Toole v Northern Blizzard Resources Inc, 2017 ABQB 760

Court of Queen’s Bench of Alberta Citation: Toole v Northern Blizzard Resources Inc, 2017 ABQB 760 Date: 20171211 Docket: 1701 01721 Registry: Calgary Between: Michael Toole Plaintiff - and - Northern Blizzard Resources Inc. Defendant _______________________________________________________ Memorandum of Decision of A. R. Robertson , Q.C., Master in Chambers _______________________________________________________ Introduction [ 1 ] Michael Toole worked for Devon Canada Corporation or subsidiaries that it acquired from May 1993 until May 2014, a period of 21 years.

He was a Senior Exploitation Engineer with Devon. [ 2 ] In early 2014, he was approached by a recruiter working for Northern Blizzard Resources Inc. and after several interviews and discussions he was offered a position as Senior Development Engineer. He gave up what he calculates to be $185,198.87 in potential value in a deferred restricted share unit (“RSU”) plan at Devon, and accepted the offer with Northern Blizzard. He started on May 25, 2014 but as a result of a corporate reorganization he was let go December 5, 2016. [ 3 ] Mr. Toole has sued for damages for wrongful dismissal.

There is no suggestion of cause, and the issue is the quantum of damages.

[4] In this application, he applies for

summary judgment. He argues that there is no material factual issue for trial. [5] I have concluded that the proper assessment is based on 10 months’ compensation, but he is not entitled to damages for a lostbonus entitlement that otherwise might have been paid in March, 2017 (during the “reasonable notice period”), because the bonus poolfor the company was set at zero.

Jurisdiction [6] Northern Blizzard argues that a master in chambers does not have the jurisdiction to determine damages in a wrongfuldismissal case, and cites Coffey v Nine Energy Canada Inc, 2017 ABQB 417, a decision of Master Farrington. [7] However, I dealt with the issue of jurisdiction at some length in in Nixdorf v Broadstreet Properties Ltd, 2017 ABQB 132,and I have not changed my views.

I understand that Coffey is under appeal, so some direction may come from a higher court, but for thetime being I prefer the analysis and the conclusion that I reached in Nixdorf. [8] In short, my view is that a master in chambers is not weighing evidence when assessing damages for wrongful dismissalwhere all of the material facts are clear.

The Master is weighing the relevant factors identified in Bardal v The Globe & Mail Ltd, (ON SC), 24 D.L.R.(2d) 140, and the many subsequent cases following it. [9] Accordingly, in the absence of material facts in dispute, it is appropriate, and desirable, for a master in chambers to assessdamages, following the approach directed by the Supreme Court of Canada in Hryniak v Mauldin, 2014 SCC 7, 1 SCR 87 and by theCourt of Appeal of Alberta in Windsor v CPR, 2014 ABCA 108, 572 AR 317. Where the material facts are not in dispute and it is fairand just to both parties to make a determination, following the

summary judgment jurisdiction set out in rule 7.3 of the Alberta Rules ofCourt, the Court should do that. Assessment Mitigation [10] In this case, the employer defendant does not suggest that Mr. Toole has made inadequate attempts at mitigation. Mr. Toolehas tried, unsuccessfully, to find replacement employment. However, the energy industry is not currently robust due to an economicdownturn, and he has not been able to find work. Out-of-pocket Expenses [11] In his attempt at mitigation, he has expended $286.65 out of pocket in trying to find a new job.

These consist of parkingexpenses while he attended at interviews or he attended to meet people in the industry for networking purposes. The employer does notchallenge that portion of the claim. Credit for Salary and Benefit Continuance [12] Mr. Toole acknowledges that he received continuance of his base pay from December 6 to December 31, 2017, or 19 workingdays, including statutory holidays. He received $12,788.14 in salary continuance.

As well, his benefits were continued for two monthspost termination, and using a calculation of an estimate for the loss of benefits of $6675.40, he calculates the continued benefits to beworth $1,112.57. I believe that those figures are not in dispute, and they are credits to his claim. If I am in error, counsel may adviseand I will consider this topic. Minor Items of Disagreement [13] There are some relatively minor items upon which the parties have not agreed. In particular, the calculation of a lost benefitfor matching RRSP contributions is the subject of debate. At the time of Mr.

Toole’s termination at the beginning of December, hispaystub indicated that his matching RRSP benefit had been $12,685 for the year 2016, up to the time of dismissal. The defendant saysthat that is the annual figure. However, that does not appear correct. The plaintiff suggests that for purposes of assessment of damages,this figure should be divided by 11 and multiplied by 12 to determine the annual value of the matching RRSP contributions. Themonthly figure would be multiplied by the number of months of reasonable notice determined by the Court. [14] I agree with the plaintiff.

That figure would then be $1,153.18 per month. [15] There is a further dispute over the calculation of vacation pay. The employer has calculated the vacation pay and come to afigure that is $1,208.07 short compared to Mr. Toole’s calculation. In oral argument, counsel for Northern Blizzard asked that I notmake a ruling on that point, at least for now, so that she could discuss that further with her client and with Mr. Toole’s counsel.Accordingly, I defer making a ruling on vacation pay. I reserve jurisdiction to do so if the parties cannot come to an agreement.

Remaining Issues [16] There are four major issues left for determination. They are: (

a) whether or not Mr. Toole’s previous service at Devon Canada should be taken into account in the assessment of the “reasonablenotice period”, and if so, how that should be done; (

b) whether the economic downturn in the energy industry economy affects the determination of the period of “reasonable notice” and,if so, how; (

c) the period of “reasonable notice”, determined after reaching conclusions on issues (

a) and (b); and

(

d) whether Mr. Toole is entitled to damages for the loss of the opportunity to earn a bonus. Inducement to Leave Secure Employment [ 17 ] The plaintiff argues that Mr. Toole’s prior service at Devon Canada should be taken into account. This revolves to some extent on the question of whether he was induced to leave secure employment there. He did have secure employment; he was at Devon or its subsidiaries for 21 years, uninterrupted. No evidence suggests that he was at risk of losing his job at the time he was approached by the recruiter.

He knew he was giving up secure employment, and he knew that he was giving up what he perceived to be a significant RSU benefit value. [ 18 ] However, he did not have that discussion with either the recruiter or with management at Northern Blizzard. Accordingly, Northern Blizzard says there was no inducement at all. Mr. Toole made a business decision.

He knew he was leaving a secure job and he was taking a new job, and he admitted in cross-examination that he understood that there was risk in taking that new job. [ 19 ] The job description that Northern Blizzard provided to the recruiter, and which was provided to Mr. Toole during the recruiting/interviewing/negotiation, indicated that Northern Blizzard was looking for someone with his skills, with 10 or more years of service.

They were consciously not recruiting a beginner. [ 20 ] The nature of the recruitment, using a recruiter (rather than relying on advertisements in a newspaper, other periodicals, or online), suggests that Northern Blizzard intended to recruit someone who already had employment. In early 2014, it would have been unlikely, given the minimum 10 years’ experience that it was instructed to seek, that the recruiter would be looking at an employee who did not currently hold a secure position. In fact, when the recruiter identified Mr.

Toole, management decided that he was their first choice, and management knew that he had 21 years’ experience. [ 21 ] The concept of “inducement” of an employee to leave secure employment involves a spectrum of facts. At one end is an employee who is already on working notice when he or she is contacted by a recruiter. That employee would be very motivated to pursue the opportunity, because his or her job is not secure.

At the other end of the spectrum is an employee who is securely employed and not interested in leaving for a new job until the recruiter offers some specific inducement, such as a signing bonus, more valuable benefits, or a better salary. Most cases are somewhere along the spectrum. [ 22 ] Mr. Toole was 48 years old when his employment was terminated at Northern Blizzard. His job title was Senior Development Engineer, and that was a relatively senior position within the company.

He had no reports, but he worked in a relatively niche position in the upstream exploration and development subset of the oil and gas industry. It was his specialty. That was what Northern Blizzard wanted; they also wanted someone with some significant experience in the area. That is why they hired Mr. Toole. [ 23 ] Mr. Toole was not being hired to work on project work, which is inherently volatile as projects are completed and new ones are started, or not.

His area of work was more stable in nature – that’s why he remained at Devon for 21 years – and long service at Northern Blizzard would have been expected by both parties. [ 24 ] One of the Bardal factors is length of service, and it often is the single most important factor in assessing “reasonable notice”. However, in the circumstances of this case it is only a small factor.

When the employer knows that the individual has given up a long-term position – and was recruited for that factor - the actual length of service at the new job becomes only one of several factors to be considered in assessing the reasonable notice period. [ 25 ] In my view, the facts here suggest that Mr. Toole’s secure employment at Devon should be taken into account, but not to the point that he should be treated as an employee with imputed service of 24 years. Rather, it is a factor that tends to militate in favour of a somewhat elevated notice period.

It related to their mutual understanding - that he was giving up a secure position and was being hired to a secure position, but with no express promises of just how secure it was. Economic Downturn [ 26 ] The issue of whether or not the economy should affect the assessment of damages at the time of termination has been a source of some difficulty for years. The concept of “reasonable notice” takes into both the implied understanding at the outset of the employment, as modified by years of service, promotions, and other factors, as well as the actual circumstances existing at the time of termination.

One of the factors expressly referenced in Bardal was “the availability of similar employment”. [ 27 ] In Lederhouse v Vermilion Energy Inc , 2015 ABQB 387 , the Court considered at the economic downturn in the oil and gas industry and took judicial notice of the fact that West Texas Intermediate oil prices have fallen dramatically since November 2014. At paragraph 35, the Court said, “This Court finds that the depressed economy is a factor that it can consider.

It is not the sine qua non , and is simply placed into the matrix of factors that it will consider.” The Court appeared to treat it as a factor that tended to inflate the assessment of reasonable notice, because at paragraph 34, the Court said, If the economy were vibrant, the likelihood of her finding employment would be enhanced, and the employer’s responsibility would be reduced.

If, however, the economy is depressed, the employee cannot possibly mitigate her damages to the same extent. [ 28 ] In Freeman v PetroFrontier Corporation , 2017 ABQB 340 , the Court considered it as well, and suggested it could cut either way. At paragraph 33 the Court stated, [T]he state of the economy may in any given case militate either for or against an extended notice period. In some cases, it may indeed be unrealistic (and unfair) to burden an employer with the same notice period in a depressed economy as it would be in a time of prosperity.

The company that is struggling to “keep the lights on” might well be able to argue that the reasonableness of it [sic] overarching duties to its shareholders, remaining employees and service suppliers is at least a one [sic] factor to be evaluated”. [ 29 ] However, at paragraph 41, the Court took the factor into account and said clearly that it was

... due to the project driven nature of [plaintiff’s] work. But for this factor, a somewhat longer notice period than nine months wouldhave been appropriate. [30] Here, Mr. Toole’s work was not “project driven” such that it would have affected his reasonable expectations of continuedemployment. He had stayed with Devon and its related companies for 21 years. Although the energy industry as a whole is inherentlysomewhat volatile, the same might be said of almost the entire economy in Alberta. Volatility was not so directly related to Mr.

Toole’sposition that the economic downturn is a factor that works in Northern Blizzard’s favour in the assessment. [31] Accordingly, in my view the economic downturn is a factor that tends to militate in favour of a somewhat longer noticeperiod. Reasonable Notice Assessment [32] Mr. Toole’s age is, in my view, a neutral factor. He was not near the end of his career, and neither was he near the beginningof it. He is not close to retirement.

Although he has expressed in his affidavit the view that employers look for younger employees, itwould be a foolish potential employer who ignores his 24 years of service, with 21 years continuous at one employer (or relatedemployers) indicating that he is a stable and valued worker. Although Mr. Toole may feel that his age gives him a disadvantage, in myview it is fair to assume that his years of experience not only balance any such disadvantage, they likely outweigh it. [33] In these circumstances, in my view Mr.

Toole is entitled to damages based on 10 months’ reasonable notice: that is, an amountreflecting the compensation that he would have earned had he been given actual working notice of 10 months. Bonus [34] The question of the bonus is more problematic. [35] At the time of dismissal, Northern Blizzard did not pay him any portion of a bonus for 2016. It relies upon the wording in theoffer of employment (which is the employment contract) which said this: You will be eligible to receive an annual bonus. The annual bonus pool is determined by the Board of Directors and created byachieving corporate targets.

Payment of the 2014 bonuses will be calculated based on achieving corporate targets (50%) and onindividual performance (50%). Annual bonuses are paid in March of the following year and you must be a current employee of Northernblizzard to receive your bonus payment. [36] Since Mr.

Toole was not going to be “a current employee” in March 2017, Northern Blizzard says he was not entitled to abonus at the time of dismissal. [37] In my view this misses the point: the claim is not for the bonus, but for damages for the loss of the opportunity to earn thebonus, just as the claim is not for the salary that he would have earned, or the benefits he would have enjoyed, but rather for damages forthem not being provided because the employer breached his contract of employment because it did not give him reasonable notice oftermination.

The only reason he was not a current employee in March 2017 is because Northern Blizzard breached the contract bydismissing him without giving him reasonable notice.

This is discussed in Lalonde v Sena Solid Waste Holdings Inc, 2017 ABQB 374at paragraphs 54-56, citing Sylvester v British Columbia, (SCC), [1997] 2 S.C.R. 315 (S.C.C.) and Paquette vTeraGo Networks Inc, 2016 ONCA 618 and other cases. [38] I will deal with the straightforward part of this aspect of his claim first. [39] In addition to the opportunity to receive a bonus in March 2107, the plaintiff claims a pro-rated bonus for those months of2017 that he would have worked had he been given reasonable notice.

However, this argument would only have traction if the period ofreasonable notice would have extended his deemed notice period past March of 2018, and if it did then it would not be pro-rated. Thatwould be at least 16 months’ of reasonable notice, and his claim does not extend that far. [40] He is not entitled to damages for a lost “2017/payable in 2018” bonus. [41] The more challenging issue is the “2016/payable in 2017” bonus. Had he continued working, he would have received nobonus in 2017 for 2016, because the company was having a less-than-successful financial year and no bonus was payable to anyone.

The “annual bonus pool” was zero. Accordingly, Northern Blizzard says that his claim for damages for the loss of opportunity to earnhis share of a bonus pool that would have been zero must lead to an award of zero. [42] However, Mr. Toole argues that damages are crystallized at the time of termination, and he had an expectation of receiving abonus based upon historical information, which should be used to assess this aspect of his claim. [43] The concept that the amount of the damages are “crystallized” in this sense is not consistent with the assessment of damagesin contract and tort claims alike.

Courts virtually always look at subsequent events to assess damages. A victim of a personal injurymay have a cause of action in negligence immediately following the injury, but the quantum depends on the extent of the injury, theextent of the recovery, the pace of recovery, lost wages, special damages subsequently suffered, and other factors. A landlord whosetenant leaves before the lease has expired has a claim for breach of contract for lost rent and occupancy costs but that claim is affected bymitigation efforts, costs and success, and the actual occupancy costs claim that becomes payable after the breach.

A claim for breach ofconfidence by an employer against a former employee is assessed based on the actual damages suffered, not on a speculative andtheoretical estimate of what might happen if the release of the employer’s secrets leads to damages. [44] And in a wrongful dismissal claim, the assessment takes into account mitigation and other post-termination factors.

A long-term senior employee who otherwise has a claim for 24 months’ compensation, but who finds a replacement job at comparablecompensation only two months later has a claim for two months’ compensation (technically it may be described as a claim for 24

months’ compensation less twenty two-months’ credit for mitigation). [ 45 ] But Mr. Toole relies on Noble v Principal Consultants Ltd , 2000 ABCA 133 . In that case the plaintiff was dismissed and he had a claim for damages. During the reasonable notice period the employer went bankrupt. The trustee in bankruptcy argued that the damage claim should be limited to the period prior to the bankruptcy. Otherwise, the dismissed employee would have a claim in the bankruptcy more than he would have had if he had not been dismissed.

That included a bonus claim, which was a payment for incentive- based performance (see para. 40). [ 46 ] The majority conclusion was that the plaintiff’s claim was not affected by the bankruptcy. He had lost the opportunity to earn the income during the period of reasonable notice and, “The notice period is determinable once and for all at the time of the breach of the employment contract” (see para. 27).

The subsequent bankruptcy did not change the assessment, which was based on a formula agreed upon by counsel, which the Court assumed was based on prior sales records (see para. 41). [ 47 ] In separate reasons by Berger, J., he said that, “The question to be decided is whether those damages crystalize on the day of termination such that an assessment of those damages made after bankruptcy is not affected by that bankruptcy” (see para. 50).

As to the bonus claim, he said (at para. 57), “reference must first be made to the contract of employment.” He repeated his statement of the issue, in different words, at paragraph 65, where he stated, “The relevant inquiry is: what did the parties intend in respect of the bonus payment?” He concluded that a plain reading of the contract made it clear that the parties intended a bonus to be paid only where there was an actual increase of sales by the company.

He concluded that if the plaintiff had not been dismissed, “he would not have received a bonus for the period following bankruptcy” (para. 67). [ 48 ] I will admit that the reasoning of Justice Berger is more appealing to me. In any event, the majority decision is properly distinguishable here. [ 49 ] Firstly, in Noble , the bonus claim was entirely incentive-based, and the employee lost the opportunity to earn that. Here, there was an incentive aspect to the bonus claim but there first of all had to be a bonus pool for there to be a distribution based on performance. [ 50 ] The expectation of Mr.

Toole on December 5, 2016 immediately before his termination was that he would be paid a share of the bonus pool that would be set in March and paid to all employees (or, at least to those employees who were entitled to a bonus). Certainly as of December 5, the year was almost complete. It was later shown not to be a particularly profitable year, but it could not have been a major surprise to employees on December 5 that the bonus was going to be smaller than in the past, if there was any bonus at all.

The price of WTI oil had fallen in 2014, as mentioned in Lederhouse , and this was a fact broadly known, and its consequences understood, by anyone in a position of responsibility in the energy industry. Mr. Toole’s expectation on December 5, 2016 must have been that he would be paid a share of a bonus pool that was going to be modest, if it were any amount at all, and that he would have to wait until March, 2017 to find out.

On his dismissal, he lost that opportunity. [ 51 ] That does not justify a quantification based on previous years’ bonuses that were based on previous years’ financial successes. [ 52 ] Secondly, Noble was a bankruptcy decision, and Northern Blizzard did not go bankrupt.

Noble was an attempt to find a proper resolution in unusual circumstances in the world of insolvency. [ 53 ] Overall, in my view, Noble is not authority for taking a fundamentally new approach to the current approach to the quantification of damages, which generally involves waiting for the damages to occur (or at least become sufficiently apparent to assess) before any proper quantification can be done. [ 54 ] Berger, J., quotes from Fridman, The Law of Contract , 3 rd ed., (Scarborough, Ontario: Carswell, 1994) at paragraph 9 of his decision, for the proposition that, “The general rule regarding damages for breach of contract is that damages are assessed at the date of the breach.” However, it is important to note that that statement cannot be read in a vacuum.

It does address the basic approach to quantification here: he was entitled to 10 months’ compensation as the starting point for assessment. But subsequent events are clearly relevant for the details. I have discussed that above, noting how subsequent events are important for a damage assessment in a variety of different kinds of claims. [ 55 ] In a wrongful dismissal claim, there are many questions that must be asked to allow a proper assessment of damages. Did he find a job? What is the compensation for it? Did he refuse to try to mitigate his damages by looking for work when it should have been available?

Did he incur costs in his attempts at mitigation? Was he able to replace his group benefits at no or little cost by being added to his wife’s benefit plan with her employer? Did he need dental work that was no longer covered by a dental plan and exceeded the premiums paid for the benefit? Did he die or become disabled without life or disability insurance during the reasonable notice period, after his entitlement to the group insurance coverage was cancelled?

One can imagine all sorts of post-termination events that inform the assessment of damages. [ 56 ] In my view, his expectation should be given the proper assessment that it deserves, which is that when March came and went, there was no bonus for anyone. His damages on that point are the loss of the opportunity to be paid his share of that amount, which was zero.

Conclusion [ 57 ] With these reasons, as we discussed in oral argument, I will leave it to counsel to work out the details and I retain jurisdiction to resolve them if necessary. [ 58 ] Costs may be spoken to if counsel cannot agree. [ 59 ] I commend counsel on their efficient and well-argued presentations.

Heard on the 29 th day of November, 2017. Dated at the City of Calgary, Alberta this 8 th day of December, 2017. A. R. Robertson, Q.C. M.C.C.Q.B.A. Appearances: Michael D. Aasen McLennan Ross LLP for the Applicant (Plaintiff) Tamara R. Prince Osler, Hoskin & Harcourt LLP for the Respondent (Defendant)