Love v. Acuity Inv. Mgt. Inc.,

• Jurisdiction: Ontario
• Judge: Goudge, Lang and Watt, JJ.A.
• Neutral Citation: 2011 ONCA 130
• Citation: 2011 ONCA 130,(2011), 277 O.A.C. 15 (CA),[2011] OJ No 771 (QL),277 OAC 15,89 CCEL (3d) 157,[2011] O.J. No 771 (QL),277 O.A.C. 15,(2011), 277 OAC 15 (CA)
• Date: 02 December 2010
• Court: Court of Appeal (Ontario)

Love v. Acuity Inv. Mgt. Inc. (2011), 277 O.A.C. 15 (CA)

MLB headnote and full text

Temp. Cite: [2011] O.A.C. TBEd. FE.046

Paul Love (plaintiff/appellant) v. Acuity Investment Management Inc. and Ian Ihnatowycz (defendants/respondents)

(C50725; 2011 ONCA 130)

Indexed As: Love v. Acuity Investment Management Inc. et al.

Ontario Court of Appeal

Goudge, Lang and Watt, JJ.A.

February 16, 2011.

Summary:

The plaintiff was dismissed without cause or notice. At the time, he was not only an employee, but a part owner of the defendant, having been permitted to buy 2% of the company's equity.

The Ontario Superior Court awarded the plaintiff damages equivalent to five months' pay in lieu of notice. He was also awarded damages for the loss of his shares on the basis that the proper date to be used to trigger the defendant's right to repurchase the shares, and consequently their valuation, was the end of his notice period. The plaintiff's other claims, including his claims for lost opportunity to acquire additional equity, negligent misrepresentation, aggravated or punitive damages, oppression, and his claim against the company's principal, were all dismissed. The defendant made several offers before trial, all of which exceeded the plaintiff's recovery. The trial judge awarded no costs to either party up to the date of the first offer, and partial indemnity costs to the defendant thereafter. The plaintiff appealed the length of the notice period and the order depriving him of costs before the defendant's first offer. The defendant cross-appealed the order that it pay the plaintiff for his shares using the end of the five-month notice period as the trigger date. It argued that the proper trigger date was the date of the plaintiff's termination.

The Ontario Court of Appeal allowed the appeal and the cross-appeal.

Company Law - Topic 2173

Shareholders - Shareholders' rights - Repurchase of shares by company - The plaintiff was dismissed without cause or notice on May 3, 2005 - He was 50 years old and had 2.53 years' service with the defendant - The defendant's business was investment management - The plaintiff, a chartered accountant, became one of two senior vice-presidents in a company of 90 employees - He reported to the founder and chief executive officer - Although he did not supervise other employees, by the time of his dismissal he had sole responsibility for managing the defendant's institutional investment clients and the business they provided to the defendant - By that date, he was also a 2% owner of the defendant and one of nine shareholders - He purchased his shares in August 2004 for approximately $360,000 pursuant to the Investment Agreement he signed with the defendant - On appeal, the defendant submitted that the trial judge erred in ordering that it pay the plaintiff for his shares using the end of the five-month notice period as the trigger date - It argued that the proper trigger date under the parties' Investment Agreement was the date of the plaintiff's termination - The Ontario Court of Appeal agreed - See paragraphs 34 to 54.

Master and Servant - Topic 8000

Dismissal without cause - Notice of dismissal - What constitutes reasonable notice - The plaintiff was dismissed without cause or notice on May 3, 2005 - He was 50 years old and had 2.53 years' service with the defendant - The defendant's business was investment management - The plaintiff, a chartered accountant, became one of two senior vice-presidents in a company of 90 employees - He reported to the founder and chief executive officer - Although he did not supervise other employees, by the time of his dismissal he had sole responsibility for managing the defendant's institutional investment clients and the business they provided to the defendant - By that date, he was also a 2% owner of the defendant and one of nine shareholders - He purchased his shares in August 2004 for approximately $360,000 pursuant to the Investment Agreement he signed with the defendant - Over that time, he received total compensation including salary, commissions, profit distribution and the value of his shares which were worth an average of $633,548 per year of employment - The trial judge determined a reasonable notice period of five months - The plaintiff appealed - The Ontario Court of Appeal held that the character of the plaintiff's employment and the challenge of finding similar employment both required a significantly longer notice period - Giving appropriate weight to these factors, and keeping in mind the plaintiff's age and short service, the court substituted a period of nine months - See paragraphs 13 to 24.

Master and Servant - Topic 8003

Dismissal without cause - Notice of dismissal - Reasonable notice - Considerations affecting (incl. bad faith) - [See Master and Servant - Topic 8000 ].

Master and Servant - Topic 8077

Dismissal without cause - Damages - To buy back employee's shares - [See Company Law - Topic 2173 ].

Practice - Topic 7243

Costs - Party and party costs - Offers to settle - Effect of failure to accept - The defendant made three written offers to settle an action before trial - The first, on January 24, 2008, was for $1,100,000 plus costs - The second, on April 14, 2008, was for $919,926 plus costs - The reduction from the first offer corresponded to a payment made by the defendant to the plaintiff in part to compensate for the failure to give notice - The third, on April 24, 2009, was for $1,250,000 plus costs - Each of these exceeded the plaintiff's recovery at trial - The trial judge found that the defendant's second offer did not revoke its first offer - He therefore held that the date of the first offer was operative for purposes of rule 49.01(2) - Given the result at trial, the trial judge determined that the rule entitled the defendant to its partial indemnity costs from the date of the first offer - However because of the plaintiff's mixed success, and his conduct in unnecessarily prolonging the trial, the trial judge exercised his discretion to deprive him of costs before the date of the defendant's first offer - On appeal, the plaintiff argued that the trial judge erred in finding that the plaintiff's second offer did not revoke its first, and further that there was no proper basis to deprive him of costs before the applicable date - The Ontario Court of Appeal agreed with the plaintiff's first argument but not his second - A second written offer could withdraw a first offer by clear implication, even if it did not do so explicitly - However, the trial judge was entirely within his discretion to deny costs to the plaintiff before the date of the second offer - See paragraphs 25 to 33.

Practice - Topic 9860

Settlements - Offers - Revocation or withdrawal of - [See Practice - Topic 7243 ].

Cases Noticed:

Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R.(2d) 140 (Ont. H.C.), refd to. [para. 13].

Iliescu v. VoiceGenie Technologies Inc. et al., [2009] O.T.C. Uned. 48; 71 C.C.E.L.(3d) 123 (Sup. Ct.), refd to. [para. 14].

Chen v. Sigpro Wireless Inc., [2004] O.T.C. 466 (Sup. Ct.), refd to. [para. 14].

Minott v. O'Shanter Development Co. (1999), 117 O.A.C. 1; 42 O.R.(3d) 321 (C.A.), refd to. [para. 17].

Cronk v. Canadian General Insurance Co. (1995), 85 O.A.C. 54; 128 D.L.R.(4th) 147; 25 O.R.(3d) 505 (C.A.), refd to. [para. 21].

Belzberg v. Pollock et al. (2003), 178 B.C.A.C. 212; 292 W.A.C. 212; 10 B.C.L.R.(4th) 255 (C.A.), refd to. [para. 22].

Diefenbacher v. Young et al. (1995), 80 O.A.C. 216; 22 O.R.(3d) 641 (C.A.), refd to. [para. 28].

Veer v. Dover Corp. (Canada) Ltd. (1999), 120 O.A.C. 394 (C.A.), refd to. [para. 35].

Taylor v. Dyer Brown (2004), 192 O.A.C. 91; 73 O.R.(3d) 358 (C.A.), refd to. [para. 44].

Kieran v. Ingram Micro Inc. (2004), 189 O.A.C. 58 (C.A.), refd to. [para. 53].

Schumacher v. Toronto-Dominion Bank et al. (1997), 30 O.T.C. 172; 147 D.L.R.(4th) 128 (Gen. Div.), refd to. [para. 53].

Counsel:

Malcolm MacKillop and Hendrik Nieuwland, for the appellant;

John D. Campbell and Stephanie L. Turnham, for the respondents.

This appeal was heard on December 2, 2010, by Goudge, Lang and Watt, JJ.A., of the Ontario Court of Appeal. Goudge, J.A., delivered the following decision for the court on February 16, 2011.