D’Souza v Acero Engineering Inc, 2017 ABQB 775

Court of Queen’s Bench of Alberta Citation: D’Souza v Acero Engineering Inc, 2017 ABQB 775 Date: 20171214 Docket: 1301 14364 Registry: Calgary Between: Louis D’Souza Plaintiff - and - Acero Engineering Inc. and Mark Kuppe Defendants Corrected judgment: A corrigendum was issued on July 25, 2018; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice C.

Scott Brooker _______________________________________________________ Introduction [ 1 ] Louis D’Souza (hereinafter “D’Souza” or “plaintiff”) claims against Acero Engineering Inc. (“Acero”) and its principal, Mark Kuppe (“Kuppe”) damages arising from his dismissal from his employment with Acero on December 21, 2011.

Facts [ 2 ] The plaintiff has a Bachelor of Engineering degree. He has extensive experience both in Calgary and internationally. He is not registered as a professional engineer. He is described in his resume [1] as “A Process and Technology specialist with over 25 years experience in progressive responsibilities with major international companies in the Oil & Gas Industry.” [ 3 ] In 2011 the plaintiff was working as Engineering & Construction Manager with Aker Solutions (“Aker”) in Calgary. Previously he had had some dealings with Kuppe and Chad Ladner (“Ladner”).

Kuppe and his partner, Rob Budd (“Budd”) were each 50% owners of Acero. Ladner worked at Acero and purported to be a director of Acero and was treated as such. Kuppe and Ladner were interested in having the plaintiff leave Aker and join Acero.

There were discussions about that which culminated in Kuppe sending a proposal by email to both D’Souza and Ladner [2] which had as attachments an Employment offer [3] and a Unanimous Shareholder Agreement (“USA”). [4] [ 4 ] The proposal Kuppe sent on May 11 offered both D’Souza and Ladner the opportunity to buy into Acero for up to 20% by the end of 2011. [ 5 ] D’Souza had some objections to the wording and provisions of the form of the Employment offer and it was subsequently changed.

The plaintiff accepted the revised form of Employment offer on May 16, 2011. [5] [ 6 ] D’Souza did not agree with some of the provisions of the USA; in particular the provisions of

Article 29(b). He never signed it. [ 7 ] Kuppe and Budd were in the process of reorganizing their affairs in Acero. Budd was selling his 50 % interest in Acero to Kuppe. Assets and liability for the lease of Acero were being divided up and credits given accordingly. It appears that this was a somewhat drawn out affair. [ 8 ] D’Souza handed in his resignation from Aker and joined Acero formally in June 2011 at a salary of $240,000 per year, paid monthly. [ 9 ] Shortly after joining Acero the company was having cash flow issues. There were a series of emails sent between Kuppe and D’Souza and Ladner.

Ultimately, it was decided to reduce the amount paid to the three by half --- from $20,000 per month to $10,000 per month. There is a dispute as to whether this reduction was a salary deferral or a salary reduction. This will be discussed in greater detail later in these Reasons. [ 10 ] D’Souza was interested in getting his 20% interest in Acero. The cost would be $150,000 based on the stipulated price of $7,500 per percentage point.

The buy-in provision was to become effective as soon as Kuppe had 100% ownership of Acero. [ 11 ] Various documents were executed between Kuppe and Budd which are dated August 1, 2012 and include resignation letter of Budd as a director and share transfer certificate from Budd to Kuppe’s numbered company. [ 12 ] Kuppe did not advise the plaintiff of these documents at the time nor suggest or advise that he had acquired 100% of Acero by early August. Kuppe in fact maintains that he did not have 100% of Acero until early January 2012.

This will be discussed in greater detail later in these Reasons. [ 13 ] In mid-December 2011 there was a meeting between Kuppe and D’Souza where Kuppe brought up the idea of a new company, Acero Processing Systems, being created which D’Souza would run. That was followed by an email from Kuppe to D’Souza December 19th providing details of this new proposal. [6] D’Souza responded by email that same day inquiring as to when Budd was going to release Kuppe so that he would become the sole owner of Acero.

Kuppe responded that that was not relevant to the discussion at hand (ie. the new proposal regarding Processing). [7] [ 14 ] D’Souza emailed Kuppe on December 20 th complaining that he was trying to change the terms of the contract. Kuppe replied later that same day saying “It does not serve us to continue carrying you in Acero Engineering Inc. as I see no value in having you here.

I have no intention of continuing our relationship at Acero Engineering Inc. regardless of your decision to steward Acero Processing Systems Inc. ...”. [8] [ 15 ] The next day D’Souza was called into Acero’s boardroom by Kuppe and handed a termination letter [9] to read. He was not permitted to copy it nor was a copy of that letter given to him. [ 16 ] The plaintiff was obliged to turn in his cell phone, his computer access was changed and he left the premises. Thereafter he tried unsuccessfully to contact Kuppe. [ 17 ] D’Souza took steps to seek alternate employment as will be discussed later in these Reasons.

He was unsuccessful and started up his own company in early 2012. [ 18 ] His new company, GasOil did not pay any salaries or dividends in 2012. [ 19 ] As is obvious from the exhibits entered as well as the viva voce evidence. Chad Ladner was intimately involved with Acero at the relevant time. He was one of the three held out as directors, the other two being Kuppe and D’Souza.

He was offered the 20% buy-in option at the same time as the plaintiff. [10] He appears to have acquired his shares in 2013 and signed a USA containing the clause 29(b). [11] [ 20 ] Despite all of this, neither party called Ladner to testify and no explanation was given for his not been called. The court was thus deprived of the benefit of Ladner’s evidence on these contentious matters.

Issues [ 21 ] The following issues arise from the facts: 1. Is D’Souza entitled to receive deferred salary? 2. Is D’Souza entitled to receive accrued vacation pay? 3. What amount of reasonable notice was D’Souza entitled to receive? 4. Is D’Souza entitled to damages in lieu of specific performance of a share purchase agreement? 5. If so, what is the quantum of such damages? 6. Did D’Souza act reasonably to mitigate his damages for wrongful dismissal? Analysis 1. Is D’Souza entitled to receive deferred salary? [ 22 ] Exhibit 1, Tab 3 is the employment agreement entered into between D’Souza and Acero.

That agreement provides that D’Souza’s position is a salaried position based on an annual pay of $240,000 paid monthly. Thus the gross monthly pay would be $20,000. From that, there would be various withholdings. [ 23 ] It is common ground that Acero paid D’Souza based on the gross amount of $20,000 per month for the months of June and July 2011. For the months of August until his termination on December 21 st , 2011 he was paid on the basis of $10,000 gross per month. [ 24 ] Acero says that D’Souza, Kuppe and director Chad Ladner all agreed to take a temporary 50% cut in salary.

It refers to an email chain Exhibit 1 Tab 6. However, D’Souza testified that this email exchange was simply a part of ongoing discussions with Kuppe about the issue and that it was his understanding that what being proposed and to which he agreed, was a temporary deferral of half of his salary in order to assist with Acero’s cash flow at the time. He further understood that the amount of income he was deferring could be applied, ultimately, to his purchase of shares in Acero.

Kuppe, however, testified that the June 2 nd emails evidenced D’Souza’s agreement to take a 50% reduction in his income – not a deferral, and that there were no discussions with D’Souza about a salary deferral rather than a salary reduction. [ 25 ] I do not accept Kuppe’s evidence on this point. It is contrary to common sense and is not supported by the June 2 nd email chain itself. D’Souza had just left his employment at Aker Processing Systems where he was being paid $250,000 per annum. He had signed on at Acero May 16 th for $240,000 per annum.

To suggest that he would simply agree to a 50% cut in salary two weeks later defies common sense. Moreover, the emails relied upon by the defence to support their position do not do so. Nowhere in those emails is there any mention of 50% or indeed any amount nor what D’Souza might receive in exchange for agreeing to a deferral or indeed a cut- back. There had to have been discussions between D’Souza and Kuppe on the point and I prefer and accept D’Souza’s evidence in that regard.

I am not persuaded by the defence submission that permitting deferred income to be applied to pay for shares at some future date is inconsistent with the objective of cash infusion for the company does not necessarily follow. Income deferral had the effect of cash infusion. It just came earlier.

Arguments as to hold-backs and deductions go to the quantum of what might be applied to share purchase, not the principle. [ 26 ] Moreover, Kuppe’s testimony that he and D’Souza had agreed in June 2011 to take a 50% reduction in their pay flies in the face of his own declaration to the Royal Bank dated July 7, 2011 where he declares his annual salary or wage to be $240,000. [12] It is also contradicted by Kuppe’s Read-ins [13] wherein Kuppe indicated that D’Souza’s current salary was $20,000 per month. [ 27 ] In the result, I find that D’Souza is entitled to receive deferred income from Acero for the period August to dismissal.

That amount is calculated and set out in the plaintiff’s written brief at para 24. The defence written brief does not take issue with that calculation. Accordingly I find the amount of deferred income owed by Acero to D’Souza is $47,500. 2. Is D’Souza entitled to receive accrued vacation pay? [ 28 ] D’Souza’s entitlement to vacation pay is set out in the employment agreement.

It states: Vacation will be paid in accordance with Alberta Employment Standards with four (4) weeks annual vacation based on accrued time. [ 29 ] The plaintiff calculates his accrued vacation pay to be $10,038.96 calculated on the basis of his having worked for Acero a total of 199 days/365 X 28 days (4weeks) resulting in his being entitled to 15.27 days of paid vacation. He then calculates that based on an annual salary of $240,000 or $657.43 per day which results in $10,038.96. [ 30 ] The defendants have a different calculation.

First, they argue that since the plaintiff had not worked a full year, the provisions of s.42(1) of the Employment Standards Code (“Code”) applies. That

section reads: 42(1) If employment terminates before an employee becomes entitled to a first annual vacation, the employer must pay the employee 4% of the employee’s wages earned during the employment.

[31] They take D’Souza’s earnings for the period of his employment to be $87,272.75 as set out in his T4 slip and multiply thatfigure by 4% to arrive at the sum of $3490.91 which sum they concede D’Souza was entitled to as vacation pay upon his termination. [32] I do not accept the defendants’ argument on this point. First, it fails to take into account the provisions of s.3 of the Codewhich state, in part: 3(1) Nothing in this Act affects (

b) an agreement ...that (

i) provides to an employee earnings...or other benefits that are at least equal to those under this Act.

(2) If under an agreement an employee is to receive greater earnings ...than those for which this Act provides, the employer must givethose greater benefits. [33]

Section 34 of the Code provided for the calculation of basic vacation and vacation pay entitlements. An employee is entitledto “at least” 2 weeks of annual vacation after each of the first 4 years of employment. Thus, under the Code, D’Souza was entitled to “atleast” two weeks of vacation after he had worked a full year. In fact, the agreement provided for 4 weeks.

He was terminated before hehad worked a full year. [34] Giving effect to my decision that D’Souza had not agreed to a reduction of salary by 50% and using the defendants’methodology, D’Souza would be entitled to vacation pay calculated at 199/365 X $240,000 = $139,830.[14] That results in a figure of$5,233.97. [35] However, doing the calculation in that fashion would ignore these words of the contract “... four (4) weeks annual vacation based on accrued time” (bolding supplied).

The Shorter Oxford Dictionary, 6th edition defines “accrue” in reference to a benefit as “tobe received in regular or increasing amounts”. I therefore conclude that the agreement contemplates and provides that the calculation ofvacation time for employment of less than a year is to be done by prorating the 4 week entitlement over the period of actual employment--- a greater benefit than the minimum required by the Code. Therefore, in my judgment, the vacation time for D’Souza’s period ofactual employment is 199/365 X 28 days X $240,000/365 = $10,037.76. 3.

What amount of reasonable notice was D’Souza entitled to receive? [36] D’Souza submits that he was entitled to reasonable notice of 9 months. [37] Acero disagrees and argues that D’Souza was only entitled to 4 months’ notice. [38] Both counsel have provided me with a number of cases which serve to illustrate notice periods for short term serviceemployees in senior positions. They range from 2 ½ months at the low end to 11 months at the high end. Of course, all have some factsthat serve to distinguish them.

Nevertheless, the range is useful as a general comparator. [39] Determining the appropriate notice period is a question of fact to be decided on a case by case basis after considering thefactors set out in Bardal v. Globe & Mail Ltd. (1960), (ON SC), 24 D.L.R. (2d) 140 (Ont. H.C.) where Chief JusticeMcRuer said at p.145: There can be no catalogue laid down as to what is reasonable notice in particular classes of cases.

The reasonableness of the notice mustbe decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant,the age of the servant, and the availability of similar employment, having regard to the experience, training and qualifications of theservant. [40] These factors were approved and adopted by the Supreme Court of Canada in Machtinger v. HOJ Industries Ltd. (SCC), [1992] 1 S.C.R. 986 at p.998 and Wallace v. United Grain Growers Ltd., (SCC), [1997] 3 S.C.R. 701 atpara. 82.

In Wallace the court recognized two additional factors which could bear on the length of the notice period --- inducement andbad faith conduct in the manner of dismissal. [41] In the present case, Mr. D’Souza was age 52 at the time of his dismissal. The defendants argue that he was simply an“operations manager”. I reject that attempt to minimize his position at Acero. While his initial offer of employment described his assuch, the evidence clearly demonstrates that he was more than that. He was the “Chief Operating Officer”. His resume, Exhibit 1, Tab23, prepared by Acero, describes him as such.

So too do the banking documents prepared by Acero for the Royal Bank.[15] [42] D’Souza had a B.Sc. in Mechanical Engineering although he was not a member of the Alberta Society of ProfessionalEngineers at the time. He had extensive international experience as set out in his resume and testimony at trial. Immediately beforejoining Acero, he had been employed at Aker Solutions where his position was Director of Business development for the Middle East,North Africa and Russia, project manager and products and technology leader for conventional oil and gas. He was a process andtechnical specialist.

He had a salary of around $250,000 plus a bonus most years of 10%. He had been with Aker about 7 years. [43] I think it can fairly be said that D’Souza was induced to leave his position at Aker and accept employment with Acero. Heknew Kuppe previously and in fact, according to his evidence, which I accept, he had been contacted previously by Acero’s Chad Ladnerfrom time to time to help out with technical advice. According to D’Souza’s uncontradicted testimony on the point, Ladner kept askinghim all the time when he was going to come over and join Acero.

Ultimately, D’Souza was persuaded to leave his employment withAkers and join Acero with the enticement of being made a director and shareholder of Acero.[16] [44] The circumstances surrounding D’Souza’s dismissal are set out in the evidence of D’Souza as well as the evidence of Kuppe.

The dismissal was sudden, abrupt and unexpected. This is not unusual. D’Souza was obliged to immediately turn in his work cell phoneand some of his internet connections were severed. He was obliged to leave the office immediately. Thereafter, there were issues withD’Souza trying to get his phone number back and his difficulty obtaining assistance in that from Acero. [45] Kuppe testified that he and Ladner decided in December that D’Souza was not working out in Acero and had to be let go.

Thatis the reason given for his dismissal. [46] Based on the authorities and the evidence in this case, I am not persuaded that the plaintiff has proven bad faith in hisdismissal. [47] Having considered the evidence as to the plaintiff’s age, position, qualifications and responsibilities and the authoritiesreferred to earlier, I conclude that a reasonable period of notice in this case is 7 months. 4.

Is D’Souza entitled to damages in lieu of a share purchase agreement? [48] D’Souza claims that he is entitled to specific performance to 20% of the shares of Acero and that he elects to take damages in lieu of specific performance. He argues that this is based on Kuppe’s email of May 11th, 2011[17] and incorporated into the May 16th,2011 agreement.[18] He cites as authority for these damages Bank of America Canada v. Mutual Trust co. 2002 SCC 43, Semelhago v.Paramadevan (SCC), [1996] 2 S.C.R. 415 and Hennig v.

Canadian Rocky Mountain Properties Inc. 2005 ABCA 223. [49] The Plaintiff also argues that the reference to the Unanimous Shareholders’ Agreement in the May 16th document was not anessential term of the contract and should be severed from the contract as per the decision in Hole v. Hole 2016 ABCA 34. [50] Finally, D’Souza argues that even if

article 29(

b) of the USA was in effect, the defendants could not rely on it as to do sowould be contrary to their duty to act honestly and to exercise any discretionary contractual rights reasonably. He relies on Styles v.Alberta Investment Management Corp., 2015 ABQB 621 and Bhasin v. Hrynew 2014 SCC 71. He alleges that Kuppe was dishonest inhis dealings with him in failing to advise him that Kuppe had secured 100% ownership of Acero by approximately August 1, 2011 andtherefore the shares could have been purchased by D’Souza at that time. [51] The defendants position is that D’Souza at no time ever tendered $150,000 in payment of shares. Further, D’Souza neveragreed with

Article 29(

b) of the USA and that this provision was contained in every iteration of the USA’s drawn up and that D’Souzaadmitted he would never sign a USA containing such an article. Therefore, it is argued, D’Souza was never ready, willing and able toconclude the share purchase on its required terms and consequently is not entitled to specific performance or damages in lieu thereof. [52] Moreover, the employment offer which the parties agreed to and signed on May 16th[19] made it clear that the “buy-in” wassubject to the terms of the USA. Applying

Article 29(

b) of that provision, even if D’Souza had paid his $150,000 for 20% of the sharesof Acero prior to his dismissal, he would basically receive back only what he had paid for the shares. Therefore the defendants submitthat the plaintiff has suffered no damages. [53] The evidence before me satisfies me that there are no damages payable to D’Souza by either or both defendants in respect tothe 20% share interest in Acero that he believes he is entitled to. I reach this conclusion for the following reasons. [54] Contractual

interpretation is a question of mixed fact and law that involves the application of interpretive principles to thewords of a written contract, considered in the light of the factual matrix. See Hole at para 30, supra, citing Creston Moly Corp v. SattvaCapital Corp., 2014 SCC 53, para 50. [55] You cannot properly and in context, read the May 11th, 2011 email from Kuppe to D’Souza and Ladner[20] alone. It must be read in context with the formal employment offer.[21] That document is dated May 11th as well, although not executed until May 16th.

It is clear that this employment offer (as well as a USA), was sent as an attachment to the May 11th email. [56] The terms of the employment are set out in the accepted employment contract.[22] One of the benefits of D’Souza’semployment is the option to buy-in to Acero for up to 20% at a price of $7,500 per percent. By its terms, that offer, pursuant to the termsof the USA, remains valid for the remainder of 2011 and becomes effective “as soon as Mark Kuppe has 100% ownership of Acero...”.

Italso stipulated “Only at the end of your buy-in period or once all monies are received (whichever comes sooner) will you be vested, atwhich point in time, the ownership as stipulated in the Unanimous Shareholder Agreement, shall take place.” [57] One cannot rationally severe the provisions of

Article 29(

b) from the agreement. D’Souza was entering employment withAcero. He would be a new employee, and a major one. Neither he nor Acero had had an actual employment relationship previously. Onecan readily understand a reluctance by Acero and its owners to immediately transfer up to 20% of the company to someone yet untestedas an employee.

It makes business sense that there would be some sort of protection in a USA to ensure that a new employee who quit orwas dismissed after a short time, would not be able to leave with a large percentage of ownership or profit from having been anowner/shareholder for a short time. [58] D’Souza, as noted, was not prepared to agree to such a provision and it would seem Kuppe was not prepared to agree to itsremoval. Thus there was no consensus on a major term of the share purchase option. The share purchase option was simply one of thebenefits of the employment contract.

Since there was no consensus on this and no signed USA, the share purchase option provisioncannot be enforced. [59] The terms of the USA pursuant to which D’Souza would be issued his shares could have and should have been sorted agreedto before he commenced his employment. [60] The defendants argue as well that the plaintiff is not entitled to specific performance because he never tendered the $150,000.

I do not accept that argument. It is no longer necessary for a party seeking specific performance to tender the funds required to be paidunder an agreement as long as he proves that he is ready, willing and able to do so: 364021 Alberta Ltd. v. 361738 Alberta Ltd. (1994),1994 ABCA 89 , 149 A.R. 219 (C.A.); Digger Excavating

(1983) Ltd. v. Bowlen 2001 ABCA 214. [61] The uncontradicted evidence before me is that the defendant had available to him the $150,000 necessary to purchase the20% interest in Acero. However, he has failed to prove that he was ready, willing and able to purchase the shares at or before the end of2011. While he testified that he had the necessary funds to do so, he also knew that if he ever were to become a shareholder in Acero hewould automatically become a party to the USA.[23] [62] As noted previously, D’Souza was not prepared to sign or accept the USA with

Article 29(

b) as written in it. Given hisadamant position on that point, I am not convinced that he was “ready” and “willing” to pay the $150,000 and become a party to theUSA. [63] D’Souza also argues, relying on Styles v. Alberta Investment Management Corp., 2015 ABQB 621 and the cases referred totherein, that the defendants, through Kuppe, breached their contractual duty of honest performance of the contract by misleading theplaintiff from August 1, 2011 onwards and concealing Kuppe’s acquisition of Budd’s shares. [64] In Bhasin v.

Hrynew 2014 SCC 71 the court noted at para 74 that there is a general duty of honesty in contractualperformance. This means simply that parties must not lie or otherwise knowingly mislead each other about matters directly linked to theperformance of the contract. [65] Here, the plaintiff outlines a number of instances where he says the defendants mislead him about when Kuppe had acquiredBudd’s shares. D’Souza argues that Kuppe had secured control of Budd’s shares by August 1, 2011.

He points to the evidence that Buddand his staff moved out of Acero’s premises on August 1, 2011, that Acero’s financial statements dated October 31, 2011 state that a“change in control” of Acero had occurred on July 31, 2011, Kuppe signed a settlement agreement with Budd effective August 1, 2011,the Acero Minute Book, Exhibit 7, shows a share purchase agreement between Budd and a numbered company which is Kuppe’snumbered company and that agreement is made as of August 1, 2011, together with Budd’s resignation letter as a director effectiveAugust 1, 2011 and a transfer of Budd’s shares to Kuppe’s numbered corporation dated August 1, 2011.

Furthermore, Kuppe’s evidenceat Questioning, put to him in cross, was that at the time he signed Exhibit 9, he was the 100% owner of Acero. Nevertheless, Kuppemaintained that Budd’s shares were not in fact transferred to him until after January 6, 2012. [66] Kuppe explained the difference between the aforementioned documents and his insistence that he did not acquire Budd’sshares, in fact, until 2012.

He testified that there was a difference between the effective date selected and used in the documents and theactual date that he obtained Budd’s shares and control of the company which was in 2012. [67] This explanation seems reasonable. It is not unusual in corporate matters to have an effective date shown on documents eventhough the actual date is later in time. Moreover, the facts in this case tend to support the conclusion that the defendants were not able todeal with the shares before 2012. Acero had a liquidity problem by the summer of 2011.

To deal with that, the directors had decided toreduce their monthly salary payments by 50%. If the defendants were, in fact, in a position to be able to sell shares to D’Souza at thebeginning of August, one would expect them to have done so to ease the liquidity problem. [68] On balance, I am not persuaded that Kuppe lied or mislead the plaintiff as to when he was free to sell Budd’s shares. Thedefendants did not breach any contractual duty of honest performance of the contract. [69] The plaintiff, relying on Matthews v. Accent Lines

(1988) Ltd., 1998 ABQB 180 also argued that Kuppe is personally liable in this case. He contends that both Acero and Kuppe were parties to the May 16th Agreement since Kuppe was going to sell the shares hewas acquiring from Budd and he was to receive half the proceeds from the sale of his shares. [70] Kuppe’s position is that there is no contractual relationship between him and the plaintiff. To the extent that Kuppe expectedthe first $75,000 of share purchase capital to be paid to him, that was simply a stipulation as to who would be a payee.

Such a stipulationdid not create a contractual relationship between Kuppe and the plaintiff. [71] Matthews is distinguishable on its facts. In Matthews, at the time the contract was made, the personal defendant, Hoefnagels,was the actual and beneficial owner of all the shares of the corporate defendant Accent as well as the sole controlling officers, directorand manager of its activities and operations. That is not the situation in the case at bar. Here, Budd was a shareholder. Indeed, asevidenced by Exhibit 1 Tab 2 Kuppe said he would discuss the terms of employment with Budd and provide assurances.

Also, inMatthews there was no written contract nor discussion of a USA. That is not the case here where there is clearly a written contract andthere is reference in it to the USA and a draft copy of the USA had been provided to D’Souza along with the draft employmentcontract.[24] Finally, I note that the trial judge in Matthews specifically found as a fact that the oral option agreement in issue was madeby Hoefnagel on his own behalf as well as the corporate defendant. [72] There is no evidence of any intention by Kuppe to enter into a personal contractual relationship with D’Souza nor D’Souzawith Kuppe.

The employment contract is on Acero letterhead and indicates by its terms that Acero is making the offer. The buy-in offeris made on behalf of Acero. Kuppe signs as “Acero Director”. He does not sign in his personal capacity. [73] The basis for the plaintiff’s claim against Kuppe personally is, as stated in his Reply Argument at para. 223 as a party to the share purchase component of the May 16th Agreement.

I conclude he was not a party to the Agreement and therefore the claims againstKuppe personally must be dismissed. [74] To conclude this topic, I find that the plaintiff is not entitled to specific performance and therefore there are no damages inlieu thereof. 5. What is the quantum of such damages?

[ 75 ] As no damages are payable in lieu of specific performance, there is no quantum of damages to assess under this heading. 6.

Did D’Souza act reasonably to mitigate his damages for wrongful dismissal? [ 76 ] The law is clear that a plaintiff who is wrongfully dismissed has a duty to take reasonable steps to mitigate his loss by seeking other employment during the period of reasonable notice. [25] [ 77 ] The burden of proof is on the defendants in this case to prove that the plaintiff failed to make reasonable efforts to find work and that would have been found if he had made reasonable efforts to find it: see Evans v. Teamsters, Local 31 2008 SCC 20 . [ 78 ] The defendants argue that the plaintiff failed in that duty.

They say that he could have mitigated his loss by accepting a proposal by Acero made about the same time as the dismissal, for the plaintiff to be involved in a new company being proposed, Acero Processing, at a pay rate of $10,000 per month. Or, he could have sought alternate employment in what the defendants allege was a “hot market” for process engineers at the time. Instead, they argue, the plaintiff did not seek alternate employment.

Rather, he elected to start up his own company and consequently did not receive any pay from it for about a year. [ 79 ] The plaintiff disputes the suggestion that he did not act reasonably to mitigate his damages. He points out that the defendants made no effort to communicate that the Acero Processing proposal remained open for acceptance following his dismissal and he was never given a copy of the dismissal letter to take away, Kuppe would not take his phone calls and there was a general lack of communication following his dismissal.

Further, he maintains that the Acero Processing proposal was unreasonable given its terms which required him to contribute equity to it and it contained a 3 year non-compete clause and there was really no guarantee that he would have a salary after the initial 6 months contribution from Acero. Moreover, given the manner in which Acero and Kuppe in particular had dismissed him, it was unreasonable to expect him to continue in a business relationship with them. Finally, he says the evidence shows clearly that he did attempt, unsuccessfully, to find alternate employment.

Also, it must be remembered that he was not a registered professional engineer. [ 80 ] At trial, Kuppe testified that there was a significant deficit of process engineers at the time the plaintiff was dismissed, that there were many heavy oil projects going on with 55% of all projects being undertaken being heavy oil projects. He testified that the salary range for process engineers with 25 years or more of service was between $225,000 and $275,000. [ 81 ] Most of Kuppe’s evidence on this point was opinion evidence.

Kuppe was not qualified as an expert and therefore, quite aside from his obvious bias, he was not entitled to give these opinions. I give them no weight. [ 82 ] The defendants also called Fatiha Akrour as their witness. She was not qualified as an expert witness either. She did have personal evidence to give as to what she experienced at the relevant time. Specifically she testified that during this time she was employed by Aker Solutions Inc. and was involved with hiring persons with D’Souza’s skill set. She said she hired three process engineers in 2012.

She expressed the opinion that there was a high demand for process engineers in Calgary during the relevant time but although that may have been her personal impression from her experience at the time as she was not qualified as an expert I do not give that opinion much, if any, weight.

She also testified that persons with engineering backgrounds but who are not registered as engineers are referred to as “specialists” and not “engineers” because “...they are not entitled to the title engineer if they are not a member of the association.” [ 83 ] D’Souza testified that he did in fact make efforts to find alternative employment before deciding to start his own company.

He testified that he called a number of his colleagues who were in senior positions in various companies such as Cenovus, Encana, and Petro-Canada, seeking employment but was told that there were no openings for someone with his experience and knowledge. He testified that their advice to him was that having regard to his knowledge and experience he should start his own company.

Given his inability to find a position and having regard to the advice he had received he set up his own company, GasOil and received no pay for the first year. [ 84 ] On the issue of mitigation, I prefer the evidence of D’Souza to that of Kuppe. I do not think the evidence of Ms Akrour is particularly helpful in deciding this issue. [ 85 ] The burden on the employer to prove the employee’s failure to mitigate is described as “..a burden not lightly discharged”: see Crisall v. Western Pontiac Buick GMC

(1999) Ltd . 2003 ABQB 255 at para 45 [ 86 ] For the reasons which follow I am not satisfied that the plaintiff failed to act reasonably to mitigate his damages. [ 87 ] First, the plaintiff’s firing took place just before the Christmas holiday and thus there would be a period when companies would be closed for the holidays. [ 88 ] Second, Acero’s taking of the plaintiff’s business cell phone with its contacts information and the lack of co-operation from Acero to transfer his cell phone number, which I find as a fact occurred, impeded his efforts. [ 89 ] Third, I think it entirely reasonable that the plaintiff did not take the offer regarding Acero Processing.

I find that he was never given a copy of the offer in the dismissal letter and given that he seemed to be unable to contact Kuppe, it is understandable that he would not have realized that that offer was still open after he was fired. Even had he known that fact, it would have been reasonable to reject it as the terms were onerous including injecting capital, signing a non-compete provision and having an Acero director on the new company’s board.

Finally, given the manner of his dismissal and his treatment by Acero and its attendant hostility, embarrassment or humiliation , having regard to the comments of Bastarache J. in Evans , supra at para 30 , a reasonable person in the plaintiff’s position would not have agreed to accept that offer. [ 90 ] Fourth, the plaintiff did in fact seek out employment as he described in his evidence referred to earlier in these reasons.

[ 91 ] Fifth, the plaintiff’s current skill set was not so much engineering as that of managing. At Aker he had been involved as project manager and business development manager. He was no longer “geared” for engineering work as a result of being involved in management for some time.

He was thus overqualified to be simply a facilities engineer. [ 92 ] Sixth, he was not registered as a professional engineer. [ 93 ] On balance I am satisfied that the plaintiff’s efforts to find other employment were reasonable in the circumstances. [ 94 ] Accordingly, I dismiss the defendants’ claim that the plaintiff’s damages should be reduced for a failure to take reasonable steps to mitigate his damages.

Conclusion [ 95 ] The plaintiff was wrongfully dismissed by Acero. [ 96 ] The plaintiff is entitled to deferred salary of $47,500. [ 97 ] The plaintiff is entitled to accrued vacation pay of $10,037.76. [ 98 ] The plaintiff was entitled to 7 months notice.

Damages in lieu thereof are $20,000 x 7 = $140,000. [ 99 ] The plaintiff is not entitled to any damages in lieu of specific performance of the share purchase agreement. [ 100 ] The plaintiff acted reasonably to mitigate his damages for wrongful dismissal. [ 101 ] The action against Kuppe personally is dismissed. [ 102 ] Any severance or vacation pay received by the plaintiff subsequent to dismissal should be deducted from the amount due under this judgment.

If counsel cannot agree on those figure they may apply to the court. [ 103 ] The plaintiff is entitled to prejudgment interest. [ 104 ] Costs may be spoken to. Dated at the City of Calgary, Alberta this 14 th day of December, 2017. C. Scott Brooker J.C.Q.B.A. Appearances: Luke Rasmussen, Esq. / Karolina Kluz for the Plaintiff John H.Wilson, Q.C. / Daniel J. Wilson for the Defendants

_______________________________________________________ Corrigendum of the Reasons for Judgment of The Honourable Mr. Justice C. Scott Brooker _______________________________________________________ On page 14, council for the Plaintiff was changed to include Karolina Kluz and counsel for the Defendant was changed to include Daniel J. Wilson.