Martin Schaufert Plaintiff - v. -, 2021 ABQB 579

Court of Queen’s Bench of Alberta Citation: Schaufert v Calgary Co-Operative Association Limited , 2021 ABQB 579 Date: 20210915 Docket: 1901 08584 Registry: Calgary Between: Martin Schaufert Plaintiff - and - Calgary Co-Operative Association Limited Defendant Docket: 1901 08585 Registry: Calgary And Between: Terry Anderson Plaintiff - and - Calgary Co-Operative Association Limited Defendant Docket: 1901 08586 Registry: Calgary And Between:

Don McConkey Plaintiff - and - Calgary Co-Operative Association Limited Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice J.T. Eamon _______________________________________________________ Table of Contents I Introduction . 3 II Whether

summary trial is appropriate . 3 III Background facts . 4 IV Did the plaintiffs’ employment agreements include the defendant’s Severance Policy that purports to limit the length of reasonable notice of termination? . 6 (

a) Introduction . 6 (

b) The Severance Policy and employment agreements . 6 (

c) Analysis . 8 V Reasonable notice . 11 VI Damages for claimed incentive awards . 14 (

a) Introduction . 14 (

b) The incentive plans . 15 (

c) Analysis . 21 (

i) Would each plaintiff have been eligible to participate during the notice period? . 22 (ii) Whether the plans unambiguously limit the plaintiffs’ common law entitlements . 25 (

d) Conclusion . 27 VII Mitigation . 27 (

a) Introduction . 27 (

b) The alleged failures to mitigate . 28 (

c) Mr McConkey’s claim for business start up expenses . 31 VIII Conclusion . 32 I Introduction [ 1 ] The plaintiffs were long term employees of the defendant. They were terminated without notice and without cause on October 31, 2017. The defendant has a Severance Policy that purports to limit common law entitlements for termination. It offered a

severance package to each plaintiff containing the maximum notice periods allowed by that policy. The plaintiffs refused the offers. Thedefendant continued to pay them a monthly amount for 18 months, the maximum notice period under its policy. The plaintiffscommenced this claim for wrongful dismissal. They claim that they are entitled to 24 months notice period and seek damages for thesalaries and other benefits they claim they would have received throughout that period. [2] On this

summary trial, the issues are: (

a) Did the plaintiffs’ employment agreements include the defendant’s Severance Policy that purports to limit reasonable noticeof termination? (

b) If the period of reasonable notice was not determined by the Severance Policy, what is the period of notice for eachplaintiff? (

c) Were the plaintiffs eligible to participate in the defendant’s 2018 and 2019 short term incentive plans (“STIP”) had theybeen given reasonable notice of termination of their employment? (

d) Were the plaintiffs disqualified from awards under the defendant’s 2017-2019 long term incentive plan (“LTIP”) becausethey were terminated? (

e) Did the plaintiffs fail to mitigate any losses? (

f) Can the plaintiff Mr McConkey recover damages for his expenses to start a business to replace his employment with thedefendant? II Whether

summary trial is appropriate [3] The test for

summary trial is set out in Imperial Oil v Flatiron Constructors Canada Limited, 2017 ABCA 102: [24] The correct test is set out in JN v GJK, 2004 ABCA 394 at paras 40-41: The test for whether a

summary trial is appropriate is twofold: 1) can the court decide disputed questions of fact on affidavits or by anyof the other proceedings authorized by the Rules for a

summary trial? 2) would it be unjust to decide the issues in such a way? See Rule158.6(1)(

a) and Lysyk v. Bank of Montreal (2003), 334 A.R. 308, 2003 ABQB 186 at para. 4 [Bank of Montreal]. In determining the suitability of a

summary trial, there are a variety of factors the trial judge may consider: see Compton PetroleumCorp. v. Alberta Power Ltd. (1999), 1999 ABQB 42 , 242 A.R. 3 at para. 17 [Compton Petroleum]; Adams v.

Norcen EnergyResources Ltd. (1999), (AB QB), 248 A.R. 120 at para. 19. [4] Many of the factors are outlined in Jagodnik v Oudshoorn, 2015 ABQB 456 at para 3: 1. the amount involved; 2. the complexity of the matter; 3. its urgency; 4. any prejudice likely to arise by reason of delay; 5. the cost of taking the case forward to a conventional trial in relation to the amount involved; 6. the course of the proceedings; 7. whether all witnesses or only some were (will be) cross-examined in court; 8. whether there is a real possibility that the defendant can bolster its evidence by discovery of the plaintiff's documents andwitnesses; and 9. whether the resolution will depend on findings of credibility. [5] The record contains gaps in respect of damages quantification.

The parties indicated they could likely work out the numbersgiven my rulings on the points in issue. [6] Both sides agree that the plaintiffs’ claims should be heard by

summary trial. In view of the additional cost and delay of aconventional trial, the extensive evidentiary record including affidavits and cross-examination thereon, and the lack of conflicts in the

evidence, I am satisfied that a

summary trial is the appropriate means of resolving the claims. III Background facts [ 7 ] The defendant is a retail co-operative in Calgary. Its operations include grocery stores, petroleum products, liquor stores, and home healthcare products. It is affiliated to Federated Co-operatives Limited, a company owned by retail co-operatives in Western Canada that supplies various services to the co-operatives. [ 8 ] The plaintiffs were employees of the defendant (or at some points, Federated Co-operatives) for most of their adult careers. [ 9 ] Mr Schaufert became employed by the defendant on February 15, 1982.

He progressed to an operations manager, became a centre manager (multiple locations) in 1999, served as a centre manager or district manager (to whom centre managers reported) through 2007, and progressed to the level of an Operations Director in 2007. [ 10 ] Mr Schaufert occupied a senior managerial role in the defendant for many years prior to his termination. His service as an Operations Director from 2007 spanned deli operations (2007-2013), and (as special projects director) renovations (2014-2015) and international foods (2016-2017).

At his employment termination, he held the position of Director of Operations, Special Projects where he worked directly with the senior executives, contributed leadership to the defendant’s retail operations in various areas, and had a high level of responsibility in developing business plans and managing workforce efficiencies. His duties included supervising the reline crew.

So far as the evidence discloses, that crew’s duties included doing schematics and visual representations of the store’s products, which are tools of visual merchandising. [ 11 ] Mr Anderson became employed in the cooperative retailing system (with Federated Co-operatives) in October 1986 as a senior auditor. He became employed by the defendant in the spring 1990 in the same role. He became corporate audit services manager in the year 2000, and by 2010 became designated as Director, Internal Audit. [ 12 ] Mr Anderson occupied a senior managerial role with the defendant for many years prior to his termination.

Whether titled as the manager or the director, he was the person in charge of the internal audit department.

This department operated independently of the accounting department for many years before his termination and played an important role in protecting the company’s assets and business undertaking. [ 13 ] Mr Anderson’s responsibilities included: creating audit plans and developing internal controls for the entire organization; evaluating and reviewing the company’s internal controls and the reliability and integrity of the company’s financial and operational information; providing policies and procedures to guide the audit staff; establishing programmes for selection and development of the human resources of the audit department; and coordinating the company’s internal and external audits.

He reported directly to the chief financial officer (or the VP Finance, as that office in the defendant was earlier known) and later to the CEO, and had meetings with the audit committee in the absence of executive management as is typical for the head of internal audit in many organizations. During his last year of employment, he was seconded to a special project concerning risk management that was overseen by the CFO.

His contract with the defendant prescribed that his start date for purposes of his seniority status was October 1, 1986, the date he joined Federated Co-operatives. [ 14 ] Mr McConkey became employed by Federated Co-operatives as a retail sales coordinator on November 13, 1988. In that role he worked to improve all areas of the general merchandise business in local retail co-operatives in Southern Alberta and BC. In September 2000, he became employed by the defendant as a General Merchandise Director, which included directing liquor operations.

The parties agreed, in his employment contract, that his initial date of hire with Federated Co-operatives would be recognized as his seniority date for the purposes of vacation entitlement, service recognition and benefit commencement. In his role as a General Merchandise Director, he provided overall leadership to the grocery and liquor divisions. In 2004, his titles became Marketing Director and Grocery and Liquor Operations Director, and overall marketing leadership was added to his duties. In 2006 he continued as Marketing Director and Liquor Operations Director.

In 2009 he became Managing Director of the liquor division. [ 15 ] As the managing director, Mr McConkey was responsible to provide overall leadership and management to the liquor division, with responsibility for the day to day operations, profitability, and building the liquor division. This position was the equivalent of a senior director in the defendant [1] , and was a senior managerial role. As the managing director, Mr McConkey initially reported to the Board of Directors and later, to officers at the executive level (CEO or a VP).

He excelled at liquor retailing and substantially increased the size of the defendant’s liquor retail operations. [ 16 ] The evidence amply demonstrated the key operational and organizational responsibilities that the defendant assigned to each plaintiff. This included the detailed job descriptions for the Managing Director of Co-op Wine Spirits and Beer (relating to Mr McConkey); the Deli Director (a Director position Mr Schaufert held from 2007-2013); and the Internal Audit Director (relating to Mr Anderson).

In speaking to his evidence that an initiative spearheaded by Mr Schaufert was a weak performer, the defendant’s Vice President of Human Resources stated on cross-examination: “Every division lead has responsibility for their division”. He agreed each plaintiff was considered senior (in contrast to junior or mid-level) management of the defendant. This is not to suggest they were part of the defendant’s executive management. [ 17 ] Each plaintiff was terminated without cause or notice on October 31, 2017. Mr Schaufert was 53 years old and had worked for the defendant for about 35 ½ years.

Mr Anderson was 55 years old and had worked for the defendant or Federated Co-operatives for about 31 years. Mr McConkey was 53 years old and had worked for the defendant or Federated Co-operatives for about 29 years. IV Did the plaintiffs’ employment agreements include the defendant’s Severance Policy that purports to limit the length of

reasonable notice of termination? (

a) Introduction [ 18 ] The defendant’s current Severance Policy 870-00-05 effective February 23, 2010 (“Severance Policy”) sets out termination notice and severance that will be provided to various categories of employees.

That policy provides each plaintiff with the maximum notice period for management employees (78 weeks, which is the equivalent of 18 months). [ 19 ] The defendant unilaterally paid each plaintiff 78 weeks of pay, following the plaintiffs’ refusal of the defendant’s severance offers made October 31, 2017. [ 20 ] Each plaintiff claims his common law entitlement is more than 18 months. [ 21 ] The issue is whether the Severance Policy is a term of any plaintiff’s employment contract. If so, that plaintiff’s entitlement is 78 weeks.

The plaintiffs have already been paid the corresponding amount (subject to bonus claims or other benefits). If not, the Court decides each plaintiff’s entitlement. (

b) The Severance Policy and employment agreements [ 22 ] The Severance Policy states that the amount of notice or pay provided therein “replaces any common law rights that an employee may have to reasonable notice of termination or pay in lieu of reasonable notice”.

The maximum notice for management employees (including the plaintiffs) was 78 weeks, subject to discretion to increase notice or severance pay. [ 23 ] The Severance Policy provided that before receiving additional notice or pay above the minimum notice periods (corresponding to the statutory minimum periods prescribed by Alberta law), the employee must sign a release acceptable to the defendant. The policy allowed the defendant to waive this requirement. [ 24 ] The Severance Policy replaced Dehiring Policy 870-00-00 effective May 1, 1999.

The Dehiring Policy provided for severance allowances for employees terminated without cause, defined as a “grant to assist employees in establishing themselves in other employment and requires approval of the CEO”.

Management employees were to be provided a severance allowance of 2/3 of a month’s salary per each completed year of service, to a maximum of 12 months (or 18 months for senior executives). [ 25 ] In contrast to the Severance Policy, the Dehiring Policy did not purport to limit any common law rights of an employee terminated without reasonable notice. [ 26 ] If the defendant had similar policies prior to May 1999 (or perhaps earlier iterations of the Severance Policy between 1999 and 2010), they are not available in evidence. [ 27 ] The plaintiffs and defendant made various employment contracts or amended their contracts over the years.

Some, not all, of the parties’ employment letters were in evidence. None of the employment letters in the evidence incorporate any of the defendant’s corporate policies. There is no evidence suggesting that any of the other letter agreements between the defendant and each plaintiff from time to time were any different on this point. I will describe the structure of these letters in the following paragraphs. [ 28 ] The defendant made an offer of employment to Mr Schaufert by letter dated December 13, 2001 for the position of District Manager.

The letter outlines the position, starting date, salary, salary review, benefits and probationary period. The letter continues: I trust this letter covers all of the pertinent points of the offer as discussed. However, should you require clarification or have any questions, please contact me at [contact particulars deleted by Eamon J].

Please sign one copy of the offer, signifying your understanding and acceptance of the terms and return the signed copy to me. [ 29 ] The acceptance, signed by Mr Schaufert, stated: “I accept the position of District Manager, at Head Office under the terms and conditions outlined above”. The employment letter does not mention severance, corporate policies, or any limitations on common law rights. [ 30 ] Similarly, the defendant made an offer of employment to Mr Anderson by letter dated February 10, 2000. [ 31 ] The structure of Mr Anderson’s employment letter was substantially identical to Mr Schaufert’s letter.

After laying out the offer of employment, the letter continues: I trust this letter covers all of the pertinent points of the offer as discussed. However, should you require clarification or have any questions, please contact me at [contact particulars deleted by Eamon J]. Please sign one copy of the offer, signifying your understanding and acceptance of the terms and return the signed copy to me. [ 32 ] The acceptance, signed by Mr Anderson, stated: “I accept the position of Manager, Corporate Auditor, at Calgary Co-op Head Office location under the terms and conditions outlined above”.

The employment letter does not mention severance, corporate policies, or any limitations on common law rights. [ 33 ] Similarly, the defendant made an offer of employment to Mr McConkey dated September 10, 2001. The structure of Mr McConkey’s employment letter was substantially identical to Mr Schaufert’s letter. After laying out the offer of employment, the letter continues: I trust this letter covers all of the pertinent points of the offer as discussed. However, should you require clarification or have any

questions, please contact me at [contact particulars deleted by Eamon J]. Please sign one copy of the offer, signifying your understandingand acceptance of the terms and return the signed copy to me. [34] The acceptance, signed by Mr McConkey, stated: “I accept the position of General Merchandise Director, under the terms andconditions outlined above”.

The employment letter does not mention severance, corporate policies, or any limitations on common lawrights. [35] None of the plaintiffs signed an acknowledgment that he would be bound by the Severance Policy. [36] There was no evidence of any system by which the defendant sought to ensure non-union employees were aware of or agreedto the Dehiring or Severance Policies. [37] The plaintiffs acknowledged on cross-examination that they were aware of the Severance Policy.

In addition, Mr Schaufertwas involved in applying it to terminations of other employees, and Mr Anderson said he understood the policies applied to allemployees including himself. However, there was no evidence that any of the plaintiffs were aware of or agreed to any dehiring orseverance policy when they joined the co-operative system or when they first became employed by the defendant. As they advanced intheir careers and took new positions, they generally signed another employment letter.

But none of the employment letters in evidencereference any policies, or the matters of severance, reasonable notice, or pay in lieu of notice. There is no evidence to suggest they signedother employment letters that incorporated the policies as contract terms. (

c) Analysis [38] An employer seeking to rely on a severance provision bears the onus of proving it represented the agreement of the parties(Long v Delta Catalytic Industrial Services Inc, (ABQB) at para 13). [39] In Long, Fruman J (as she then was) stated: [14] Unilateral changes to employment contracts seem to be a touchy subject in our jurisprudence. Generally, a unilateralnotification of a change in severance entitlement by an employer after an employee has commenced working is insufficient to bind anemployee.

The employer must show that the employee had "an expression of agreement, express or implied": Brode v. Fitzwright Co.(1992), 41 C.C.E.L. 289 (B.C. S.C.), at 295. Acceptance cannot necessarily be inferred from an employee's continuing to report to workafter receipt of a new policy: Lyonde v. Canadian Acceptance Corp. (1983), 3 C.C.E.L. 220 (Ont. H.C.), at 224. Nor, in my view, is anemployee required to object to the amended policy once he learns of it, in order not to be bound. Finally, if the new policy reduces anemployee's severance rights, issues of consideration for the new contract arise: Rahemtulla v.

Vanfed Credit Union, (BC SC), [1984] 3 W.W.R. 296 (B.C. S.C.), at 304. [15] The courts have developed a complex set of legal and evidentiary principles to ensure that employees are treated fairlyat the time of termination. The preoccupation with fairness seems to elevate the contractual standards for provisions which limitseverance, surpassing normal principles of offer and acceptance in an arms' length negotiation. The standards for severance policies thatmay be changed unilaterally by an employer appear to be higher still. Courts have shown some reluctance to enforce those policies:Bienvenu v.

Zellers Inc. (1984), (NS SC), 5 C.C.E.L. 30 (N.S. T.D.); Clark v. Optyl (Can.) Ltd. (1985), 7 C.C.E.L. 1(N.B. C.A.). [40] The decisions of Starcevich v Woodward's Limited, (BCSC), 58 BCLR (2d) 254 at p 258 and Rahemtulla vVanfed Credit Union, (BCSC), 51 BCLR 200 illustrate the relatively high threshold required to prove that policieslimiting common law rights became contract terms in situations similar to the present case. [41] In Starcevich, the claimant was aware of the severance policy and applied it to other employees.

This was not sufficient toconstitute assent: 18 In this case, the defendant says that the plaintiff accepted the policy as a term of his employment. In support of that statement,the defendant points to the fact that the plaintiff was aware of the policy, and that he in fact applied the policy to others during the courseof his employment. 19 In my view, neither of those facts establishes, on balance, that the plaintiff accepted that policy as a term of his own contract ofemployment.

The plaintiff may well have had to deal with the dismissal of employees as part of his job description, and if there was apolicy in effect, no doubt he was required to apply that policy. It does not follow that by applying the policy he must be taken to haveaccepted that he was legally bound by the policy in the event of his own dismissal. There would have to be clear and unequivocalevidence to establish that the plaintiff had agreed to the policy forming part of his own contract of employment.

Such clear andunequivocal evidence does not exist in the material before me. (Underlining added). [42] In Rahemtulla, McLachlin J (as she then was) refused to infer assent from mere knowledge of the severance policy andquestioned whether, in any case, there was valid consideration to support a policy added after the claimant was hired: [20] The evidence in the case at bar does not establish that the parties expressed a common intention to be bound by the terms of thepolicy manual. The usual method of indicating assent to written documents is by signature; this was not done. Nor was assentmanifested by conduct.

It may be that the defendant's assent can be inferred from the act of giving the manual to the plaintiff. But,while the plaintiff may have privately accepted the terms of the manual, there is no evidence that this acceptance was evercommunicated by her to the defendant. Communication of assent cannot be inferred from the fact that the plaintiff continued to workafter being given the manual. She had contracted to work for the defendant prior to receiving the manual. The fact that she continued tofulfil this obligation after being given the manual cannot be taken as an assent to its terms.

[21] For similar reasons it may be questioned whether there was valid consideration for the promise the plaintiff is alleged to havemade to be bound by the policy manual. Performance of an existing duty is no consideration: Stilk v. Myrick (1809), 2 Camp. 317, 170E.R. 1168 (N.P.); Swain v. West (Butchers) Ltd., [1936] 3 All E.R. 261 (C.A.).

The defendant's obligation to employ having arisenbefore delivery of the policy manual, its performance of that obligation cannot constitute consideration for any new terms imposed onthe plaintiff by the manual. (Underlining added). [43] The same principles apply to an amendment to an existing policy that had contractual force (Taylor v Canada Safeway Ltd, (BCSC) at para 8). [44] Each of the plaintiffs worked for the defendant for many years before the Severance Policy was put into place.

This policypurported to make very substantial changes to their employment contracts including their right to have their reasonable notice determinedunder the applicable common law principles. [45] Each plaintiff periodically signed employment letters that purported to address the pertinent points of an offer of employment.None of the letters purported to incorporate any of the defendant’s corporate policies that existed or may exist in future, or to authorizethe defendant to unilaterally amend the terms of their employment by issuing new or revised policies.

As mentioned, the evidencesuggests the parties signed other employment letters that are not in evidence. There is no evidence or argument suggesting these letterswere any different in respect of severance policies. [46] The defendant has not explained why it reasonably expected the Severance Policy to form part of the employment contracts,when it prepared and provided letters purporting to be offers of employment that omitted reference to such drastic limitations of theiremployees’ common law rights.

This alone creates significant ambiguity in the defendant’s objective contractual intentions, an ambiguitythat should be construed against it. [47] The mere facts the plaintiffs knew of the policy, did not object to the policy, or were required by the defendant to apply thepolicy to their subordinates is not proof that they assented or communicated their assent to the defendant.

Given the power imbalances, itwould not be reasonable to infer that employees, usually concerned for their job security or opportunities for advancement, expressedassent to the employer’s unilateral deployment of policies by saying nothing. If the defendant wanted these policies incorporated inemployment contracts, it had to engage the issue with its employees and obtain their unambiguous assent. It could do that, for example,by asking them to sign employment letters, or amendments to their employment letters, incorporating the policy.

The defendant did notdo so. [48] The defendant has not proved that the Severance Policy was a component of the contractual employment terms between eachplaintiff and the defendant. V Reasonable notice [49] The manner of determining reasonable notice is as follows: 81 In determining what constitutes reasonable notice of termination, the courts have generally applied the principles articulated byMcRuer C.J.H.C. in Bardal v. Globe & Mail Ltd. (1960), (ON SC), 24 D.L.R. (2d) 140 (Ont. H.C.), 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. 82 This Court adopted the foregoing list of factors in Machtinger v. HOJ Industries Ltd., (SCC), [1992] 1 S.C.R.986, at p. 998….

I note, however, that Bardal, supra, does not state, nor has it been interpreted to imply, that the factors it enumeratedwere exhaustive.… Canadian courts have added several additional factors to the Bardal list. The application of these factors to theassessment of a dismissed employee’s notice period will depend upon the particular circumstances of the case. (Wallace v United Grain Growers Ltd, (SCC) at paras 81 - 82). [50] The plaintiffs cited a number of cases where the claimants occupied middle to senior management or general managementroles and had lengthy terms of service[2].

These cases indicate a range of 22 to 24 months notice, but also make clear that lower awardsmay be appropriate. [51] A good example is Hansen v Altus Energy Services Partnership, 2010 ABQB 820. Goss J cited a number of cases wheresenior managers with long terms of service were found entitled to notice in the range of 15 to 24 months. In the case before her, theclaimant was a professional engineer who was terminated at age 50, following 29 years of service and attaining a senior managerialposition in one area of industry with specific products.

Goss J found that despite his engineering degree and his membership inprofessional bodies both in Alberta and BC, his opportunity for finding employment was more limited. Goss J found that he was entitledto 24 months notice. [52] The defendant cited a number of cases where the claimants occupied middle or senior management positions and had lengthyterms of service[3]. These cases indicate a range of 18 to 19 months notice.

In one case[4], an appellate court dismissed an appeal from atrial judge’s award of 13.5 months in the case of a holder of a senior management position without supervisory functions, who served for21 years. The Court stated that if it were deciding the case as the trial judge, it would have been disposed to award a somewhat higheramount (and cited cases suggesting 18 months), but declined to interfere with the award on the deferential standard of review.

[53] Each plaintiff occupied a senior management position, having significant responsibility in their division. Each was a long termemployee[5]. The plaintiffs were in their early 50’s, distinguishing them from some of the cases cited where the claimant was severalyears older, much closer to retirement and perhaps less attractive to prospective employers.

Nevertheless, many of the cases cited by theplaintiffs awarded the rough upper limit of 24 months to claimants of similar age. [54] The defendant emphasized that the plaintiffs occupied a variety of roles and developed many skills and should have been ableto market those skills and obtain new employment within 18 months. It submitted: The Plaintiffs’ claims for 24 months of notice are excessive, especially considering the Plaintiff’s significant experience in a variety ofroles at Co-op.

The Plaintiffs had a variety of roles and skills developed during their time at Co-op and they should have been able to usethese skills to market themselves and obtain new employment. [55] Mr McConkey’s career was focussed on building and operating the defendant’s liquor business for many years before histermination. He served in volunteer positions in the liquor retailing industry. All his recent experience was in that industry.

It is unlikelythat he would be as attractive a candidate to retailers of other product lines, in comparison to an individual having more generalexperience in a variety of product lines and of similar seniority and responsibility. [56] Mr Anderson’s career was focussed on internal audit. His responsibilities for accounting were removed in the restructuring ofhis position in the year 2000. I do not think it would be reasonable to expect him to try to join an accounting or external audit practice, atleast not without retraining.

His reasonable course was to seek employment in a senior level of an internal audit department or overseeingcorporate accounting operations. [57] Mr Schaufert had a variety of high level experience in the defendant’s retail grocery operations.

He may be an attractivecandidate to another grocery retailer, but it is unlikely that he would be as attractive a candidate to a retailer of other product lines, incomparison to an individual having more general experience in a variety of product lines and of similar seniority and responsibility. [58] The defendant’s documents cause me to doubt that suitable employment was available within a relatively short time frameafter the unlawful terminations.

In its 2016 Compensation Review and 2017 Salary Administration Results Report dated January 23,2017 that was prepared for each plaintiff, the defendant observed that 2017 would be an even more challenging year than 2016, citing: astruggling economy; additional taxes and increased utility costs and minimum wages; and expansion of competition that was addingsquare footage to a shrinking market.

The defendant froze management and non-union wages for fiscal 2017, a decision not taken lightlyand intended to address what the defendant described as a “very challenging environment.” [59] Then, at the end of 2017 the defendant terminated the plaintiffs to address ongoing financial challenges. According to thedefendant’s VP Human Resources: As evidenced in the compensation information in [the 2016 Compensation Review and 2017 Salary Administration Results Reports],Co-op was dealing with economic challenges in 2016 and 2017.

In 2017, Co-op made the business decision to restructure as part of acost-savings and efficiency initiative, and the positions of the Plaintiffs were terminated and never back-filled. [60] Consequently, I do not share the defendant’s view that the plaintiffs could use their skills to market themselves and obtainnew employment in the time frame suggested by the defendant.

These industry or economic considerations are properly considered inassessing the notice period (Kosteckyj v Paramount Resources Ltd, 2021 ABQB 225 at paras 51 - 54; Hunsley v Canadian EnergyServices LP, 2020 ABQB 724 at paras 26 - 27; Toole v Northern Blizzard Resources Inc, 2017 ABQB 760 at paras 26 - 31; Lederhousev Vermilion Energy Inc, 2015 ABQB 387 at paras 31 - 35). [61] The plaintiffs were senior, long term employees in management positions with significant responsibilities, which can justifyan award at the high end of the range of 18 to 24 months that is appropriate for persons in similar circumstances.

The pressures in thegrocery retailing market that the defendant identified in its communications to the plaintiffs indicate that the plaintiffs would need asignificant period of time to find suitable alternative employment. It is appropriate to fix reasonable notice at the higher end of the range. [62] The defendant submitted that its Severance Policy is evidence of a custom in the industry that sets an upper limit on thecommon law notice entitlement of the plaintiffs. [63] Custom is a relevant consideration.

The party alleging a custom must prove the alleged custom that was certain, notorious andwithin the industry involved (Emslie v Kensington Homes Ltd, (MBCA) at para 10; Scapillati v A PotvinConstruction Limited, (ONCA), 1999 CarswellOnt 1844 at paras 41 - 49). [64] The Severance Policy allowed the defendant, in its discretion, to provide pay in lieu of notice; pay more than the maximum inindividual cases; waive the provisions of the policy as it pleased; pay lump sum settlements at its option; and require the employee tosign a release.

There is no evidence that the defendant’s policy was based on any certain, reasonable or notorious practice in the retailgrocery industry or even within the defendant.

Given that the policy significantly interferes with common law rights, vests considerablediscretion in the defendant employer to determine the rights of its own employees in a relationship of power imbalance, and even requiresthem to sign releases in favour of the defendant to obtain the purported benefits thereunder, I am unwilling to accept it represents acustom absent cogent evidence. [65] I reject the defendant’s assertion of custom. [66] I do not find that the small distinctions among the plaintiffs would justify differentiating among them.

They were all valuablecontributors of similar seniority in function and years of service. Mr McConkey’s service was slightly shorter but his position wasslightly senior to the others. I find that 24 months is the appropriate notice period for each plaintiff. VI Damages for claimed incentive awards

(

a) Introduction [ 67 ] The plaintiffs participated in the defendant’s short term incentive plan (STIP) and long term incentive plan (LTIP). The short term plan provided an award based on the defendant’s financial results for an annual performance period commencing each financial year.

The long term plan provided an award based on the defendant’s financial results for a performance period of three consecutive financial years. [ 68 ] The defendant paid the plaintiffs awards under the 2017 STIP (that commenced October 31, 2016 and ended October 28, 2017), the 2015-2017 LTIP (that commenced November 2, 2014 and ended October 28, 2017) and the 2016-2018 LTIP (that commenced November 1, 2015).

These plans provided awards, either because the performance periods were completed before the plaintiffs were terminated or the plan purported to allow for pro rated awards where an employee was terminated before the end of the performance period. There was no issue over the amounts paid under these plans. [ 69 ] The defendant refused to pay awards under the 2018 STIP (that commenced October 29, 2017), the 2019 STIP (that commenced November 4, 2018), and the 2017-2019 LTIP (that commenced October 30, 2016) [6] .

It had changed the eligibility provisions in its incentive plans commencing in 2017, by purporting to exclude employees terminated during a performance period as participants under the plans and removing the right to share on a pro rated basis if terminated during the performance period.

Also, the 2018 and 2019 STIPs provided that a terminated participant was not entitled to participate in any performance period that commenced after the date the participant’s employment was terminated. [ 70 ] The plaintiffs claim the “expected STIP value ... from the date of termination at the end of October 2017 over the claimed notice period to October of 2019”.

They submit the plans are integral to their compensation; the defendant could not change the eligibility provisions of the plans or the right to a pro rated award if terminated before a performance period ended; and they should be considered employed during the notice period for the purpose of the plans. [ 71 ] The defendant responds that participation in the plans is discretionary, and awards are subject to the terms of the plans including the requirement for ongoing employment. [ 72 ] The issues I must decide are: (

a) Were the terms of the plans commencing in fiscal year 2017 effectively changed in respect of eligibility and awards? (

b) Would the plaintiffs have been eligible to participate in the plans as part of their compensation structure during the reasonable notice period? (

c) If so, do the terms of the LTIP or STIP unambiguously take away or limit that entitlement? (

b) The incentive plans [ 73 ] Each STIP was an annual plan. Each LTIP was a three year plan. An LTIP was issued annually, so at any time an employee could be participating in up to three LTIP plans. The terms of the plans were in the discretion of the defendant’s board of directors. The plans were proposed by the Human Resources department and approved by the Board annually. The plans were not negotiated with employees.

After approval to participate in a specific year of the STIP or LTIP, the participants received a letter informing them that they were a participant for that year and a copy of the plan. [ 74 ] Each plaintiff testified he received a letter informing him of being approved as a participant under the 2017 - 2019 LTIP together with a copy of the plan, and read the plan. The evidence is not clear when the plaintiffs received this communication – whether before or after the performance period started.

The record does not indicate whether the defendant provided the plaintiffs a copy of the 2018 STIP either before or after they were terminated. [ 75 ] Each STIP and LTIP provided for awards based on various performance measures over a performance period. Each STIP performance period was a financial year of the company, with a new performance period being established at the start of each financial year. LTIP performance periods comprised three consecutive financial years.

Awards were subject to Board approval and paid out as soon as possible after the end of the performance period and approval of the defendant’s annual audited financial statements. [ 76 ] Before 2017, each STIP and LTIP purportedly provided a pro rated award for employees terminated without cause during a performance period. [ 77 ] As an example, the 2016 STIP provided: VIII. Payment of Bonuses 6.

Payment upon Termination Without Cause If a Participant’s employment is terminated without cause during a Performance Period and a STIP Award becomes payable, a pro-rated STIP Award based on regular base earnings paid as a Participant during the Performance Period (which, for greater certainty, in the case of an employee who is terminated without cause, includes the period of notice the employee was entitled to receive) will be paid to the former Participant at the end of the Performance Period.

For greater certainty, a terminated employee is not entitled to participate in or receive payment for any STIP Award in respect of any Performance Period that commences after the date that the employee’s

employment is terminated. 7. Payment upon Other Termination If a participant resigns from his or her employment or is terminated for cause at any time during a Performance Period, the Participant will cease to be a Participant under the Plan and will not be entitled to payment of a STIP Award in respect to the Performance Period underway. [ 78 ] Similarly, the 2016-2018 LTIP provided: G. Payment of LTIP Awards 7.

Payment upon Termination without Cause If a Participant’s employment is terminated without cause when one or more Performance Periods are underway, and an LTIP Award becomes payable in respect of one or more of these Performance Periods, a pro-rated LTIP Award based on length of time the terminated employee was a Participant during each Performance Period (which, for greater certainty, in the case of an employee who is terminated without cause, includes the period of notice the employee was entitled to receive) will be paid to the former Participant at the end of each such Performance Period.

For greater certainty, a terminated employee is not entitled to participate in or receive payment for any LTIP Award in respect of any Performance Period that commences after the date that the employee’s employment is terminated. 8.

Payment upon Other Termination If a Participant resigns from his or her employment or is terminated for cause at any time during a Performance Period, the Participant will cease to be a Participant under the Plan and will not be entitled to payment of an LTIP Award in respect to the Performance Period underway. [ 79 ] Commencing with the 2017 STIP and 2017-2019 LTIP, the terms for participation by terminated employees changed. An employee terminated without cause or with cause during the performance period purportedly lost his or her right to an award. [ 80 ] The 2017 STIP provided: VIII. Payment of Bonuses 6.

Payment upon Resignation, Termination With or Without Cause If a Participant resigns from his or her employment, is terminated without cause or is terminated for cause at any time during a Performance Period, the Participant will cease to be a Participant under the Plan and will not be entitled to payment of an STIP Award in respect of any Performance Period that is underway. [ 81 ] The defendant further revised the 2018 and 2019 STIPs. Their terms included: VI. STIP AWARDS 7.

Eligibility to receive a STIP Award requires satisfying a retention requirement, under which a Participant must be actively employed at the end of the Performance Period in order to qualify for payment of any STIP Award. A STIP Award is not earned if the Participant does not satisfy this retention requirement. This retention requirement does not apply in situations where the Participant dies while actively employed by the Company or retires and does not obtain new employment with a competitor of the Company. ... VII. Payment of Bonuses 6.

Payment upon Termination With or Without Cause If a Participant’s employment is terminated by the Company for any reason during a Performance Period (with or without cause), the Participant will cease to be a Participant under the Plan and will not be entitled to payment of a STIP Award in respect to the Performance Period underway or during any termination notice period.

In addition, a terminated Participant is not entitled to participate in or receive payment for any STIP Award in respect to of [sic] any Performance Period that commences after the date the Participant’s employment was terminated. [ 82 ] Similar to the 2017 STIP, the 2017-2019 LTIP provided: G. Payment of LTIP Awards 7.

Payment upon Resignation, Termination With or Without Cause If a Participant resigns from his or her employment, is terminated without cause or is terminated for cause at any time during a Performance Period, the Participant will cease to be a Participant under the Plan and will not be entitled to payment of an LTIP Award in respect of any Performance Period that is underway. [ 83 ] The STIPs and LTIPs contained a variety of other provisions that may bear on the plaintiffs’ claims.

For ease of reference, I set them out verbatim in the following paragraphs. [ 84 ] The 2017 STIP included the following language, that was repeated with minor, immaterial variations in the 2018 and 2019

STIPs [7] : I.

Objective The objective of the Short Term Incentive Plan (“Plan”) of Calgary Co-operative Association Limited (“Company”) is to promote profitability and enhance the value of the Company; to retain and attract key employees; to recognize the contribution of participants in the Plan (“Participants”) to the growth of the Company; to provide an additional incentive for employees to improve their skills and assume managerial responsibilities; and to provide an annual incentive element in an overall compensation package which is competitive with the compensation offered by comparable companies in Calgary. ... II.

Administration The Plan will operate on a financial year basis and will be subject to an annual review by the Board .... The Board has appointed the Chief Executive officer as the Plan Administrator (“Administrator”).... III. Eligibility The Board has established that Management [8] and Non-Union Employees will be eligible for participation in the Plan and that the Administrator will have the authority to approve participation in the Plan in accordance with such positions. IV. Performance Period The Performance Period will be the financial year of the Company (“Performance Period”).

A new Performance Period will be established at the beginning of each financial year. ... VII. STIP Awards [9] 1. STIP award levels vary according to position level.... ... 3. Awards will be paid as a percentage of regular base earnings paid during the Performance Period. ... 6. The Administrator retains the discretion to withhold all or part of any participant’s award based on the performance of the participant. VIII. Payment of Bonuses [10] 1.

STIP Award amounts, as determined in VII above, will be approved by the Board and be provided for and charged to the financial year for which the STIP Awards are earned. 2. Subject to the remaining paragraphs in this

section VIII, each Participant’s STIP Award will be paid as soon as possible after the end of the Performance Period. No STIP Award payments to be made prior to Board approval of the audited financial statements. ... 6. Payment upon Resignation, Termination With or Without Cause [the language of this provision for 2016 through 2019 STIPs is provided in paras 77, 80, and 81 above] ... IX. Non-Assignability [11] Except as required by law or expressly contemplated herein, the rights of a Participant under the Plan are not capable of being ... assigned....

The Plan shall be binding on all successors and assigns of the Company. X. Amendment and Termination [12] The Board may at any time and from time to time amend, suspend or terminate the Plan in whole or in part. No such amendment, suspension, or termination will adversely affect the rights to a Participant’s STIP award in respect of any Performance Period, which is underway, without the written consent of the Participants. XI. General [13] ... 3.

Nothing in this Plan or the Participants opportunity to participate in this Plan shall be construed to provide the Participant with any rights whatsoever to participate or to continue to participate in this Plan, or to compensation or damages in lieu of participation or the

right to participate in this Plan on termination of the Participant’s employment. ... [ 85 ] The LTIPs included similar provisions: A.

Objective The objective of the Long Term Incentive Plan (“Plan”) of Calgary Co-operative Association Limited (“Company”) is to promote profitability and enhance the long term value of the Company; to retain and attract key employees; to recognize the contribution of participants in the Plan employed by the Company (“Participants”) to the growth of the Company; and to provide an annual incentive element in an overall compensation package which is competitive with the compensation offered by comparable companies. ... B.

Administration The Plan will operate on a financial year basis and will be subject to an annual review by the Board .... The Board has appointed the Chief Executive Officer (“CEO”) as the Plan Administrator (“Administrator”).... C. Eligibility Executive employees and other designated senior management employees will be eligible for participation in the Plan and that [sic] the Administrator will have the authority to confirm participation in the Plan in accordance with such positions approved by the Board. D.

Performance Period The performance period will be for a period of three (3) consecutive years (“Performance Period”) and will start at the beginning of the first financial year and conclude at the end of the third financial year. A new Performance Period will be established annually at the beginning of such financial years. At any one time a Participant may be participating in up to three Performance Periods. ... F. Long Term Incentive Plan Awards ... 2. LTIP Awards will be calculated as a percentage of the Participant’s regular paid earnings paid during the Performance Period. ... 5.

The Administrator, with the approval of the Board, retains the discretion to withhold all or any part of a Participant’s LTIP Award(

s) based on the performance of the Participant or some other substantial reason. Some other substantial reason is one where the behaviour or conduct of the Participant is such that it has a material detrimental effect on the finances or reputation of the Company. G. Payment of LTIP Awards 1. LTIP Awards will be approved by the Board and be provided for and charged to the appropriate financial years preceding the actual payment. 2. Payment at the end of a Performance Period Subject to the remaining paragraphs in this

section G, each Participant’s LTIP Award will be paid as soon as possible after the end of the Performance period. No LTIP Awards will be paid prior to Board approval of the audited financial statements. ... 7. Payment upon Resignation, Termination With or Without Cause [the language of this provision for 2016-2018 and 2017-2019 LTIPs is provided in paras 78, 82 above] ... H. Non-Assignability Except as required by law or expressly contemplated herein, the rights of a participant under the Plan are not capable of being ... assigned... Subject to

Section I of this Plan, the Plan and its application to any Performance Periods underway shall be binding on all successors to the Board, and any and all assigns of the Association. I. Amendment and Termination The Board may at any time, and from time to time, amend, suspend or terminate the Plan in whole or in part. No such amendment, suspension, or termination will adversely affect the rights to a Participant’s LTIP Award in respect of any Performance Periods underway, without the written consent of the Participant.

J. General ... 3. Nothing in this Plan or the Participant’s opportunity to participate in this Plan shall be construed to provide the Participant with anyrights whatsoever to participate or to continue to participate in this Plan, or to compensation or damages in lieu of participation or theright to participate in this Plan on termination of the Participant’s employment. ... (

c) Analysis [86] The defendant was entitled to terminate the plaintiffs without cause but it had to give reasonable notice. “In Canada, it hasbeen established since at least 1936 that employment contracts for an indefinite period require the employer, absent express contractuallanguage to the contrary, to give reasonable notice of an intention to terminate the contract if the dismissal is without cause”(Machtinger v HOJ Industries Ltd, , [1992] 1 SCR 986 at p 997). Failure to give required notice gives rise to a claimfor damages.

There is “no such implied term of the contract to provide payment in lieu” (Matthews v Ocean Nutrition Canada Ltd, 2020SCC 26 at para 74; see also paras 71-75 where the Court appears to reject the contrary conclusion in the earlier decision of the AlbertaCourt of Appeal in Styles v Alberta Investment Management Corp, 2017 ABCA 1). [87] The plaintiffs are entitled to “damages as compensation for the income, benefits, and bonuses they would have received hadthe employer not breached the implied term to provide reasonable notice” (Matthews at para 53).

Thus, damages are assessed on thebasis of the amount the employee would have earned had they worked during the notice period (Jegou v Canadian Natural ResourcesLimited, 2021 ABQB 401 at para 277 and authorities cited therein). [88] For bonus and benefit plans, the applicable test is set out in Matthews at para 55: “Would the employee have been entitled tothe bonus or benefit as part of their compensation during the reasonable notice period? If so, do the terms of the employment contract orbonus plan unambiguously take away or limit that common law right?” (

i) Would each plaintiff have been eligible to participate during the notice period? [89] Where a bonus is discretionary, the Courts have generally asked whether it was integral to the employee’s compensation as anaid to deciding what the employee would have earned or been paid during the reasonable notice period (Matthews at para 58; Paquette vTeraGo Networks Inc, 2016 ONCA 618 at para 17).

Alberta courts have considered a variety of factors in considering whether thebonus would have been awarded: the history or pattern of bonus payments; the size of a bonus as a component of total remuneration; theuse of a known or prescribed formula to calculate a bonus (Rosscup v Westfair Foods Ltd, 1999 ABQB 629 at paras 44 - 49; Lederhousev Vermilion Energy Inc, 2015 ABQB 387 at paras 40 - 42, 51 - 52; Christie v CitiFinancial Canada Inc, 2015 ABQB 487 at paras 125- 126; Palmer v Acciona Infrastructures, 2018 ABQB 462 at para 72; Jegou at para 295). [90] In order to decide the issue, I must ascertain whether the incentive scheme was integral to the plaintiffs’ compensation andwhether the defendant could unilaterally change the terms. [91] The plaintiffs submit their rights to participate are established by past practice as most recently reflected in the 2016 STIP and2016-2018 LTIP.

They submit that these plans provided a pro rata award if the plan participant was terminated before the end of theperformance period of the plan. The defendant changed the termination provisions starting with fiscal year 2017. The plaintiffs rely onthe plan provisions[14] that preclude changes without their written consent. Further, they submit that the employer must adequatelynotify them of changes to the plans and failed to do so. [92] The defendant emphasizes that the plans are annual plans and participation is discretionary. These plans are not integral to theplaintiffs’ compensation.

The defendant can change each plan annually, at the commencement of the plan, and approve or refuseparticipation in its discretion. [93] None of the employment offers in evidence explicitly provide a right to participate in any particular form of STIP or LTIP, andthere is no evidence of any verbal agreement or other letter agreement to that effect. [94] However, I do not agree with the defendant’s submission that the plans are not an integral part of the plaintiffs’ compensation. [95] The plans[15] each set out detailed objectives, that include promoting profitability and enhancing value of the company,retaining and attracting key employees, recognizing contribution of employees to the company’s growth, and providing “an annualincentive element in an overall compensation package which is competitive with the compensation offered by comparable companies”(underlining added).

The plans provide objective performance criteria, and provide the plan Administrator discretion to withhold specificparticipants’ awards based on their performance. [96] The plaintiffs each participated in the plans for several years before they were terminated. Mr Anderson consistently was paidhis awards since 2014; Mr Schaufert since 2014; Mr McConkey since 2013. The documentary record indicates the plaintiffs participatedin earlier years as well.

The plans were long standing components of the plaintiffs’ compensation packages by the time the plaintiffswere terminated. [97] By fiscal 2016, the plaintiffs received awards that were a significant proportion of their total compensation. In January 2017,the defendant wrote each plaintiff informing him of its decision to freeze salaries. This letter commences: Compensation is much more than just base salary. It is important to know what Calgary Co-op actually provides to you in terms of yourTotal Compensation.

(Emphasis in original). This statement is followed by a table titled “2016 Compensation Review” that includes aggregate bonuses.

This amount was about 1/3 ofthe base salaries for each of Mr Schaufert and Mr Anderson, and about 50% for Mr McConkey. [98] Technically, participation in the plans was discretionary but there is no evidence that the Board or Administrator ever refusedparticipation or any reasons for such refusal. [99] The evidence strongly suggests and I find, that these plans had become integral to the plaintiffs’ annual salary structure, madeavailable by the employer to provide both performance incentives and a competitive compensation package. [100] The plaintiffs claim the 2017 revisions to the plans are ineffective for two reasons. [101] First, the plan’s terms might preclude the Board from changing it.

Each plan provides for amendment and explicitly restrictsamendment in respect of performance periods that are underway: The Board may at any time and from time to time amend, suspend or terminate the Plan in whole or in part. No such amendment,suspension, or termination will adversely affect the rights to a Participant’s STIP [or LTIP] award in respect of any Performance Period,which is underway, without the written consent of the Participants. [102] The defendant rolled out the participant approvals annually.

If the plaintiffs were approved, they received a letter informingthem of the approval with a copy of the plan. The approval letters were tied to specific years. There is no evidence that the plaintiffswere ever enrolled as participants until further notice or until revoked. [103] The 2017 STIP and 2017-2019 LTIP were approved by the Board on September 23, 2016, well before the performance periodscommenced on October 30, 2016. The plaintiffs were not participants until they received their annual approval, therefore their consentcould not possibly be required to annual changes made before the plan was rolled out.

The restriction on amendment was to precludechanges to participants’ rights without their consent after the plan commenced, not to preclude the annual review and revision process. [104] The second reason relates to notice.

In many cases, communication of changes to bonus plans is required, otherwise the changeis ineffective (Grace v Reader’s Digest Assn (Canada) Ltd, (ONSC), [1995] OJ No 2671 (Gen Div) at para 64; Dawev The Equitable Life Insurance Company of Canada, 2019 ONCA 512 at para 64; at paras 70 - 72). [105] The defendant likely had to give notice if it were terminating or making substantial changes to the program. [106] The plaintiffs claim they were not notified of the changes. I do not agree. The plaintiffs were provided copies of the planstogether with advice that they were approved to participate on an annual basis.

Although the evidence does not identify the specific datethe plaintiffs received the plans, it is clear that they received the plans well before they were terminated. One plaintiff testified the planswere communicated sometime in the fall and in one year they were communicated as late as the January following the commencement ofthe performance period. Another plaintiff testified he would have received the 2017 plan in the fall 2016.

Based on the testimony and thefew letters deploying various versions of the plans over the years, the plaintiffs must have received and read the 2017 plans well prior totheir termination on October 31, 2017. [107] The plaintiffs knew the plans were subject to change each year, and read the plans when they received them. None testified thatthey were actually unaware of the changes to the eligibility provisions or could not or did not understand the changes. [108] In my opinion, the manner of notice of the 2017 plans was both timely and adequate.

The amendment that removed any prorated award was effective. [109] On the balance of probabilities, the plaintiffs would have received the 2017-2019 LTIP awards if they had remained employedat the end of the performance periods of this plan and awards were otherwise payable. The plaintiffs were senior, well respected, longterm, key employees who performed to expectations. Like most employees, the defendant identified room for improvement in theirperformances from time to time.

Nevertheless, they were approved as participants under the plans in the years leading up to theirtermination and they had been approved as participants under the 2017 STIP and 2017-2019 LTIP before they were unlawfullyterminated. It would be speculative to think the Administrator would have exercised discretion to refuse an award that was otherwisepayable, based on performance. [110] The 2018 and 2019 STIPs are dated at the commencement of their performance periods. There is no evidence that thesedocuments were backdated or changed after the commencement date of their respective performance periods.

The plaintiffs have notproved that the Board was not entitled to amend the terms of the 2018 and 2019 STIPs in these circumstances. [111] I find that if the plaintiffs had been given reasonable notice of termination, they would have been approved to participate in theSTIPS. The defendant would likely have decided to provide the plaintiffs, as key employees, the usual incentive to encourage excellentperformance and promote company profitability during the notice period and avoid demoralizing other employees by making substantialpay cuts.

As to notice of changes to the annual plans, it is likely the plaintiffs would have received notice of the plans as they had in thepast. [112] The plaintiffs were therefore eligible to participate in any plan that commenced and ended during the notice period. I was notprovided evidence of the end dates of the fiscal years in question.

The defendant’s fiscal year end dates appear to vary by a few days.Later in these reasons, I issue directions to address this gap. (ii) Whether the plans unambiguously limit the plaintiffs’ common law entitlements [113] The plans purport to exclude employees from participation when they are “terminated without cause” before the end of the

annual performance period, and also, in the case of the 2018 and 2019 STIPs, from participation in any performance period thatcommences after the date the participant is terminated. The 2018 and 2019 STIPs further impose a retention requirement, that purports toremove a participant from the plan in the event they are not “actively employed”. [114] The plans were not negotiated. They were prescribed and drafted by the defendant. The plans try to exclude employees fromparticipation if they are terminated before the end of a performance period.

I characterize the termination and retention provisions asexclusionary clauses that are properly considered in the second stage of the Matthews analysis. [115] The plans further provide that nothing in the plans or the opportunity to participate in the plan “shall be construed to provide theParticipant with any rights whatsoever to participate or to continue to participate in this Plan or to compensation or damages in lieu ofparticipation or the right to participate on termination of the Participant’s employment”.

I must also take this language into considerationwhen assessing the exclusions. [116] Matthews illustrates the stringent

interpretation of exclusionary clauses in the present circumstances. [117] In that case, the employee participated in an incentive plan that provided for a bonus on the occurrence of a “RealizationEvent”. The Realization Event occurred after his unlawful constructive dismissal and during the period of reasonable notice oftermination to which the trial judge found him entitled. The employer’s LTIP provided: 2.03 CONDITIONS PRECEDENT: ONC shall have no obligation under this Agreement to the Employee unless on the date of a Realization Event the Employee is a full-time employee of ONC.

For greater certainty, this Agreement shall be of no force and effect if the employee ceases to be an employee ofONC, regardless of whether the Employee resigns or is terminated, with or without cause. 2.05 GENERAL: The Long Term Value Creation Bonus Plan does not have any current or future value other than on the date of a Realization Event andshall not be calculated as part of the Employee’s compensation for any purpose, including in connection with the Employee’s resignationor in any severance calculation. [118] The Supreme Court of Canada observed that on the facts, the claimant would have received an LTIP payment during the noticeperiod.

Turning to the second question – whether the clause excluded the claimant’s entitlements – the Court refused to accept that theseprovisions were sufficiently unambiguous to exclude Mr Matthews from participating. Responding to the submission that the planunambiguously excluded terminated employees from participating, Kasirer J, speaking for a unanimous Court, stated: [65] To this end, the provisions of the agreement must be absolutely clear and unambiguous.

So, language requiring anemployee to be “full-time” or “active”, such as clause 2.03, will not suffice to remove an employee’s common law right to damages.After all, had Mr. Matthews been given proper notice, he would have been “full-time” or “actively employed” throughout the reasonablenotice period (Paquette, at para. 33, citing Schumacher v. Toronto-Dominion Bank (1997), (ON SC), 147 D.L.R.(4th) 128 (Ont. C.J. (Gen. Div.)), at p. 184; see also para. 47; Lin, at para. 89).

Indeed, the trial judge and the majority of the Court ofAppeal agreed that an “active employment” requirement is not sufficient to limit an employee’s damages (trial reasons, at para. 398; C.A.reasons, at para. 66). [66] Similarly, where a clause purports to remove an employee’s common law right to damages upon termination “with or withoutcause”, such as clause 2.03, this language will not suffice. Here, Mr. Matthews suffered an unlawful termination since he wasconstructively dismissed without notice. As this Court held in Bauer v.

Bank of Montreal, (SCC), [1980] 2 S.C.R. 102,at p. 108, exclusion clauses “must clearly cover the exact circumstances which have arisen”. So, in Mr. Matthews’ case, the trial judgeproperly recognized that “[t]ermination without cause does not imply termination without notice” (para. 399; see also Veer v. DoverCorp. (Canada) Ltd. (1999), (ON CA), 120 O.A.C. 394, at para. 14; Lin, at para. 91). Yet, it bears repeating that, forthe purpose of calculating wrongful dismissal damages, the employment contract is not treated as “terminated” until after the reasonablenotice period expires.

So, even if the clause had expressly referred to an unlawful termination, in my view, this too would notunambiguously alter the employee’s common law entitlement. (Italics in original). [119] The plaintiffs submit that the word “terminated” is ambiguous. They submit they should only be considered as terminated at theend of the reasonable notice period, instead of October 31, 2017. [120] The Matthews Court states that “[t]ermination without cause does not imply termination without notice” (para 66). Anyambiguity in this regard should be construed against the employer.

It is unreasonable to conclude that the defendant objectively intendedthat participants were excluded when removed from their employment or active employment by the employer’s breach of its obligationto provide notice. Therefore, the LTIP does not address such terminations. Rather, the common law principles of wrongful dismissalapply. [121] Similarly,

section VI (7) of each of the 2018 and 2019 STIPs is not clear enough to take away the plaintiff’s common lawentitlements where the performance period ends before the reasonable notice period would have ended and the termination was withoutcause and without notice. Again, see Matthews at para 65. [122]

Section VII (6) excludes participation in the STIP “during any termination notice period” and in any performance period “thatcommences after the date the participant’s employment was terminated.” [123] The defendant submits this provision is clear, citing Dawe, at paras 51 - 65; Hunsley v Canadian Energy Services LP, 2020ABQB 724 at paras 66 - 74; and Kosteckyj v Paramount Resources Ltd, 2021 ABQB 225 at para 76.

[124] Each case turns on its own wording, and in my opinion the provisions in the present case are less clear than in the cases thedefendant cites and much more akin to those before the Court in Matthews. In Matthews at para 66, the Court observed that exclusionclauses “must clearly cover the exact circumstances which have arisen” and that the clause in question did not apply to unlawfulterminations.

The defendant’s provision is ambiguous because it may reasonably apply only in cases where notice was actually given (a“termination notice period”) or of a lawful termination, not where notice was not given or of an unlawful termination. In contrast to the2016 STIP, the provision does not explicitly refer to “notice the employee was entitled to receive”, which would more strongly point toan intention to include cases where the employee actually did not receive notice. The ambiguity should be construed against thedefendant, who seeks to forfeit the plaintiffs’ compensation structure. Consequently,

section VII(6) does not apply to terminationswithout cause that were executed without notice. [125] As mentioned, the plans provide that nothing in them shall be construed to give a right to participate or to compensation ordamages. These statements merely confirm that each plan does not contain an implied term to provide payment of an award in the eventan employee is terminated before the end of the participation period. The Court could not imply any right to a pro rated payment ontermination before the end of the participation period in light of these provisions.

However, these provisions are not inconsistent with,and do not unambiguously limit, the plaintiff’s common law right to damages for all losses arising from the employer’s breach ofcontract in failing to give proper notice. The plaintiffs’ rights to damages depends on the Court’s jurisdiction to assess damages, not onthe express or implied terms of the plans. [126] In view of the above, the answer to the question whether the plans unambiguously take away the plaintiffs’ common lawentitlements, is “no”. (

d) Conclusion [127] The plaintiffs would have participated in the 2018 STIP because they would have satisfied the retention requirement and theexclusion does not apply to their terminations. The answer is less clear for the 2019 STIP.

If the performance period ends on or beforeNovember 1, 2019, then the plaintiffs are eligible for an award, but if otherwise, then recovery is precluded under the retention clause.As mentioned, the parties did not provide the end date for the performance periods for the 2017-2019 LTIP or 2019 STIP[16] orinformation about whether Awards were paid under any of the plans. [128] If the parties cannot agree on the end date, whether the necessary targets would have been or were achieved, or award amounts,they can apply for directions. VII Mitigation (

a) Introduction [129] The defendant submits that the plaintiffs failed to mitigate their losses, and suggests a 1/3 reduction in any damages award. [130] The general principles for failure to mitigate in the employment context are conveniently summarized by Madam JusticeBrowne in Johnson v. Top-Co LP, 2009 ABQB 731: [56] A plaintiff has an obligation to mitigate his damages by finding reasonable other employment. The onus lies on the employerto prove that the employee has failed to mitigate: Coyes v. Ocelot Industries Ltd. (1984), (AB QB), 56 A.R. 241, 33Alta. L.R. (2d) 102 (QB): . . .

However, just as the onus is on the employer to show what notice is reasonable in the circumstances, so too, is the onus on theemployer to show whether or not the employee has mitigated his damage. The late Bora Laskin, C.J.C., in the case of Red Deer Collegev.

Michaels and Finn, (SCC), [1975] 5 W.W.R. 575; 5 N.R. 99, at 580 W.W.R., adopted with approval the followingstatement from Williston on Contracts: It seems to be the generally accepted rule that the burden of proof is upon the defendant (employer) to show that the plaintiff (employee)either found, or, by the exercise of proper industry in the search, could have procured other employment adapted to his abilities, and thatin the absence of such proof the plaintiff is entitled to recover the salary fixed by the contract." [57] Further, the onus is on the employer to prove what the plaintiff might reasonably have earned had he found employmentelsewhere: Coyes, (at para. 41). [58] In Robinson v.

Team Cooperheat-MQS Canada Inc., 2008 ABQB 409 Lee J. indicated that an employer has a two partburden – first it must prove that an employee failed to take reasonable steps in his particular circumstances to find reasonably alternativeemployment, and secondly, it must show that if an employee had taken those steps he would likely have found suitable employment (atpara. 122). See also Evans v.

Teamsters Local Union No. 31, [2008] 1 S.C.R. 661, 2008 SCC 20 at para. 30: This Court has held that the employer bears the onus of demonstrating both that an employee has failed to make reasonable efforts to findwork and that work could have been found (Red Deer College v. Michaels, (SCC), [1976] 2 S.C.R. 324). (

b) The alleged failures to mitigate [131] Shortly after receiving notice of termination, Mr Schaufert met with the professional career transition counsellors provided bythe defendant, subscribed to job search services, began searching, and began to reach out to his industry and professional contacts to lookfor new employment. He received a soft offer in November 2017 from a personal contact, to work for a food broker. The starting salary

was far less than his compensation with the defendant, but he believed there would be opportunity for growth. He initially believed this position would come available in early 2018. He met with the company’s representative regularly, and was led on about the prospects. He started applying for other jobs in September 2018 as he became concerned the opportunity would not materialize into a job. These jobs were at the level of category manager and beyond (general manager, director, VP).

In March 2019 the food broker confirmed the opportunity would not work out. [ 132 ] Mr Schaufert testified that he frequently received postings for jobs of general manager or higher through the search services, but he did not see any that he thought he was capable of doing. He indicated that other large grocery retailers were laying off hundreds of people in the Calgary market and closing up and moving corporate offices out of Alberta. He testified there were health care and other types of opportunities outside the grocery industry for which he felt he was not qualified.

He did not see any opportunities in other retail that was comparable in terms of compensation with what he had, and was willing to go as low as $80,000 – a figure far below his compensation with the defendant. [ 133 ] Mr Schaufert has not secured new employment. He described his experience as specific to the grocery retail industry, and deposed that the opportunities are scarce and the industry is contracting. [ 134 ] Mr Anderson began reaching out to professional and industry contacts to look for new employment shortly after he was terminated.

He continually monitored government and professional association job banks, and various job search sites, for financial auditor positions and accounting positions (controller or similar), and applied for such positions as they were posted. He worked on a resume, met with outplacement services representatives and took several outplacement courses. He also was helping his elderly parent and in-law during this time, as they required assistance in respect of health matters. [ 135 ] Mr Anderson looked for internal audit positions outside the retail grocery industry.

He testified to his observations that there were a limited number of head office senior internal audit jobs in Calgary at the time, given the oil and gas industry downturn and the fact that many companies are headquartered outside Alberta. [ 136 ] Mr McConkey reached out to his industry and professional contacts to seek re-employment in the liquor industry. He met with outplacement counsellors and developed a resume and published it online. He was in touch with a headhunting firm, who kept his resume on file.

He received an invitation to consider a possible job in a chain of liquor stores in early 2019 but the company went into receivership shortly after and the opportunity fell apart. [ 137 ] There were very few senior positions in Alberta in the retail liquor industry similar to his position at the defendant. He also considered smaller chains of stores, but found many were family run and positions were not available. He summarized: “ ... but again, there’s just not a lot of jobs out there like what I had.” He also searched for senior grocery positions.

In both cases, he found nothing available. [ 138 ] As to his need for work, Mr McConkey testified: There’s something you need to understand. I’ve got six kids. I was looking for work. ... I needed work. Six kids.” [ 139 ] Eventually Mr McConkey had exhausted his leads, even after looking to possible jobs in Victoria BC and New Brunswick. He liquidated some retirement savings and began the process of opening his own liquor store. His damages claim includes his start up costs of his store. [ 140 ] The onus to show lack of mitigation lies on the defendant.

There are two issues for each plaintiff: (1) whether the plaintiff took reasonable steps to find suitable employment; (2) if not, whether the plaintiff, if he had taken reasonable steps, likely would have found suitable employment. [ 141 ] The defendant has not discharged its onus. [ 142 ] The defendant has not shown the plaintiffs Anderson and McConkey did not make reasonable efforts to find suitable employment. [ 143 ] These plaintiffs provided evidence of their general efforts to find work over the entire period of notice. This evidence was not seriously challenged.

The defendant submitted that Messrs Anderson and McConkey produ

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