The Ontario Court of Appeal has dismissed an appeal involving an investment advisor’s recruitment bonus and has confirmed that an amended promissory note is enforceable and supported by valid consideration.
The ruling clarifies that efforts by an employer to restructure or “reset” loan terms can constitute fresh consideration, particularly when those terms provide distinct benefits to an employee over time.
In this case, Brant Securities sought to enforce a $461,000 debt against D.G., a former investment advisor, after D.G. declined to pay the remaining balance on a $1.6-million recruitment loan. The decision also addressed D.G.’s counterclaim relating to unpaid performance bonuses, which the lower court had largely dismissed.
Promissory note
Brant originally sued D.G. to recover on the loan, which was documented by a promissory note. D.G. contended that the note was invalid for lack of consideration and argued that his counterclaim for unpaid performance bonuses should be set off against any amount he owed.
A lower court granted summary judgment to Brant, enforcing the note. The court also partially allowed D.G.’s claim for specific entitlements under employment standards legislation, but dismissed the remainder of his counterclaim. D.G. appealed, arguing primarily that the amended promissory note lacked fresh consideration and imposed increased obligations on him without any corresponding benefits.
Recruitment bonus
D.G. joined a firm called Aston Hill Securities in 2013 and received a “recruitment bonus” structured as an interest-free loan totalling $1.6 million. Under that arrangement, D.G. had agreed to make ten annual instalments of $160,000. However, the employment agreement stated that if he met certain annual revenue benchmarks, D.G. would receive a matching $160,000 bonus that would be applied to the outstanding balance, effectively cancelling each yearly payment.
The record shows that D.G. did meet those targets in 2014 and 2015, but no bonuses were issued and no payments were credited against the loan for those years.
Amalgamation
Aston Hill Securities later amalgamated with Brant, at which time D.G. signed an amended promissory note (“Amended Note”) extending the repayment schedule by two years and formally transferring responsibility for the loan to the new entity.
As explained by the court, this Amended Note acknowledged the lack of bonuses in 2014 and 2015, recognized D.G. had made no payments on the loan, and confirmed that the company could transfer the note. From 2017 to 2020, D.G. did receive bonus credits that reduced the outstanding balance, and he signed annual confirmation letters documenting the updated amount owed.
Termination of employment
When Brant was acquired by another company, D.G.’s employment ended. Brant demanded payment of the remaining $461,000 under the Amended Note, minus certain unpaid compensation and referral fees.
D.G. refused to pay, and Brant sued to recover. D.G. argued that the Amended Note was not enforceable due to a lack of fresh consideration, contending he gained no material advantage when it was introduced. He also continued to assert that the missed bonuses from 2014 and 2015 should reduce his debt.
The court rejected D.G.’s arguments and upheld the summary judgment. In its written reasons, the court emphasized that “the motion judge correctly summarized several core principles concerning the law of consideration.”
According to the ruling, “the law does not concern itself with the adequacy” of consideration; rather, there simply needs to be some form of exchange. Moreover, “clarifying an unclear term in a contract to create certainty and avoid disputes can constitute valid consideration.”
Three distinct benefits
The court found that D.G. received at least three distinct benefits under the Amended Note. First, the Amended Note created a “reset” of the relationship and clarified the parties’ obligations as the company was changing hands.
This meant the parties avoided potentially costly disputes or litigation over the missed bonus credits and the original note’s terms. Second, by extending the schedule of repayment, D.G. was able to defer tax implications associated with loan forgiveness. Although D.G. argued there was insufficient proof of any tax benefit, the court noted that “deferring the payment of tax on $320,000 was likely a benefit” and that D.G. had refused to provide his tax returns during the discovery process. Third, the Amended Note granted two more years of interest-free status on the loan, which the court also deemed beneficial to D.G.
D.G. pointed to a previous case that found an absence of consideration in an employer’s unilateral change to an employment contract. However, the court distinguished that earlier ruling, finding no evidence that D.G. was in a vulnerable position or that the agreement was “non-negotiable.” Instead, the record showed both parties had options before signing the Amended Note, including the possibility of immediate lump-sum payments and enforcement of rights under the original arrangement.
The court further explained that the Amended Note, “on its face, resolved any further claim” to the unpaid 2014 and 2015 bonuses. By agreeing to that provision, D.G. waived any right of set-off on those bonuses against his outstanding debt. Because the Amended Note was found to be valid and supported by fresh consideration, the court did not address D.G.’s remaining arguments, including claims for wrongful dismissal damages.
The court dismissed the appeal and confirmed that D.G. owed Brant $461,000, subject to the previously awarded entitlements under employment standards legislation.
The ruling underscores that, in scenarios where an original loan arrangement has gone awry or proven unclear, an employer’s decision to restructure or clarify its terms can be binding if it confers real value to the employee.
Negotiations that extend loan deadlines, resolve disputed contractual terms or avoid immediate tax burdens may all amount to sufficient consideration to render a new contract valid. The court ordered D.G. to pay costs set at $12,000, inclusive of taxes and disbursements.
For more information, see Brant Securities Limited v. Goss, 2025 ONCA 8 (CanLII).
