In Timmins v. Artisan Cells, 2024 ONSC 7123, the Ontario Superior Court of Justice issued a substantial damages award – an award in the amount of $456,908.82 – in favour of the plaintiff, Nicholas Timmins.
This followed the without cause termination of Mr. Timmins' employment as an executive at a gene therapy company named Artisan Development Labs Inc. ("Artisan").
Notably, about three weeks before trial, Artisan withdrew its statement of defence in the action. Mr. Timmins' claim was thus undefended at trial.
Background
Mr. Timmins was employed by Artisan from November 2019 to March 2023. He held various executive roles at the company, including Vice-President, Executive Vice-President and ultimately Chief Development Officer. He was paid a base salary of about $475,000 annually and provided with an annual bonus, stock options and other benefits.
Mr. Timmins was employed under a written employment agreement (the "Employment Agreement") that contained a termination clause dealing with termination for just cause and without cause.
In the event of termination without cause, Mr. Timmins was entitled to the greater of three months of pay or his minimum entitlement under the Employment Standards Act, 2000, S.O. 2000, c. 41 (the "ESA").
In March 2023, Artisan terminated Mr. Timmins' employment on a without cause basis. Notwithstanding the fact that he had been continuously employed for more than three years, the termination letter provided for only one week of ESA termination pay. The termination letter stated that the balance of the amount payable under the Employment Agreement would be withheld until Mr. Timmins signed a full and final release.
In response, Mr. Timmins took the position that Artisan had repudiated the Employment Agreement.
Decision
The Court agreed with Mr. Timmins. It held that a reasonable person would conclude the defendant did not intend to be bound by the termination clause in the Employment Agreement. This was informed by Artisan's evidence on discovery as well as the documentary evidence.
Artisan's witness could not answer why Mr. Timmins was not paid the three months of pay due under the Employment Agreement. As well, correspondence from the company's counsel made it clear that not paying the contractual amount was not a slip or other error but a point of leverage to receive the signed release.
By failing to pay the three months of pay or even the minimum amount due under the ESA and by insisting on a broad release, Artisan repudiated the Employment Agreement. The company simply failed to meet its obligation to pay Mr. Timmins the amount owed under his written agreement and, as such, he was entitled to damages calculated in accordance with the common law (reasonable notice).
In determining the length of the period of reasonable notice, the Court took into account Mr. Timmins' age at the time of termination (44 years old) and the fact that he had been employed with Artisan for 3.5 years. The Court commented on the niche nature of employment in the gene therapy sector. Of the five other companies doing gene therapy work in Canada, Mr. Timmins had already worked for two of them and, with his bonus and benefits, he had been earning about $450,000 a year at Artisan. Those factors, the Court held, militated in favour of a longer notice period because Mr. Timmins would experience difficulty in finding comparable employment. The Court proceeded to hold nine months to be a reasonable notice period.
Mr. Timmins was also seeking punitive damages in the amount of $50,000. The Court declined to make that award. One factor to consider in determining if an award of punitive damages would be appropriate is whether the compensatory damages already carry an element of deterrence. In this case, the Court was satisfied that the compensatory award provided sufficient deterrence because it was three times larger than the contractual notice period.
Takeaway
This case is a cautionary tale for employers. It demonstrates the importance of complying strictly with the termination provision in a written employment agreement. Attempting to impose additional conditions at or around the time of termination of employment could result in a repudiation of the agreement and result in a costly notice award under the common law.
Originally published by LexisNexis Labour Notes Newsletter
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