Canada: Love Hurts – SCC Refuses Leave To Appeal In Love v. Acuity Investment Management Inc.

Last Updated: October 19 2011
Article by David Elenbaas

Love hurts.

That's how Paul Love is feeling, now that the Supreme Court of Canada has refused his application for leave to appeal the Ontario Court of Appeal's decision in his wrongful dismissal action (Love v. Acuity Investment Management Inc., 2011 ONCA 130). Love hurts despite the fact that the Court of Appeal took the unusual step of increasing Love's period of reasonable notice in his action against his former employer.

Love sued Acuity, an investment management firm, when he was dismissed without cause. He had been a senior vice president and, at the time of his dismissal, was 50 years old with approximately two and a half years of service. He also held two percent equity in the company with his annual compensation including salary, commissions, profit sharing and the value of his shareholdings totalling approximately $633,000. At trial, the judge awarded Love damages based on a five month notice period. Love appealed that finding and the Court of Appeal substituted a nine month notice period. The Court's decision was based primarily on its view that the trial judge over-emphasized one factor (in this case length of service) to the apparent de-emphasis of others (the character of employment including level of position and compensation, and the availability of comparable employment). So Love looked like a winner at the Court of Appeal. Right?

Not so fast. There were also the "small" matters of Acuity's cross-appeal and the issue of costs. The cross-appeal challenged the trial judge's finding that Love was entitled to the value of incremental capital appreciating on his shares ($219,000) plus the value of incremental profit sharing and dividends ($273,000), to the end of the notice period. Acuity argued that the trigger date for Love's obligation to sell his shares back to the company and their valuation occurred when his employment ended, and not at the end of the notice period. The relevant provision in the Investment Agreement between Love and Acuity read:

"Subject to paragraph 4 hereof, if at any time:

Love's employment is terminated by Acuity without cause; or
Love should cease to be an employee of Acuity by reason of death or disability,

...Love agrees that Acuity shall have the option...to purchase the shares for a purchase price, determined at the date that Love ceases to be an employee of Acuity... ."

In reviewing the trial judge's finding on that issue, the Court of Appeal began by distinguishing the concept of notice of termination from payment in lieu of notice. The termination of employment without working notice is a breach of the implied contractual right to reasonable notice. Any payment by the employer in lieu of notice is not in compliance with the contractual right, but rather is intended to compensate for the breach. Contrary to the finding of the trial judge, the Court of Appeal agreed with Acuity and found that, based on the language of the Investment Agreement, the trigger date for Acuity's right to repurchase the shares and for valuing those shares was the date that Love's employment was terminated without cause, and not at the end of the notice period. In making this determination, without expressly stating so the Court of Appeal was clearly distinguishing the Investment Agreement in Love from the share option agreement in a previous Court of Appeal decision: Veer v. Dover Corp. (Canada) Ltd. (1999), 2 BLR (3d) 234. That is, there is a distinction to be drawn between "ceases to be an employee" (Love) and "terminate as of the effective date of such termination" i.e. upon lawful termination (Veer).

Equally as important to the case, Acuity made formal offers to settle the case well before trial, in amounts that exceeded Love's ultimate award of damages. After adjustment of the costs by the Court of Appeal, Love remained on the hook for the majority of the costs. At the end of the day Love's damages were reduced from $528,000 to $131,434, while the costs awarded to Acuity were $269,568. It was a costly lawsuit for Love.

What Love means for employers

The Court of Appeal's decision, which the Supreme Court has chosen not to review, makes it clear that an employer must be very careful in crafting language that deals with an employee's entitlements around shares and share options on termination of employment. Moreover, an employer is well advised not to place too much weight on any single factor, such as length of employment, when assessing the notice entitlement of an employee it is about to dismiss without cause.

The Supreme Court having refused his application for leave to appeal, Love is left without a further remedy. In the words of the great Leonard Cohen: there ain't no cure, ain't no cure, ain't no cure, for Love.

The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.

© Copyright 2011 McMillan LLP

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
David Elenbaas
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions