A senior project manager who was on the job for less than five months has been awarded damages for wrongful dismissal but a court rejected his argument that he was also entitled to shares in the company.
JG worked for CF+D Custom Fireplace Design. He got the job after a chance meeting on an airplane in the spring of 2016 when he was seated in the same row as the owner, VV, and his wife. JG later contacted VV and — following numerous conversations and meetings at restaurants — eventually signed a formal employment contract in December 2016.
Employment contract
Under the contract, JG was given an annual salary of $90,000; three week’s paid vacation; benefits after three months; and either a car or an allowance of $600 per month.
It also stipulated the following:
“Effective May 1, 2017; After Corporate Accountants have crystallized share value, you are to receive annually and cumulatively 1% of company shares for 5 consecutive years of service for a total of 5% to be held in trust and only to officially transfer ownership upon the successful completion of a five year term. Each completed year end will in addition pay out the value of accumulated share ownership at that time.”
The parties differed somewhat on their interpretation of this last provision.
Termination
There was no termination date in the contract, as both JG and VV expected that he would remain in his role with CF+D long term. His first day of work was Jan. 30, 2017, and his last day of work was either June 22 or June 27, 2017. (The parties disagreed on the last day, but the court settled on June 22.)
There was no issue that JG was dismissed without cause, and he was paid two weeks of severance pay after less than five months of service. At the time of dismissal, JG was 50 years old.
The court then turned to the Bardal factors to determine the reasonable notice period — character of employment; length of service; age; and availability of similar employment.
The court flagged the short nature of his employment, pointing out that it would, “considering his age and past experience… require him to explain to prospective employers why he was terminated so soon after being hired.”
JG sought 12 months’ reasonable notice, while the employer countered with a range of two weeks to one month.
The court settled on a period of five months and two weeks as appropriate in the circumstances.
Inducement and bad faith
JG also argued he was induced to leave a secure job at Honeywell to join CF+D. But the court said, in its view, the “parties sought each other out.”
“They both pursued their possible working relationship, and each was intrigued by what the other offered. One did not pursue the other with more vigor. While perhaps not a typical courtship, it was a mutual one,” the court said.
JG also sought damages for misconduct and bad faith on the part of the employer. He argued he was caught off guard by the termination, as there were no warnings, and VV was vague and unwilling to expand on the reasons.
But the court noted he was terminated in private in VV’s office.
“He was able to say goodbye to the other employees. He was not escorted out. There was nothing exceptional about the event,” the court said. “There was no evidence that (JG) was maligned or embarrassed by (VV) during the termination process.”
It declined to award damages for bad faith. It also rejected an argument from the employer that JG failed to mitigate his damages by finding alternate work.
Company shares
Central to the case was JG’s claim for compensation based on an alleged agreement entitling him to company shares.
CF+D, known for designing and manufacturing custom fireplaces, disputed his entitlement to share-based compensation, stating that he had not earned any shares during his brief tenure. The court heard testimony from JG, another CF+D employee, and VV, who was described as forthright and candid during his testimony.
The court examined the principles of contractual interpretation, particularly in employment contexts, noting the necessity to read contracts as a whole and in light of the circumstances surrounding their creation. It found that the contract’s terms were clear: JG would earn 1% of CF+D shares annually over five years, contingent upon his continued employment.
The court rejected JGs interpretation of the contract regarding annual payments and shares, finding no evidence to support his expectations of a $30,000 annual payment or eventual full ownership of CF+D. It also found no merit in his claims for vacation pay, as he had already utilized most of his entitled days.
Furthermore, the court dismissed the claim against VV personally, finding no evidence of his personal liability.
The court encouraged both parties to resolve the issue of legal costs and outlined a schedule for submissions if an agreement couldn’t be reached.
For more information, see Grimaldi v. CF+D Custom Fireplace Design Inc., 2023 ONSC 6708 (CanLII)
