accordance with these reasons. If the parties have any difficulty with the numbers I can resolve those, and if they cannot agree on costs, I can settle those as well. If the parties do need assistance please make an appointment through the Masters’ office within 90 days of issuance of these reasons. [ 43 ] Thank you very much to counsel for a well argued matter which covered many issues.

Heard on the 18 th day of October, 2017. Dated at the City of Calgary, Alberta this 15 th day of November, 2017. J. Farrington M.C.Q.B.A. Appearances: McLennan Ross LLP D. Robb Beeman and Alexander MacDonald

for the Plaintiff McCarthy Tetrault LLP Renee Reichelt and Timothy Froese for the Defendants