COURT OF APPEAL FOR ONTARIO

CITATION: Manastersky v. Royal Bank of
    Canada, 2021 ONCA 458

DATE: 20210624

DOCKET: C65121

Feldman, Brown and Miller JJ.A.

BETWEEN

James Anthony Manastersky

Plaintiff (Respondent)

and

Royal Bank of Canada and
RBC Dominion Securities Inc.

Defendant (
Appellant
)

Jeremy Devereux and Geoff Mens, for the
    appellant

Nancy Shapiro, for the respondent

Heard: January 19, 2021 by video conference

On remand from the
    Judgment of the Supreme Court of Canada dated November 12, 2020.

Brown J.A.:

I.        OVERVIEW

[1]

This remand from the Supreme Court of Canada
    involves the award of certain incentive plan-related damages to the respondent,
    Mr. James Anthony Manastersky, in his wrongful dismissal action against his
    employer, the appellant RBC Dominion Securities Inc. (RBCDS). At trial, RBCDS
    conceded that it had terminated Mr. Manasterskys employment without cause. The
    trial judge found that Mr. Manastersky was entitled to 18 months reasonable
    notice upon termination: 2018 ONSC 966, 46 C.C.E.L. (4th) 316.

[2]

During his employment, Mr. Manastersky
    participated in profit-sharing plans called carried interest plans. From late
    2004 until his termination in 2014, Mr. Manastersky participated in the
    Mezzanine Carried Interest Plan (the Mezzanine CIP). The trial judge awarded
    Mr. Manastersky: (i) the sum of $953,392.50 in respect of the lost opportunity
    to earn entitlements under the Mezzanine CIP during the 18-month reasonable
    notice period: Judgment, para. 5; and (ii) the amount of $190,789.00 in respect
    of Mr. Manasterskys share of investment proceeds under the Mezzanine CIP for
    the period 2005 to 2013, as calculated using Mr. Manasterskys foreign exchange
    methodology: Judgment, para. 6.

[3]

RBCDS appealed both parts of the award.

[4]

By reasons dated July 18, 2019, this court
    (Feldman J.A. dissenting) allowed RBCDS appeal regarding the award of damages
    in respect of the incentive plan. The court unanimously dismissed the appeal
    regarding the foreign exchange methodology: 2019 ONCA 609, 146 O.R. (3d) 647
    (the Original Decision).

[5]

Mr. Manastersky sought leave to appeal to the
    Supreme Court of Canada. By Judgment dated November 12, 2020, the Supreme Court
    remanded the case to this court pursuant to s. 43(1.1) of the
Supreme Court
    Act
, R.S.C. 1985, c. S-26, with the direction that the case forming the
    basis of the application for leave to appeal is remanded to this court for
    disposition in accordance with
Matthews v. Ocean Nutrition Canada Ltd.
,
    2020 SCC 26 (the Remand Directions)

[6]

This court sought and received remand submissions
    from the parties and heard oral submissions on January 19, 2021.

II.       THE
    APPROACH ON A REMAND

[7]

On the remand of a case from the Supreme Court
    with directions to dispose of the case in accordance with an identified
    decision of that court, this court will reconsider its original decision in
    light of the authoritative pronouncement of the Supreme Court on issues that
    may have affected this courts disposition of the appeal. If the application of
    the identified Supreme Court decision mandates a different disposition, this
    court should alter its earlier decision in light of the holdings of that
    decision; if it does not, this court should affirm its earlier decision:
Deslaurier
    Custom Cabinets Inc. v. 1728106 Ontario Inc.
, 2017 ONCA 293, 135 O.R. (3d)
    241, at para. 14, leave to appeal refused, [2016] S.C.C.A. No. 249;
Sankar
    v. Bell Mobility Inc.
, 2017 ONCA 295, 410 D.L.R. (4th) 1, at para. 9,
    leave to appeal refused, [2016] S.C.C.A. No. 251;
Mikelsteins v. Morrison
    Hershfield Limited
, 2021 ONCA 155, at para. 16.

[8]

In performing the exercise required by the
    Remand Directions, I have considered the following: (i) the
Matthews
decision; (ii) the Original Decision; (iii) the trial judges reasons; (iv) the
    portions of the record relevant to the issue raised by the Remand Directions;
    and (v) the submissions of the parties on the appeal and in respect of the
    remand hearing. As these reasons address the parties submissions made on the
    remand, they supplement and therefore should be read together with the Original
    Decision.

III.      THE
    LAW AS AFFIRMED IN THE
MATTHEWS
DECISION

[9]

Upon the termination of employment without
    cause, an employee is entitled to damages equivalent to what the employee would
    have earned during the notice period, including compensation for bonuses or
    incentives that would have been earned had the employer not breached the
    employment contract:
Matthews
, at para. 48. The purpose of damages in
    lieu of reasonable notice is to put employees in the position they would have
    been in had they continued to work through to the end of the notice period:
Matthews,
at para. 59. The remedy for a breach of the implied term to provide
    reasonable notice is an award of damages based on the period of notice which
    should have been given, with the damages representing what the employee would
    have earned in this period:
Matthews
, at para. 49.

[10]

Noting that how payments under incentive bonuses or plans
    are to be included in these damages is a recurring issue in the law of wrongful
    dismissal, the Supreme Court affirmed the two-step approach set out by this
    court in
Lin v. Ontario Teachers Pension Plan
, 2016 ONCA 619, 402
    D.L.R. (4th) 325,
Paquette v. TeraGo Networks Inc.
, 2016 ONCA 618, 352
    O.A.C. 1, and
Taggart v. Canada Life Assurance Co.
(2006), 50 C.C.P.B.
    163 (Ont. C.A.): at para. 49. The Supreme Court stated, at paras. 52-54, that
    the two-step approach rests on two key principles:

(i)

When
    employees sue for damages for wrongful dismissal, they are claiming for damages
    as compensation for the income, benefits, and bonuses they would have received
    had the employer not breached the implied term to provide reasonable notice;
    and

(ii)

A contract
    of employment effectively remains alive for the purposes of assessing the
    employees damages, in order to determine what compensation the employee would
    have been entitled to but for the dismissal.

[11]

Building on those two principles, the Supreme Court, at
    para. 55, affirmed a two-step approach to determine whether an employee
    dismissed without cause is entitled to damages in respect of a bonus or incentive
    benefit:

Courts should accordingly ask two questions
    when determining whether the appropriate quantum of damages for breach of the
    implied term to provide reasonable notice includes bonus payments and certain
    other benefits.
Would the employee have been entitled to
    the bonus or benefit as part of their compensation during the reasonable notice
    period?
If so, do the terms of the
employment
    contract or bonus plan unambiguously take away or limit that common law right
?

[12]

The Supreme Court further clarified that resorting to the
    so-called integral test does not play a role in all cases. Where there is
    doubt about whether the employee would have received a discretionary bonus
    during the reasonable period of notice, resorting to the test of whether a
    benefit or bonus is integral to the employees compensation can assist in
    answering the question of what the employee would have been paid during the
    reasonable notice period:
Matthews,
at para. 58. By contrast, where
    there is no doubt that the employee would have received a bonus or incentive
    benefit during the notice period, there is no need to ask whether the bonus was
    integral to the employees compensation:
Matthews
, at para. 59. At
    the remand hearing, counsel for Mr. Manastersky acknowledged that, on the facts
    of this case, the issue of whether the incentive benefit was integral does
    not arise because the entitlement to payments under the Mezzanine CIP was not
    discretionary.

[13]

The Original Decision identified the legal principles
    applicable to the appeal as those set out in
Lin
,
Paquette
,
    and
Taggart
, including the application of the two-step approach:
    Original Decision, paras. 39-43. Consequently, I do not see the exercise on
    this remand as applying any new legal principles identified in
Matthews
to the case on appeal; the legal principles affirmed in
Matthews
were
    those applied in the Original Decision. Instead, I propose to look afresh at
    the application of the two-step analysis to the case on appeal.

IV.     THE
    APPLICATION OF
MATTHEWS
TWO-STEP ANALYSIS

A.

What RBCDS
    paid Mr. Manastersky on termination in respect of his Mezzanine CIP entitlement

[14]

Before reconsidering the application of the two-step
    approach to the present case, it is worth recalling what compensation RBCDS
    paid Mr. Manastersky in respect of his legal rights under the Mezzanine CIP
    following his termination.

[15]

The Original Decision described, at paras. 8 to 12, the
    various incentive plans that had formed part of Mr. Manasterskys employment
    contract. The details of the Mezzanine CIPs in place at the date of termination
    are set out at paras. 13 to 22 of the Original Decision. I see no need to
    repeat them; I incorporate them in these reasons.

[16]

RBCDS terminated Mr. Manasterskys employment on February
    14, 2014. As of that date, two funds  Funds 1 and 2  had been established
    under the Mezzanine CIP. Each fund contained a portfolio of investments for an
    Investment Period. Mr. Manastersky had been granted points, or shares, in the
    profits generated by the portfolios of both funds. No profits from either fund
    had been distributed by the time of Mr. Manasterskys termination; his
    interests in both funds had been carried from 2008 until 2014. Significant
    payouts were made after RBCDS gave notice to Mr. Manastersky and wound-up the
    funds: $3,624,079 in 2015; and $1,810,230 in 2016.

[17]

The trial judge found that Mr. Manastersky was entitled to
    18-months notice, which ran from February 14, 2014 until August 14, 2015.

[18]

Several months after Mr. Manasterskys termination, RBCDS
    began to wind-up Funds 1 and 2. It also approved the termination of the
    Mezzanine CIP in respect of all future Investment Periods  that is to say, no
    further investment funds would be created within the Mezzanine CIP: Original
    Decision, at para. 28.

[19]

At trial, Mr. Manastersky filed an Updated Earnings
    Summary. It showed that during 2015 and 2016 he was fully paid his share of the
    profits from the winding-up of Funds 1 and 2. Mr. Manastersky acknowledged that
    RBCDS had paid him all profits from Funds 1 and 2 to which he was entitled
    under the Mezzanine CIP.

[20]

The evidence therefore shows that both during and after Mr.
    Manasterskys period of reasonable notice RBCDS administered the wind-up of
    Funds 1 and 2 and paid out Mr. Manasterskys share of Fund profits. Put
    differently, during and after his period of reasonable notice Mr. Manastersky
    received all the incentive plan benefits to which he was entitled in respect of
    the two funds that existed at the time of the termination of his employment.

B.

Analysis

[21]

Under the
Matthews
framework, the issue of any
    limitations on an employees entitlement to bonus/incentive benefit
    compensation typically (but not invariably) would arise under the second step
    namely, do the terms of the employment contract or bonus plan unambiguously
    take away or limit a common law right or entitlement upon the termination of
    employment? The factual twist in the present case is that the issue of any
    limitation on Mr. Manasterskys entitlement to further incentive benefits
    during his period of reasonable notice falls more under
Matthews
first
    step: would he have been entitled to receive payment of a CIP incentive benefit
    as part of his compensation during the reasonable notice period? However, as
    recognized in the Original Decision, at para. 51, incentive-benefit plans vary
    greatly in their structure and pay-out terms, so the analysis in respect of one
    type of incentive plan may not be transferable to the analysis of another type
    of incentive plan.

[22]

In
Matthews
, the employees entitlement to a
    long-term incentive plan payment  the occurrence of a Realization Event such
    as the sale of the employer  was limited by the incentive plans requirement
    that the employee be a full-time employee at the date of the Realization
    Event. The Supreme Court held that the first step was clearly satisfied because
    the Realization Event fell within the employees reasonable notice period; but
    for the employees dismissal, he would have received the incentive payment:
Matthews,
at para. 59. In considering the second step, the Supreme Court held that
    the language of full-time employee did not limit the employees entitlement
    to the incentive payment when the Realization Event occurred during the period
    of reasonable notice:
Matthews
, at paras. 65-67.

[23]

The circumstances of the present case differ from those in
Matthews
.
    Here, the Mezzanine CIP did not place a limit on Mr. Manasterskys entitlement
    to his carried interest incentives in the event of the termination of his
    employment without cause. As stated in the Original Decision, at para. 17:

There is no dispute that at the time of his
    termination, Mr. Manasterskys points were fully vested. When the employment of
    a participant was terminated without cause, the participant continued as a
    participant, retaining in all Portfolios with respect to which he or she has
    Points, all rights represented by his or her Vested Points.

[24]

Instead, Mr. Manastersky takes issue with the treatment by
    the majority in the Original Decision of the scope of his entitlement in
    respect of the Mezzanine CIP incentive benefits during the period of reasonable
    notice. He contends that he was entitled to more than merely the payment of his
    share of the profits from Funds 1 and 2.

[25]

In applying
Matthews
first step, the majority in
    the Original Decision concluded that Mr. Manastersky was entitled to benefits
    during the period of reasonable notice in respect of Funds 1 and 2 because the
    terms of the Mezzanine CIP linked his entitlement to incentive benefits to the
    existence of discrete Investment Periods, each encompassing a specific
    portfolio in a specific fund. Those terms of the Mezzanine CIP differed from
    those considered in
Paquette
and
Lin
. As stated in the
    Original Decision, at paras. 55-56:

The entitlement of a participant, such as Mr.
    Manastersky, to earn payments under the Mezzanine CIP was tied to the existence
    of the funds created for different Investment Periods. Two funds existed during
    the last decade of Mr. Manasterskys employment and the period of reasonable
    notice: Funds 1 and 2. In accordance with the terms of the Mezzanine CIP, Mr.
    Manastersky was allocated a specific amount of points in respect of each Fund.

As Article 4.4 of the Mezzanine CIP clearly
    stated, the status of a participant with respect to any Investment Period
shall not give any Participant the express or implied right
    to any Points for any future Investment Period
.
    [Emphasis added]

[26]

The Original Decision went on to state, in part, at paras.
    61-62:

[T]he terms of the Mezzanine CIP provided that
    Mr. Manastersky was not entitled to any further earnings under that plan:

i.        The Management Committee was
    entitled to terminate the Plan effective as of the end of any Investment
    Period with respect to future Investment Periods: Art. 9.3. The Management
    Committee did so. No new Fund 3 Investment Period was created;

ii.       A participant was granted points
    in respect to each Portfolio relating to a given Investment Period and those
    points represented the Participants share of the portion of the aggregate
    profits and losses of RBCDS with respect to that Portfolio: Art. 6.1.1;

iii.      Any allocation of points in
    connection with an Investment Period after the Funds 1 and 2 Investment Periods
    would be done by way of a new allocation letter: Art. 6.1.3; and

iv.      An employees status as a
    participant in respect to any Investment Period did not give the participant
    the express or implied right  to any Points for any future Investment
    Period: Art. 4.4.

Those provisions, when combined with the
    decision of the Management Committee to terminate the Plan, indicate that Mr.
    Manastersky was not entitled to any common law damages in respect of the
    Mezzanine CIP profit-sharing plan beyond those relating to his vested points
    for Funds 1 and 2

[27]

Mr. Manastersky contends that analysis was in error. He
    points to language used in
Matthews
, in respect of the second step of
    the analysis, that a plans limitation on entitlement to an incentive payment
    will not be effective unless it unambiguously limits or removes the
    employees common law right, is absolutely clear and unambiguous or clearly
    covers the exact circumstances which have arisen:
Matthews
, at
    paras. 55 and 64-66.

[28]

Drawing on that language, Mr. Manastersky argues that the
    terms of the Mezzanine CIP that permitted termination of the Plan effective as
    of the end of any Investment Period with respect to future Investment Periods
    (Art. 9.3) and stipulating that an employees status as a participant in
    respect to any Investment Period did not give the participant the express or
    implied right  to any Points for any future Investment Period (Art. 4.4)
    could not operate to limit his entitlement to incentive compensation, during
    the period of reasonable notice, to only the payout of his profit shares in
    Funds 1 and 2. Mr. Manastersky contends that notwithstanding the language
    defining the scope of his entitlement in the Mezzanine Plan (i.e., his common
    law right), he is entitled to more because the provisions of the Mezzanine CIP
     Arts. 4.4, 6.1.1, 6.1.3, and 9.3  did not clearly and unambiguously cover
    the exact circumstances that arose in his case, namely the termination and
    winding-up of Funds 1 and 2 during his period of reasonable notice.

[29]

Mr. Manastersky advances two bases upon which to calculate
    the more to which he contends he is entitled as further damages for incentive
    benefits during the notice period.

[30]

First, he submits that since, for all intents and purposes,
    he was the only remaining employee beneficiary of the two funds, RBCDS was
    required to give him reasonable notice of the termination of the funds
    equivalent to the 18-months reasonable notice found by the trial judge. That
    would mean RBCDS would have to continue to operate the Mezzanine Funds and make
    new investments until the end of his period of reasonable notice (August 2015).

[31]

I see two difficulties with that submission.

[32]

First, in his evidence Mr. Manastersky acknowledged that
    the Investment Period for Fund 1 ended on December 15, 2006, following the
    departure of a senior plan member, and the Fund 2 Investment Period effectively
    came to an end in 2013, prior to Mr. Manasterskys termination, when its
    investments reached $158 million. While that was just shy of the $160 million
    portfolio cap that would end an Investment Period, further investments in Fund
    2 were not practical as the remaining $2 million was smaller than any deal the
    Mezzanine Fund had done.

[33]

Second, there was no evidence adduced at trial that would
    enable the court to determine whether deferring the process of winding-up Funds
    1 and 2 from the summer of 2014 until the end of the notice period in August
    2015 would have resulted in a higher payout to Mr. Manastersky of his share of
    the profits in the funds. Further, as the CIP was a profit-sharing program,
    there was no guarantee that making further investments would prove profitable
    and increase Mr. Manasterskys payout.

[34]

The second basis for calculating the more is the one Mr.
    Manastersky primarily relied upon at the appeal. At trial, Mr. Manastersky
    admitted that he was not taking the position that he was entitled to an
    allocation of points with respect to some new or notional Fund 3 Investment
    Period that was never established by RBCDS under the Mezzanine CIP.

[35]

By taking that position, Mr. Manastersky seemed to
    acknowledge that the conclusion of one Investment Period under the Mezzanine
    CIP did not automatically require RBCDS to start a new one, as reflected in
    Art. 9.3 of the Mezzanine CIP that entitled the Plans Management Committee to
    terminate the Plan effective as of the end of any Investment Period with
    respect to future Investment Periods.

[36]

Notwithstanding that acknowledgement, Mr. Manastersky
    submits that he is entitled to more than his actual share of profits from the
    realization of Funds 1 and 2 that he received both during and after the period
    of reasonable notice. He contends that RBCDS should pay an additional amount in
    respect of the notice period calculated by averaging the actual share of the
    profits in Funds 1 and 2 that he received during and after the notice period
    over the lifetimes of the funds and then applying the resulting annual average
    (the Notional Annualized Historical Profit Share)
pro rata
to the
    18-month notice period. Under that approach, Mr. Manastersky contends that
    during the period of reasonable notice he should have received Mezzanine
    CIP-related incentive benefits made up of two components: (i) first, the
    payouts of $5,434,309 that RBCDS made to Mr. Manastersky during and after the
    period of reasonable notice for his share in the profits of Funds 1 and 2,
    calculated in accordance with the terms of the Mezzanine CIP; plus (ii) an
    additional $953,392.50 in damages calculated by applying the Notional
    Annualized Historical Profit Share for those same funds
pro rata
to
    the 18-month period of reasonable notice.
[1]

[37]

I remain unpersuaded by that submission. The first step of
Matthews
requires ascertaining whether an employee would have been entitled to an
    incentive or benefit as part of their compensation during the reasonable notice
    period: at para. 55. Determining the content of that common law right requires
    examining the characteristics of the incentive or benefit to which the employee
    would be entitled. In many cases, the character of the incentive or benefit
    will be an annual payment or bonus. But that is not the character of the common
    law contractual benefit under the Mezzanine CIP. It was a carried interest
    plan that quite clearly did not entitle its participants to annual payments. By
    its terms, a participant was only entitled to receive a payment at the
    conclusion of an Investment Period and the realization of a specific funds
    investment portfolio. And, as noted, Mr. Manastersky carried his interest in
    the two funds from 2008 until 2014 without receiving any annual payment; he was
    paid his share of the profits from the two funds in 2015 and 2016.

[38]

To accede to Mr. Manasterskys submission would, in effect,
    recast his common law, fund-specific entitlement to incentive compensation
    under the Mezzanine CIP into a notional annual or annualized entitlement. The
    trial judge and my colleague in dissent in the Original Decision acceded to Mr.
    Manasterskys submission. With respect, I cannot.

[39]

Mr. Manasterskys position seeks to alter, in a fundamental
    way, the character of the common law right to incentive compensation to which
    he was entitled under his employment contract. The terms of an incentive plans
    eligibility criteria and formula for calculating a bonus remain relevant to the
    inquiry into what benefit the employee would have been entitled to as part of
    his or her compensation during the reasonable period of notice:
Paquette
,
    at para. 18. I do not read the
Matthews
decision as changing that
    principle.

[40]

Matthews
provides
    that damages for dismissal are designed to compensate the employee for the
    income, benefits, and bonuses they would have received had the employer not
    breached the implied term to provide reasonable notice: at para. 53. The terms
    of Mr. Manasterskys employment contract did not entitle him to receive an
    annual incentive payment. The terms entitled him to receive a fund-specific
    incentive payment upon the end of a funds investment period. During his period
    of reasonable notice, Mr. Manastersky was entitled to receive damages
    calculated on the latter basis, not damages calculated on both bases. In my
    view, RBCDS paid Mr. Manastersky that to which he was entitled at common law
    and, with respect, the trial judge erred in concluding otherwise.

V.      DISPOSITION

[41]

For these reasons, having considered the Original Decision
    in light of
Matthews
, I would affirm the Original Decision.

[42]

I would order Mr. Manastersky to pay RBCDS its
    costs of the remand fixed in the amount of $5,000.00, inclusive of
    disbursements and applicable taxes.

David
    Brown J.A.

I
    agree. B.W. Miller J.A.

Feldman J.A. (dissenting):

A.

introduction

[43]

Mr. Manastersky sought leave to appeal this courts
    majority decision to the Supreme Court of Canada. The issue to be decided was
    essentially whether the majoritys decision overturning the trial judge, or the
    dissenting reasons that would have upheld the trial judge, had correctly
    applied the test for damages for wrongful dismissal, as set out in this courts
    decisions in
Lin v. Ontario Teachers Pension Plan
, 2016 ONCA 619, 402
    D.L.R. (4th) 325,
Paquette v. TeraGo Networks Inc.
, 2016 ONCA 618, 352
    O.A.C. 1, and
Taggart v. Canada Life Assurance Co.
(2006), 50 C.C.P.B.
    163 (Ont. C.A.).

[44]

Before considering whether to grant the appellant leave to
    appeal, the Supreme Court heard an appeal from the Nova Scotia Court of Appeal
    in
Matthews v. Ocean Nutrition Canada Ltd.
, 2020 SCC 26, 449 D.L.R.
    (4th) 583, and reserved its decision. Ultimately, in
Matthews
, the
    Supreme Court did not change the law of Ontario and endorsed this courts
    approach in
Lin
,
Paquette
, and
Taggart
.

[45]

Without granting leave to appeal, the Supreme Court remanded
    the appellants case to this court pursuant to s. 43(1.1) of the
Supreme
    Court Act
, R.S.C. 1985, c. S-26, for disposition in accordance with
Matthews
    v. Ocean Nutrition Canada Ltd.
, 2020 SCC 26.

[46]

Because the Supreme Court in
Matthews
adopted and
    endorsed this courts jurisprudence that had been applied by the trial judge,
    and by the majority and the dissent on the appeal, both the parties and this
    court have had to grapple with the question of what issue was remanded to this
    court for rehearing. To me, the correct approach is to ask the question: If the
    trial judge had had the benefit of the
Matthews
decision, would he
    have approached the case differently? Similarly, on appeal, the question for
    this court would be: Did the trial judge err by failing to apply the principles
    and the test as now set out by the Supreme Court in
Matthews
?
[2]

B.

The
Matthews
Decision

[47]

David Matthews was an experienced chemist who, from 1997,
    occupied a number of senior management positions with Ocean Nutrition Canada
    Ltd. (Ocean). In 2007, efforts to force Mr. Matthews out of the company
    started, and he ultimately resigned in 2011, resulting in constructive
    dismissal.

[48]

As a senior executive, Mr. Matthews was part of the
    long-term incentive plan (LTIP), which included as a benefit a significant
    payment in the event of the sale of the company. About 13 months after Mr.
    Matthews was forced out, the company was sold for $540,000,000, but it refused
    to pay him his entitlement under the LTIP on the basis that he did not comply
    with a provision that required him to be a full-time employee on the date of
    the sale.

[49]

In endorsing this courts decisions in
Lin
,
Paquette
,
    and
Taggart
, the Supreme Court in
Matthews
made the following
    important observations, at paras. 47-55, about the purpose of the two-step test
    for determining a wrongfully dismissed employees entitlement to damages, and
    how to apply it:

[47] In the case at bar, the only disagreement
    in respect of reasonable notice turns on whether Mr. Matthews damages include
    an amount to compensate him for his lost LTIP payment.

[48] In my respectful view, the majority of
    the Court of Appeal erred by focusing on whether the terms of the LTIP were
    plain and unambiguous instead of asking what damages were appropriately due
    for Oceans failure to provide Mr. Matthews with reasonable notice. The issue
    is not whether Mr. Matthews is entitled to the LTIP in itself, but rather what
    damages he is entitled to and whether he was entitled to compensation for
    bonuses he would have earned had Ocean not breached the employment contract. By
    focusing narrowly on the former question, the Court of Appeal applied an
    incorrect principle, resulting in what I see as an overriding error.

[49] Insofar as Mr. Matthews was
    constructively dismissed without notice, he was entitled to damages
    representing the salary, including bonuses, he would have earned during the
    15-month period (
Wallace
, at paras. 65-67). This is so because the
    remedy for a breach of the implied term to provide reasonable notice is an
    award of damages based on the period of notice which should have been given,
    with the damages representing what the employee would have earned in this
    period (para. 115). Whether payments under incentive bonuses, such as the LTIP
    in this case, are to be included in these damages is a common and recurring
    issue in the law of wrongful dismissal. To answer this question, the trial
    judge relied on
Paquette
and
Lin
from the Court of Appeal for
    Ontario. I believe he took the right approach.

[50] In
Paquette
, the employee
    participated in his employers bonus plan, which stipulated that employees had
    to be actively employed on the date of the bonus payout. That language is
    broadly comparable to that found in the LTIP which, at clause 2.03, requires
    the claimant to be a full-time employee of the company. In Paquette, but for
    the employees termination, the employee would have received the bonus within
    the reasonable notice period. The motion judge in that case, however, concluded
    that the employee was not entitled to the bonus because, while he may have been
    notionally employed during the reasonable notice period, he was not
    actively employed and so did not qualify under the terms of the plan.

[51] The employees appeal was allowed. The
    Ontario Court of Appeal relied principally on its prior decision in
Taggart
    v. Canada Life Assurance Co.
(2006), 50 C.C.P.B. 163, concerning a similar
    question related to pension benefits. In that case, Sharpe J.A. rightly
    cautioned that courts should not ignore the legal nature of employees claims.
    The claim is not, he said, for the pension benefits themselves. Rather, it
    is for common law contract damages as compensation for the pension benefits
    [the employee] would have earned had [the employer] not breached the contract of
    employment (para. 16). Consequently, a terminated employee is entitled to
    claim damages for the loss of pension benefits that would have accrued had the
    employee worked until the end of the notice period (para. 13). With respect to
    the role of a bonus plans contractual terms, Sharpe J.A. explained that [t]he
    question at this stage is whether there is something in the language of the
    pension contract between the parties that takes away or limits that common law
    right (para. 20).

[52] The Court of Appeal in
Paquette
built upon the approach in
Taggart
, proposing that courts should take
    a two-step approach to these questions. First, courts should consider the
    [employees] common law rights (para. 30). That is, courts should examine
    whether, but for the termination, the employee would have been entitled to the
    bonus during the reasonable notice period. Second, courts should determine
    whether there is something in the bonus plan that would specifically remove the
    [employees] common law entitlement (para. 31). The question, van Rensburg
    J.A. explained, is not whether the contract or plan is ambiguous, but whether
    the wording of the plan unambiguously alters or removes the [employees] common
    law rights (para. 31).

[53] I agree with van Rensburg J.A. that this
    is the appropriate approach. It accords with basic principles of damages for
    constructive dismissal, anchoring the analysis around reasonable notice. As the
    court recognized in
Taggart
, and reiterated in
Paquette
, when
    employees sue for damages for constructive dismissal, they are claiming for
    damages as compensation for the income, benefits, and bonuses they would have
    received had the employer not breached the implied term to provide reasonable
    notice (see also
Iacobucci v. WIC Radio Ltd.
, 1999 BCCA 753, 72
    B.C.L.R. (3d) 234, at paras. 19 and 24;
Gillies v. Goldman Sachs Canada
    Inc.
, 2001 BCCA 683, 95 B.C.L.R. (3d) 260, at paras. 10-12 and 25;
Keays
,
    at paras. 54-55). Proceeding directly to an examination of contractual terms
    divorces the question of damages from the underlying breach, which is an error
    in principle.

[54] Moreover, the approach in
Paquette
respects the well-established understanding that the contract effectively
    remains alive for the purposes of assessing the employees damages, in order
    to determine what compensation the employee would have been entitled to but for
    the dismissal (see, e.g.,
Nygard Int. Ltd. v. Robinson
(1990), 46
    B.C.L.R. (2d) 103 (C.A.), at pp. 106-7, per Southin J.A., concurring;
Gillies
,
    at para. 17).

[55] Courts should accordingly ask two
    questions when determining whether the appropriate quantum of damages for
    breach of the implied term to provide reasonable notice includes bonus payments
    and certain other benefits. Would the employee have been entitled to the bonus
    or benefit as part of their compensation during the reasonable notice period?
    If so, do the terms of the employment contract or bonus plan unambiguously take
    away or limit that common law right?

[50]

In my view, the key point made by the Supreme Court about
    the first stage of the two-step test is that the purpose is to recognize that
    the contract of employment is treated as alive and continuing to subsist during
    the notice period, so that the question is, what would the employee have earned
    or been entitled to receive had their employment not been wrongfully
    terminated?

[51]

Mr. Matthews argued that since the sale of the company took
    place during the 15-month reasonable notice period, he was
prima facie
entitled to common law damages for the lost LTIP payment. Oceans position was
    that Mr. Matthews could not satisfy the first stage of the two-part test. Mr.
    Matthews had a common law entitlement to damages only for all compensation and
    benefits that are integral to his compensation, and the LTIP was not integral
    because he did not have a vested right at the date of termination.

[52]

The Supreme Court rejected Oceans position. It agreed that
    whether a bonus or benefit is integral to the employees compensation
    assists in answering the question of what the employee would have been paid
    during the reasonable notice period: at para. 58. However, in Mr. Matthews
    case, there was no need to ask whether the benefit was an integral part of his
    compensation because there was no question that, had he remained employed
    during the notice period, he would have received the LTIP benefit. It was not a
    discretionary payment, and he would have been entitled to it. Therefore, he was
prima facie
entitled to receive damages as compensation for the LTIP.
    The only issue for the Supreme Court to resolve was whether the terms of the
    LTIP unambiguously limited or removed Mr. Matthews common law right to receive
    damages.

[53]

Turning to that issue, the Supreme Court examined the terms
    of the LTIP to see if there were any that removed Mr. Matthews common law
    entitlement. It concluded that the limiting terms did not have that effect. The
    two relevant clauses provided:

2.03 CONDITIONS PRECEDENT:

[Ocean] shall have no obligation under this
    Agreement to the Employee unless on the date of a Realization Event the
    Employee is a full-time employee of [Ocean]. For greater certainty, this
    Agreement shall be of no force and effect if the employee ceases to be an
    employee of [Ocean], regardless of whether the Employee resigns or is
    terminated, with or without cause.

2.05 GENERAL:

The Long Term Value Creation Bonus Plan does
    not have any current or future value other than on the date of a Realization
    Event and shall not be calculated as part of the Employees compensation for
    any purpose, including in connection with the Employees resignation or in any
    severance calculation.

[54]

The Supreme Court emphasized, at paras. 64-65, that the
    wording of the LTIP must unambiguously limit[] or remove[] the employees
    common law right, and that the provisions must be absolutely clear. To that
    end, language requiring an employee to be full-time, like in clause 2.03,
    would not suffice to remove an employees common law right to damages. Had Mr.
    Matthews been given proper notice, he would have been a full-time employee
    during the notice period.

[55]

The Supreme Court also noted, at para. 66, that where a
    clause purports to remove an employees common law right to damages upon
    termination with or without cause, such as clause 2.03, this language will
    not suffice, pointing out that termination without cause does not mean
    termination without notice. And in any event, because an employment contract is
    not treated as terminated until after the reasonable notice period expires for
    the purpose of calculating damages for wrongful dismissal, even if the clauses
    had expressly referred to wrongful termination, that would not have been
    sufficient to unambiguously alter the employees common law entitlement.

[56]

In the result, the Supreme Court concluded that under step
    one, Mr. Matthews was
prima facie
entitled to the LTIP payment as part
    of his compensation, and under step two, the terms of the LTIP did not
    unambiguously remove that entitlement.

C.

Analysis

[57]

Based on the Supreme Courts approach and analysis in
Matthews
,
    which follows
Lin
,
Paquette
, and
Taggart
, in my
    view, had the trial judge had the benefit of the
Matthews
decision and
    had he applied that decision as the legal framework for analyzing the
    appellants claim, his analysis and conclusion would not have changed. And it
    of course follows that there would be no basis to interfere with the trial judges
    decision on appeal. I base this conclusion on paras. 38-48 of the trial judges
    reasons:

[38] Benefit Plans generally include
    limitations or conditions on payments out of the plan. Where an employee has
    been dismissed without cause, it may be argued that the terms of such Benefit
    Plans limit or eliminate the employees entitlements upon the termination of
    his or her employment. In
Taggart v. Canada Life Assurance Co.
, Sharpe
    J.A. explained the correct approach for analysing such issues. The first step in
    the analysis is to determine the employees common law right to damages for
    breach of contract. The second step is to determine whether the terms of the
    relevant Benefit Plan alter or remove a common-law right. Moreover, clear
    language is required to limit common law entitlements.

[39] Applying this analysis to the CIP, in my
    view it is clear that the CIP represented an integral part of Manasterskys
    compensation. His participation in the CIP was included in his Contract of
    Employment and he continued to participate in the Plan throughout his 13 years
    of employment at RBC. Although the allocation of a specific number of Points to
    participants was discretionary, once awarded, Points could not be reduced
    without the agreement of the participant. Manasterskys Points allocation had
    remained constant since 2007, when he was awarded 50% of the total available
    Points under the Plan. Because the entitlements under the Plan depended on
    investment earnings from the Mezzanine Fund, the amounts earned by participants
    would fluctuate from year to year. However the calculation of a participants
    share of investment proceeds was nondiscretionary in the sense that it would be
    determined through the application of the Payment Formula set out in the Plan
    itself. Over the course of Manasterskys 13 years at RBC, his average share of
    investment proceeds per investment year was approximately $635,000,
    representing well over 50% of his total annual income.

[40] I note that in
Bain v. UBS Securities
    Canada Inc.
, D.A. Wilson J. set out a general test for determining whether
    a bonus is integral to the employees compensation. One element of the test was
    whether the bonus was received each year, although in different amounts. It
    might be noted that in this case no payments had been made from the CIP since
    2007, since the Fund 2 investment period that had commenced in 2006 had not yet
    concluded. Nevertheless, participants in the CIP continued to accumulate
    entitlements each year. The fact that no actual payments had been made out of the
    Plan since 2007 does not alter or diminish the significance and materiality of
    the Plan to a participants annual compensation.

[41] In short, the CIP was a significant,
    nondiscretionary variable form of compensation that represented more than half
    of Manasterskys annual income, similar to the variable forms of incentive
    compensation considered by Corbett J. in
Lin v. Ontario Teachers' Pension
    Plan Board
. It was integral to his compensation and therefore forms part
    of his presumptive entitlement to damages at common law during the notice
    period.

[42] The second stage of the analysis is to
    consider whether there are any provisions in the CIP which limit or eliminate
    this presumptive entitlement upon termination of employment. The CIP did make
    provision for the impact of a termination of employment on an employees
    entitlements under the Plan. However, far from eliminating or limiting
    Manasterskys entitlements upon termination, the CIP provided that all of
    Manasterskys outstanding Points would immediately vest in the event that he
    was terminated without cause. It was for this reason that the Termination Offer
    provided that, despite the termination of his employment, Manasterskys rights
    under the CIP remained fully vested. In short, the CIP did not purport to limit
    or reduce Manasterskys entitlements under the Plan in the event that his
    employment was terminated without cause.

[43] RBC argued that Manastersky was not
    entitled to compensation in respect of the CIP during the common law notice
    period by virtue of a provision which allowed RBC to terminate the Plan
    effective as of the end of any Investment Period with respect to future
    Investment Periods. As noted earlier, by the fall 2013, the CIP was nearing
    the end of the investment period for Fund 2, by virtue of the fact that the
    total amount invested through the Mezzanine Fund was approaching $160 million.
    Upon the conclusion of the Fund 2 investment period, a new investment period
    would automatically begin. However, RBC could also elect to terminate the CIP
    with respect to future investment periods upon the conclusion of the Fund 2
    investment period and prior to the commencement of Fund 3. In fact, RBC
    exercised this right on June 25, 2014, when it terminated the CIP in respect of
    future investment periods.

[44] I do not believe that the fact that RBC
    had the option of terminating the Plan at the end of an investment period
    should be regarded as limiting Manasterskys entitlement to notice at common
    law. First, RBCs right to terminate the CIP was in no way tied to the
    termination of Manasterskys employment. Far from containing clear language
    limiting rights upon termination of employment, the provision in the CIP
    permitting RBC to terminate the Plan did not purport to limit or reduce his
    common law entitlements. Nor could it be said that the parties did not turn
    their minds to the consequences flowing from the termination of Manasterskys
    employment on his entitlements under the CIP. In fact, the CIP enhanced
    Manasterskys entitlements in the event his employment was terminated without
    cause, through accelerated vesting of his Points.

[45] Further, the fact that RBC terminated the
    CIP in respect of future investment periods on June 25, 2014, four months after
    Manasterskys dismissal without cause, does not alter this analysis. As Sharpe
    JA explained in
Taggart
, in cases where a terminated employee seeks
    compensation for entitlements under a benefit plan, the claim is not for the
    benefits themselves. Rather, the claim is for common law contract damages as compensation
    for the benefits that the employee would have earned had the employer not
    breached the contract of employment. The employee is claiming for the lost
    opportunity to continue to earn or receive benefits that would have been
    available in the event their employment had continued. As of the date of the
    Termination Offer, RBC had not in fact terminated the CIP, and it therefore
    remained in place as an integral component of Manasterskys compensation.

[46] What if Manasterskys employment had
    continued past February 14, 2014 and in June 2014 RBC had terminated the CIP
    without offering Manastersky some alternate, comparable form of compensation?
    Although consistent with the terms of the CIP, this would have amounted to a
    unilateral significant reduction in his compensation, as it would have
    eliminated the opportunity for him to continue to accrue entitlements through
    the CIP. This would in all likelihood have amounted to a constructive
    dismissal, thereby triggering an entitlement to damages at common-law,
    including damages for the lost opportunity to continue to earn entitlements
    under the CIP.

[47] In any event, RBC had not in fact
    terminated the CIP as of the date of Manasterskys termination of employment.
    Nothing in the CIP purported to limit or restrict his entitlements under the
    Plan upon the termination of his employment. His termination without cause
    deprived him of the opportunity to continue to earn entitlements under the CIP
    and he is entitled to be compensated in damages for that lost opportunity.

[48] RBC also argues that rather than
    terminate the CIP, it could simply have elected to cease making any additional
    investments in the Mezzanine Fund, effectively eliminating Manasterskys
    opportunity to earn additional entitlements under the CIP. But if RBC could not
    directly reduce Manasterskys compensation unilaterally, it could not achieve
    the same result through indirect means. To be sure, RBC was perfectly entitled
    to make investment decisions as to how and where it wished to invest its capital
    but, in doing so, it could not escape its contractual and common law
    obligations to Manastersky. [Footnotes omitted.]

[58]

The trial judge applied all of the principles from
Matthews
.
    He applied the two-step test by first determining the appellants common law right
    to damages for breach of contract, and second determining whether the CIP
    altered or removed the appellants common law right. And he took note that
    clear language is required to limit common law entitlements.

[59]

At the first step, to determine the appellants common law
    right to damages, he addressed the question whether the CIP represented an
    integral part of the appellants compensation, focusing on the evidence of the
    significance and materiality of the CIP to the appellants annual compensation,
    regardless of whether it was paid or just accrued annually.

[60]

At the second step, the trial judge found that the terms of
    the CIP provided for full vesting on termination without cause, and did not
    purport to reduce the appellants entitlement upon the termination of his
    employment. He considered the effect of the provisions that allowed the
    respondent to terminate the CIP for future investments, which it ultimately did
    during the notice period. However, interpreting those provisions, as he was
    entitled to do (
Sattva Capital Corp. v. Creston Moly Corp.
, 2014 SCC
    53, [2014] 2 S.C.R. 633), the trial judge found that the respondents option to
    terminate the CIP did not limit the appellants entitlement to notice at common
    law. He also specifically rejected the respondents argument that because it
    could terminate the CIP by simply ceasing to make additional investments into
    the Fund, it was entitled to thereby reduce the appellants compensation by
    eliminating his opportunity to earn his entitlements under the CIP. The trial
    judge concluded that the respondents freedom to make investment decisions did
    not allow it to escape its contractual and common law obligations.

[61]

In his analysis of the terms of the CIP, the trial judge
    addressed their effect on termination under step two, as well as their effect
    on the appellants common law entitlement under step one. In fact, as my
    colleague observes, at para. 21, the twist in this case is that the court was
    required to determine whether the terms of the CIP limited the appellants
    common law entitlement. The trial judge addressed this issue directly by
    interpreting the terms of the CIP in the context of the factual record.

[62]

The determination at step one as to whether the CIP
    constituted an integral part of the appellants compensation package was the
    key issue before the court at trial and on appeal.
[3]
While it is
    acknowledged that the CIP was not discretionary, the question whether it formed
    an integral component of the appellants compensation arose because the
    respondent took the position that it was entitled to discontinue the CIP (which
    it did during the notice period) without replacing it with a comparable
    benefit. My colleague accepts the respondents position that Mr. Manasterskys
    entitlement was fund-specific, and that the appellant did not have any further
    right to claim common law damages once the Fund was wound up and he received
    the value of his vested interest in the CIP. However, whether the appellants
    entitlement was fund-specific was the question before the court. Under step
    one, the issue was whether the appellant was entitled to receive an equivalent
    benefit once the fund was wound up, because the CIP benefit formed an integral
    part of his compensation.

[63]

My colleague says that the appellant was only entitled to
    the CIP and that he got what he was entitled to. He relies on the fact that the
    respondent was not obliged to start a third Fund.

[64]

The appellant does not dispute the respondents entitlement
    to make business decisions, including whether to continue with the Mezzanine
    Fund or the CIP. However, that does not determine his entitlement to be
    compensated at the level reflected by his participation in the Fund through the
    CIP. That turns on whether the CIP formed an integral part of his compensation
    package. The trial judge found at step one that it did, in the paragraphs
    quoted above. I agree with his analysis.

[65]

Furthermore, the terms of the CIP do not undermine the
    conclusion that it formed an integral part of the appellants compensation.
    There are no terms in the CIP or in the appellants employment agreement that
    unambiguously state that if the respondent decided to terminate the CIP, the
    effect would be to discontinue the employees right to receive compensation at
    a level based on the performance of the Fund. The trial judge found that there
    was no unambiguous language that would affect the appellants common law
    entitlement. I agree with that finding as well.

[66]

While the Supreme Court in
Matthews
endorsed the
    requirement for unambiguous language in order to disentitle an employee at
    stage two, it follows that the same requirement applies at stage one. In
    endorsing the requirement, the Supreme Court referred to the principle of
    contractual interpretation for unilateral contracts that clauses excluding or
    limiting liability be strictly construed. It stated, at paras. 64-65, that the
    principle applies with particular force, and added that the provisions of
    the agreement must be absolutely clear and unambiguous. There is no basis to
    suggest that the court intended to limit this requirement to the stage two
    portion of the analysis.

[67]

The appellant was hired to be a director of the Mezzanine
    Fund and to be compensated in significant part based on the performance of the
    Fund through the CIP. Eventually the respondent decided to bring the Fund
    in-house and to eliminate the CIP incentive performance plan. The respondent
    was certainly entitled to do that as a business decision. However, the result
    was to effectively eliminate the appellants position with the respondent as
    the director of the Fund. When the respondent decided to make that decision, it
    was obliged to give the appellant reasonable notice, and to pay him what he
    would have earned during that period or to offer him a comparable position at a
    comparable rate of compensation. Failure to do so would constitute constructive
    dismissal:
Farber v. Royal Trust
, [1997] 1 SCR 846, at paras. 33-36.
    When it became clear that there would be no comparable position, the respondent
    terminated the appellants employment, whereupon he was entitled to be paid
    what he would have earned had he remained employed during the reasonable notice
    period.

[68]

Although the respondents Mezzanine CIP was a complex,
    high-end financial vehicle, as was the appellants very remunerative
    entitlement to his points allocation in it, the law with respect to the
    two-step process for determining entitlement to damages in lieu of notice for
    wrongful termination of employment, set out by the Supreme Court in
Matthews
,
    applies to it in the same way as it does to a more simple bonus or benefit. The
    court asks first, what is the employees common law entitlement during the
    notice period, and second, whether the terms of the employment contract or
    bonus plan unambiguously take away or limit that common law right on
    termination.

[69]

In this case, there is no language that purports to reduce
    the appellants compensation if the CIP is discontinued (step one), or to limit
    the appellants entitlement because of his dismissal (step two). The language
    that my colleague focuses on is the right of the respondent to discontinue the
    plan. That right is merely the right of any business to make business decisions
    in its own interest. It is not an unambiguous right to also reduce the
    appellants compensation, either while he remains employed or is in the
    reasonable notice period following the termination of his employment.

[70]

What the Supreme Courts decision in
Matthews
emphasized, at para. 65, is how absolutely clear and unambiguous the
    provisions of the employment agreement must be to remove an employees common
    law right to damages. There is no language in the appellants employment
    agreement stating that if the CIP is terminated, so also is his entitlement to
    be compensated at the same level.

[71]

In my view, the trial judge was correct in his analysis of
    the CIP, and in his application of the law as it was then and as confirmed in
Matthews
.
    The trial judges decision remains entitled to the deference of this court.

[72]

I would affirm my original decision to dismiss the appeal
    from the trial judges decision, with costs.

Released: June 24, 2021 K. F.

K. Feldman J.A.

[1]
The trial judge, at paras. 50-51, averaged Mr. Manasterskys CIP
    entitlement over the period 2005 to 2013 (9 years), calculated a notional
    annual entitlement from Funds 1 and 2, and the multiplied it by the 1.5 years
    reasonable notice period.

[2]
In
British Columbia (Ministry of Forests) v. Teal Cedar Products
    Ltd.
, 2015 BCCA 263, 70 B.C.L.R. (5th) 318, at para. 2, the Court of Appeal
    for British Columbia, considering a remand after the Supreme Courts decision
    in
Sattva Capital Corp. v. Creston Moly Corp.
, 2014 SCC 53, [2014] 2
    S.C.R. 633, stated that the remand hearing was to be treated as a fresh appeal:
    Although this Court can inform itself from its earlier reasons, the appeals
    are to be reconsidered having particular regard for the law as stated in
Sattva
.
    The remand decision was appealed to the Supreme Court, where the result was
    overturned: see
Teal Cedar Products Ltd. v. British Columbia
, 2017 SCC
    32, [2017] 1 S.C.R. 688. But the Supreme Court stated, at para 78: However, on
    remand, the Court of Appeal had the benefit of
Sattva
, and its decision
    was specifically directed toward reconsidering the majoritys decision in light
    of
Sattva
.

[3]
My colleague comments, at para. 12, of his reasons that counsel for
    the appellant in oral submissions agreed that because the CIP was not
    discretionary, the issue of whether the CIP was integral did not arise. As I
    understand her comment in the context of her full submissions, she agreed that
    because the CIP was not discretionary, it was unnecessary to consider whether
    it was integral on that basis. However, the issue in the case remains whether
    the employer could cancel the CIP without replacing it or giving reasonable
    notice, and that turns on whether it was integral to the appellants
    compensation package.


COURT OF APPEAL FOR ONTARIO

CITATION: Murray v. Pier 21 Asset
    Management Inc., 2021 ONCA 466

DATE: 20210624

DOCKET: C66936 & C67356

Pepall, Roberts and Thorburn
    JJ.A.

BETWEEN

Emily Murray and 2327342 Ontario
    Inc.

Plaintiffs (Respondents/Appellants)

and

Pier 21 Asset Management Inc.,

David
    Star and 8165246 Canada Inc.

Defendants (Appellants/Respondents)

Igor Ellyn and Kathryn J. Manning, for
    the appellants (C66936)/respondents (C67356)

Edward J. Babin, Cynthia L. Spry and Michael
    Bookman, for the respondents (C66936)/appellants (C67356)

Heard: May 26, 2021 by video
    conference

On appeal from the judgment of Justice Michael
    A. Penny of the Superior Court of Justice, dated April 12, 2019 and September
    25, 2020, with reasons reported at 2019 ONSC 316, 2019 ONSC 4501, 2019 ONSC
    7230, 2020 ONSC 2153, 150 O.R. (3d) 419, and 2020 ONSC 5606.

COSTS ENDORSEMENT

[1]

The parties have agreed not to seek any costs of
    the appeal motions or the appeals.

S.E. Pepall
    J.A.

L.B. Roberts
    J.A.

J.A. Thorburn
    J.A.


WARNING

The President
    of the panel hearing this appeal directs that the following should be attached
    to the file:

An order restricting publication in this
    proceeding under ss. 486.4(1), (2), (2.1), (2.2), (3) or (4) or 486.6(1) or (2)
    of the
Criminal Code
shall continue. These sections of
the
    Criminal Code
provide:

486.4(1)       Subject to subsection
    (2), the presiding judge or justice may make an order directing that any
    information that could identify the victim or a witness shall not be published
    in any document or broadcast or transmitted in any way, in proceedings in
    respect of

(a)     any of the following
    offences;

(i)      an
    offence under section 151, 152, 153, 153.1, 155, 159, 160, 162, 163.1, 170,
    171, 171.1, 172, 172.1, 172.2, 173, 210, 211, 213, 271, 272, 273, 279.01,
    279.011, 279.02, 279.03, 280, 281, 286.1, 286.2, 286.3, 346 or 347, or

(ii)      any
    offence under this Act, as it read at any time before the day on which this
    subparagraph comes into force, if the conduct alleged involves a violation of
    the complainants sexual integrity and that conduct would be an offence
    referred to in subparagraph (i) if it occurred on or after that day; or

(iii)     REPEALED:
    S.C. 2014, c. 25, s. 22(2), effective December 6, 2014 (Act, s. 49).

(b)     two or more offences being dealt with in
    the same proceeding, at least one of which is an offence referred to in
    paragraph (a).

(2)     In proceedings in respect of
    the offences referred to in paragraph (1)(a) or (b), the presiding judge or
    justice shall

(a)     at the first reasonable
    opportunity, inform any witness under the age of eighteen years and the victim
    of the right to make an application for the order; and

(b)     on application made by
    the victim, the prosecutor or any such witness, make the order.

(2.1) Subject to subsection (2.2),
    in proceedings in respect of an offence other than an offence referred to in
    subsection (1), if the victim is under the age of 18 years, the presiding judge
    or justice may make an order directing that any information that could identify
    the victim shall not be published in any document or broadcast or transmitted
    in any way.

(2.2) In proceedings in respect of
    an offence other than an offence referred to in subsection (1), if the victim
    is under the age of 18 years, the presiding judge or justice shall

(a) as soon as feasible, inform
    the victim of their right to make an application for the order; and

(b) on application of the victim
    or the prosecutor, make the order.

(3)     In proceedings in respect of
    an offence under section 163.1, a judge or justice shall make an order
    directing that any information that could identify a witness who is under the
    age of eighteen years, or any person who is the subject of a representation,
    written material or a recording that constitutes child pornography within the
    meaning of that section, shall not be published in any document or broadcast or
    transmitted in any way.

(4)     An order made under this
    section does not apply in respect of the disclosure of information in the
    course of the administration of justice when it is not the purpose of the
    disclosure to make the information known in the community.
2005, c. 32, s. 15; 2005, c. 43, s.
    8(3)(b); 2010, c. 3, s. 5; 2012, c. 1, s. 29; 2014, c. 25, ss. 22,48; 2015,
    c.  13, s. 18.

486.6(1)       Every person who
    fails to comply with an order made under subsection 486.4(1), (2) or (3) or
    486.5(1) or (2) is guilty of an offence punishable on summary conviction.

(2)     For greater certainty, an
    order referred to in subsection (1) applies to prohibit, in relation to
    proceedings taken against any person who fails to comply with the order, the
    publication in any document or the broadcasting or transmission in any way of
    information that could identify a victim, witness or justice system participant
    whose identity is protected by the order. 2005, c. 32, s. 15.

COURT OF APPEAL FOR ONTARIO

CITATION: R. v. J.J. R.-M., 2021 ONCA 454

DATE: 20210624

DOCKET: C65626

Watt, Benotto and Harvison Young
    JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

J.J. R.-M.

Appellant

Scott Reid, for the appellant

Jeremy D. Tatum, for the respondent

Heard: May 19, 2021 by video
    conference

On appeal from the conviction entered on
    January 31, 2018 and the sentence imposed on March 1, 2018 by Justice Meredith Donohue
    of the Superior Court of Justice, sitting with a jury.

REASONS FOR DECISION

[1]

The appellant appeals his conviction before a judge and jury on counts
    of sexual interference and sexual assault of his stepdaughter. He says that the
    trial judge made the following reversible errors:

a.

She erred in
    ruling that certain post-incident evidence should be admitted;

b.

She erred in
    failing to instruct the jury to disregard an improper aspect of the Crowns closing
    which suggested that the complainants behavioural issues were related to the
    sexual abuse by the appellant;

c.

She erred in
    refusing to exclude photographs of the defendant and the complainant taken in
    her bedroom on grounds that it violated s. 8 of the
Canadian
Charter of Rights and Freedoms
.

[2]

There is no merit to any of these grounds for the following reasons.

The Post-Incident Conduct

[3]

The appellants adult daughter was a witness at the trial. She testified
    that during a visit with the appellant while he was in custody after being
    charged, the appellant had asked her to destroy a black bag containing the
    complainants clothing which he had left in an outbuilding near the familys
    home. The Crown brought a pre-trial motion asking that this evidence be
    admitted as it was after-the-fact conduct relevant to an issue at trial.

[4]

There was no dispute as to the relevance of the evidence to the
    allegations. It was anticipated that there would be evidence led that the
    appellant had bought his stepdaughter see-through clothing that he asked her to
    wear with nothing on underneath while her mother was absent. The heart of the
    appellants submissions on appeal is that the trial judge erred in failing to
    weigh the probative value of this evidence against its prejudicial effect. He
    argues that the prejudicial effect was high because, in his view, a jury would
    be likely to assume that the daughter was telling the truth unless there was
    evidence of motivation on her part to lie. While the appellants counsel was of
    the view that there was such motivation, this was evidence that was bad
    character evidence, including evidence that the appellant physically abused his
    children, that he had abducted them and spirited them out of their home country
    illegally, and that he had reacted very negatively when his daughter came out
    to him. This reality put the appellant in an untenable position because he
    was faced with the choice of addressing the daughters evidence on its own
    terms, or introducing bad character evidence.

[5]

We do not agree. As the appellant conceded, the evidence was highly
    probative in the circumstances. In her ruling allowing the Crowns application,
    the trial judge correctly instructed herself on the applicable principles of
    the law, and there is no suggestion that her instructions to the jury erred
    with respect to the treatment of post-incident conduct. The appellant
    cross-examined the witness extensively on her motivation to lie due to her
    fathers reaction to her coming out, and to her report of having been sexually
    assaulted on one occasion. In addition, the appellant and the appellants wife
    were both rigorously cross-examined on discrepancies between their respective
    testimonies as to where the black bag was found.

[6]

In short, we see no error. As the trial judge correctly held, it was up
    to the jury to decide whether the appellant had asked his daughter to find and
    destroy the bag. The material question was whether the appellant had made this
    request. The defence made strategic decisions as to what factors it brought out
    that could constitute motives to lie on the daughters part and rigorously
    cross-examined her on them. There was no basis for excluding this evidence as
    submitted by the appellant.

The Crowns Closing Submission

[7]

The appellant takes issue with the Crowns comment in its closing to the
    jury that the complainants behaviour after the summer during which the alleged
    incidents took place made sense because it was more in keeping with that
    summer she had after being sexually assaulted.

[8]

The appellant claims that this statement was entirely speculative,
    prejudicial, and rendered the trial unfair. We disagree. First of all, we note
    that the defence closing also contained statements that arguably invited
    speculation in the other direction. More importantly, there was no objection
    from Mr. Reid, who was also the trial counsel. This is particularly striking given
    that following the charge to the jury, counsel asked for, and the trial judge
    made, some clarifying instruction to the jury. He did not raise the issue of
    the closing. Closing submissions are to be given significant latitude, and the
    trial judges charge was balanced in that it included a fair summary of both
    sides positions.

The s. 8 Argument

[9]

Finally, the appellant submitted in his factum that the trial judge
    erred in ruling that the circumstances of the delivery of certain photos to the
    police did not violate his s. 8 rights. The photos had been inadvertently found
    by the appellants daughter on her (disabled) sisters tablet, and the daughter
    who found them downloaded them so they could be provided to the police. The
    trial judge made her finding on the basis that that the daughter who provided
    the photos to the police was acting as an independent actor and not as a state
    agent, and that those actions were not subject to s. 8 scrutiny. We see no
    error in this conclusion and no merit in this ground of appeal.

[10]

The
    appeal is dismissed.

David Watt J.A.

M.L. Benotto J.A.

A. Harvison Young J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Johnson v. Rajanna, 2021 ONCA 453

DATE: 20210623

DOCKET: C68567

Rouleau, Hoy and van Rensburg
    JJ.A.

BETWEEN

Phyllis
    Johnson

Plaintiff (Appellant)

and

Dr. Shobha Rajanna, Dr.
    Anthony Sterling, Margaret Doe
and Mary Doe

Defendants (
Respondents
)

Daniel Lamberto Ambrosini, for the
    appellant

Monica Tessier, for the respondents

Heard: May 31, 2021 by video conference

On
    appeal from the order of Justice Michael T. Doi of the Superior Court of Justice,
    dated April 22, 2020, with reasons reported at 2020 ONSC 2489.

REASONS FOR DECISION

[1]

The appellant appeals the motion judges order,
    granting summary judgment in favour of the respondents, dismissing her action
    against them. She also seeks leave to adduce fresh evidence on appeal,
    consisting of the affidavit and report of Dr. Ronald M. Kellen, a retired
    dentist.

[2]

The appellant raises several arguments on
    appeal. It is unnecessary to address all of them. As we will explain, we admit
    the fresh evidence. We are persuaded that, with the benefit of the fresh
    evidence, the motion judge would have adjourned the summary judgment motion.
    Accordingly, we set aside the dismissal of the appellants action.

The background

[3]

In March 2015, the appellant commenced an action
    against the respondents for dental malpractice arising out of Dr. Rajannas
    extraction of a molar in April 2013. The appellant, a walk-in patient, was 70
    years old at the time of the extraction. She alleged that she suffered nerve
    damage from the procedure, which resulted in lost sensation and feeling in the
    lower left side of her tongue and mouth.

[4]

In February 2016, the respondents gave the
    appellant notice of their intention to seek a summary dismissal of the action
    because she had not obtained expert evidence to establish that the respondents
    had failed to meet the standard of care.

[5]

Over the course of the litigation, the appellant
    was represented by several lawyers. She had difficulty obtaining an expert
    report.

[6]

The respondents summary judgment motion was
    originally returnable January 16, 2019. However, the appellant and her
    then-counsel requested an adjournment in order to allow additional time to seek
    and retain an expert to provide an expert report. The adjournment was granted,
    and, on February 21, 2019, a timetable was ordered, peremptory to all parties
    to the action. That timetable required the appellant to serve her responding
    record by September 2, 2019. In a court attendance on another matter on August
    20, 2019, the appellant was reminded that the timelines continued to apply.

[7]

When the summary judgment motion was ultimately
    heard on Wednesday, March 11, 2020, the appellant represented herself. At the
    outset of the hearing, she handed up a two-page, undated and unsigned, written
    submission to the motion judge. It stated that after meeting on Saturday with a
    retired dentist, who was not identified, and reviewing her documentation, we
    found three discrepancies which might constitute negligence or malpractice. The
    letter went on to briefly describe the concerns.

[8]

The motion judge, after making some inquiries of
    the appellant, concluded that she was unable to obtain an expert report to
    support her claim against the respondents  and that, given the complexity
    surrounding the application of clinical dental skills in determining liability,
    this was not a case where liability could be determined without expert
    admissible evidence addressing the standard of care and causation. Because the
    appellant had not delivered expert evidence to support her dental malpractice
    claim, and the respondents had adduced their own expert evidence which states
    that the dental treatment at issue met the expected standard of care, he found
    there was no genuine issue to be tried.

The fresh evidence

[9]

In his affidavit, Dr. Kellen deposes that: he is
    the retired dentist who assisted the appellant in preparing her two-page
    written submission; his initial contact with the appellant was on Friday, March
    6, 2020; when he met with her on Saturday, March 7, 2020, he agreed to be
    retained to assist in her case; he had reviewed her file and identified issues
    that suggested the possibility of negligence but he required additional time to
    investigate them and complete his final report; he could not attend the hearing
    on March 11, 2020 due to health reasons; and he advised the appellant to give
    the judge the written submission and seek an adjournment so that he would have
    enough time to complete his report.

[10]

After the hearing, the appellant instructed Dr.
    Kellen to complete his report, which he did on May 15, 2020.

[11]

In his affidavit, Dr. Kellen deposes that,
    Based on my review of the file provided by Ms. Johnson, and direct interviews
    with Ms. Johnson, I am of the opinion there is very likely negligence and
    dental malpractice by the Defendants that require a more fulsome disclosure and
    appropriate adjudication. He attaches his report, dated May 15, 2020.

[12]

The opinions expressed in his report include
    that:

·

The paraesthesia (numbness) almost certainly
    developed from additional injection(s) possibly with a damaged needle. It
    would be negligence if Dr. Rajanna used a 27-gauge needle (rather than a
    25-gauge needle) to administer the anaesthetic or if she failed to test the
    needle point for a bur prior to re-use. The fact that the paraesthesia happened
    to both the lingual nerve and the inferior alveolar nerve raises the
    probability that more than one block injection was used and that one or more of
    the further injections had a bur-damaged needle tip, which would have torn
    nerve tissue.

·

The x-ray showed that the appellants bone is
    dense, with narrow periodontal ligament space around the tooth being extracted.
    This definitely increased extraction difficulty. There is no indication in the
    chart that there was any pre-planning or consideration of the potential
    problems with the extraction that developed. This indicates negligence.

·

When Dr. Rajanna realized the difficulties with
    the extraction, there is no indication that she stopped, re-assessed, or
    considered aborting and referring the appellant to a nearby oral surgeon. That
    is negligence.

Application of the test for admission of
    fresh evidence

[13]

R. v. Palmer
,
    [1980] 1 S.C.R. 759, at p. 775, established the test for the admission of fresh
    evidence on appeal:

1.

The evidence should not be admitted if, by due
    diligence, it could have been adduced at trial, but this general principal will
    not be applied as strictly in criminal cases as in civil cases;

2.

The evidence must be relevant in the sense that
    it bears on a decisive or potentially decisive issue;

3.

The evidence must be credible in the sense that
    it is reasonably capable of belief; and

4.

The evidence must be such that if believed, it
    could reasonably, when taken with the other evidence adduced at trial, be
    expected to have affected the result.

[14]

The respondents argue that the proposed fresh
    evidence does not satisfy the first, third and fourth
Palmer
criteria.
    We disagree. In our view, all four factors are satisfied in this case.

[15]

As to the first factor, the respondents say that
    the time to adduce expert evidence was before the hearing of the summary
    judgment motion. They point out that the appellant had several years to obtain
    a supportive expert report and, according to her, had approached at least ten
    dentists, trying to do so.

[16]

That is so, but that very submission supports
    the appellants position that she was trying, throughout, to obtain an expert
    report. She spoke of her difficulty in finding someone to opine that a fellow
    dentist was negligent. She only succeeded in finding Dr. Kellen days before the
    scheduled summary judgment motion. Once she located him, she followed up to
    ensure that his report was completed promptly, within approximately two months
    of the hearing date.

[17]

There is no dispute that the second factor is
    satisfied. The expert evidence is clearly relevant to the issue that was before
    the motion judge.

[18]

As to the third factor, the respondents say that
    the fresh evidence is not credible because Dr. Kellens report is not
    accompanied by an assurance of his objectivity, in the form of an
    acknowledgment of the experts duty (Form 53), signed by Dr. Kellen, as
    required by r. 53.03(2.1) of the
Rules of Civil Procedure
, R.R.O.
    1990, Reg. 194. Further, they say that Dr. Kellen makes groundless assumptions
    and assertions about Dr. Rajanna, which should lead this court to conclude
    he cannot meet his obligation to provide the court with a fair, objective and
    non-partisan opinion.

[19]

The respondents are correct that the report is
    not accompanied by a Form 53 and, in portions of his report, Dr. Kellen made
    certain assumptions which he characterized as a couple of unsubstantiated
    theorizations because of large information gaps and things that do not fit.

[20]

To the extent there are deficiencies in Dr.
    Kellens report, they may speak to a lack of experience as an expert witness or
    the preparation of the report without input by counsel. We view them more as
    deficiencies that go to the fourth
Palmer
factor, and that could prove
    fatal if not rectified before trial or a further summary judgment motion.
    Nonetheless, in our view, Dr. Kellens evidence is reasonably capable of
    belief.

[21]

Turning to the fourth
Palmer
factor,
    the respondents argue that Dr. Kellens report suffers from a further,
    fundamental deficiency: it fails to definitively opine on both standard of care
    and causation. Dr. Kellen could have expressed his opinions with greater
    clarity. But, contrary to the respondents assertion, his opinions, summarized
    above, address both standard of care and causation.

[22]

In our view, if the motion judge had the benefit
    of Dr. Kellens affidavit and report he would not have granted summary judgment
    in favour of the respondents.

[23]

As the respondents argue, there are problems
    with the report Dr. Kellen prepared. And we note the lengthy history of this
    matter, the reminders to the appellant about the necessity of an expert report,
    and the peremptory timetable in place. We appreciate that there was in
    important interest in finality in this case.

[24]

However, the respondents were seeking a summary
    dismissal of the appellants action and had the onus of establishing there was
    no genuine issue requiring a trial. There appears to be no dispute that the
    appellant suffers from a real injury  numbness in the lower left side of her
    mouth and tongue  as a result of the dental procedure performed. Further, the
    transcript reveals that the motion judge made inquiries of the appellant when
    she handed up the letter. Unfortunately, the appellant did not specifically
    request an adjournment or clearly advise that she had retained an expert. The motion
    judge would not have appreciated from her submissions that, at the time the
    motion was heard, she had retained Dr. Kellen to provide an expert report and
    he had requested more time to complete his report.

[25]

We are persuaded that, faced with a 77 year-old
    self-represented party, seemingly of limited means, who suffered injury as a
    result of a dental procedure, who had struggled to secure an expert, who had
    retained an expert at the time she appeared before him, and who then secured a
    supportive expert report, the motion judge would have concluded that it was in
    the interests of justice to adjourn the motion to provide the appellant with an
    opportunity to cure the deficiencies in the expert report.

Disposition

[26]

Accordingly, we allow the appeal and set aside
    the dismissal of the appellants action and the costs below, without prejudice
    to the respondents right to bring a further summary judgment motion. Should
    the respondents elect to bring a further summary judgment motion, the
    privileged materials included in the motion record below and in the responding
    materials on this appeal should not form part of the motion record.

Paul
    Rouleau J.A.

Alexandra
    Hoy J.A.

K.
    van Rensburg J.A.