Décision

Tesson c. GVE Global Vision inc.				2016 QCCS 1862
JM2455    SUPERIOR COURT
CANADA
PROVINCE OF QUEBEC
DISTRICT OF			MONTREAL
N° :		500-17-051931-098
DATE :	April 22, 2016
_____________________________________________________________________
PRESIDING:  THE HONOURABLE Gary D.D. Morrison, J.S.C.
_____________________________________________________________________
RALPH TESSON
Plaintiff
v.
GVE GLOBAL VISION INC.
Defendant
______________________________________________________________________
JUDGMENT
_____________________________________________________________________

[1]           Plaintiff, Ralph Tesson (“Tesson”), seeks an award in the amount of $157,072 against GVE Global Vision Inc. (“Global”) in relation to his dismissal as Vice-President, Sales and Marketing, and this only approximately eight and one-half (8 ½) months after having started to work for Defendant.

1-           CONTEXT

[2]           Prior to starting at Global, Tesson had approximately 25 years of experience in sales, twenty (20) of those in management positions.

[3]           Much of his experience was with small to medium-sized businesses in Canada specializing in automation.

[4]           Immediately prior to being hired at Global, Tesson was an international sales manager at another company.  This latter company, as well as Tesson personally, had done business with Global prior to Tesson being hired as V.P.

[5]           As regards Global, it was founded by Reuben Malz (“Malz”), a mechanical engineer.  In addition to its research and development, the company specializes in a unique automated proof-reader system for label printing sold on a worldwide basis, primarily to pharmaceutical, printing and packaging companies.

[6]           Global’s system is based on the interconnection of cameras and computers, with certain imaging equipment coming from the company where Tesson had been.

[7]           Malz personally built the first prototype.

[8]           As the product was unique, with no competitors anywhere in the world, the company grew quickly, as did the variety of products.

[9]   Eventually, Global’s own client base, primarily the pharmaceutical companies, advised Malz that the company had a “single-point failure”.  Malz was so involved in every aspect of the company that if anything were to happen to him, the company would fail.  The company needed to adapt.

[10]        So, the decision was made to hire a Chief Operating Officer (“COO”), and then a Vice-President of Sales and Marketing.

[11]        David Perlis (“Perlis”) was hired as the COO.

[12]        Global retained recruiting firms to find the new VP Sales and Marketing.  The company claims to have even consulted the Business Development Bank of Canada as to the type of professional to retain.

[13]        A job description was prepared for the new VP position, whose supervisor would be the COO, Perlis.

[14]        Tesson met the recruiters and went through their profile testing.  He was interviewed on three (3) occasions, mostly with Perlis but also with Malz.

[15]        Global’s Human Resources had provided three (3) candidates.  For Malz, Tesson was “the clear choice”.  This is particularly of interest as previously, Malz had essentially run the Sales Department and, with the assistance of his wife for a period of time, the company’s marketing.

[16]        Tesson began working for Global on February 12, 2007.

[17]        His Employment Agreement[1], with appendixes, was signed by Tesson, Perlis and then Malz, on March 19 and 20, 2007 respectively.

[18]        On Monday, October 29, 2007, Tesson was informed by Malz that he was dismissed, effective immediately.

2-           TESSON’S POSITION

[19]        According to Tesson, he was terminated without serious reason.

[20]        He alleges that he was never provided, whether verbally or in writing, any reason or explanation for his dismissal and that, as well, Global had failed throughout to comply with its own progressive discipline policy[2].

[21]        Moreover, he claims that he was provided insufficient payment in lieu of a notice of termination, the two weeks provided by Global being insufficient as to base salary, commissions on sales, bonus and vacation pay.  Accordingly, he seeks payment of additional compensation.

[22]        In this regard, he alleges that Global has failed to calculate the commissions owing to him in accordance with his Employment Agreement.

[23]        He adds that his dismissal was abusive, having been done in bad faith.  In his view he was terminated only a few days prior to the end of Global’s third quarter in order for the company to avoid having to pay him the full commissions he would otherwise have been owed.

[24]        He asserts that the manner in which his dismissal was conducted, and the circumstances surrounding same are such that he is entitled to moral damages.

3-           GLOBAL’S POSITION

[25]        Global argues that it had serious reason to dismiss Tesson.

[26]        Essentially, Global asserts that it terminated the employment contract for cause.  Accordingly, the latter claims to have applied section 2.3 (i) of the Employment Agreement (P-1) for benefit calculation purposes.

[27]        As for the applicable length of notice to Tesson, the Defendant asserts that the governing clause of the Employment Agreement is appropriate in the present case, subject to adaptation in order to reflect the fact that Tesson’s tenure was less than a full year.

[28]        In fact, Global claims to have treated Tesson in a manner that exceeds its obligations by paying him not only two weeks of base salary in lieu of notice but also all commissions calculated up to his dismissal.

[29]        In that regard, the company asserts that the parties had agreed to modify the commission payment scheme and that they took that into account in calculating the commissions to be paid to Tesson.

[30]        As regards such commissions, Global argues that the applicable exchange rate to convert from sales in US currency to CDN currency for payment thereof would be the rate in force when they would have allegedly become due, not the current rate at the time of the Hearing, as claimed by Tesson.

[31]        Moreover, Global argues that as for its purported overpayment to Tesson, it has decided not to seek reimbursement.

[32]        In the event that the Court were to award any amount to Tesson, Global asserts that interest and additional indemnity thereon should not be calculated for the period between the date the matter was first scheduled for trial and postponed at Tesson’s request, being September 10, 2012, through to the last day of Hearing, being February 22, 2016.

4-           ISSUES BEFORE THE COURT

[33]        The following are the principal issues before the Court:

            a)      Was Tesson terminated with or without serious reason?

            b)      Was he provided with sufficient notice of termination?  Does section 2.3 of the Employment Agreement apply?

            c)      Has Tesson received the compensation to which he is entitled?

            d)      In the negative, what additional amounts should he be paid as base salary, benefits, commissions and bonus, if applicable?

            e)      What exchange rate should apply for converting the commission from U.S. to Canadian currency?

            f)       Was his termination decided in bad faith or conducted in an abusive manner?

            g)      Should Tesson be paid moral damages?  If so, how much?

            h)      From when should interest and the additional indemnity be calculated and for what period of time?

5-           ANALYSIS

5.1       The governing law

[34]        As a senior executive, the Loi sur les normes du travail[3] does not apply to Tesson.

[35]        The claim being in relation to a contract of employment, the governing provisions are to be found at Articles 2085 and following C.C.Q.[4]. 

[36]        During the life of the employment contract, the employer is bound to allow the performance of the work and to pay the remuneration agreed upon[5].

[37]        As for the employee, the latter must perform the work with prudence and diligence and, as well, to act faithfully and honesty[6].

[38]        When an employer decides to terminate the services of an employee, it is the former who has the burden to prove that the latter’s dismissal was as a result of just and sufficient reason:

En pratique, c’est l’employeur qui a le fardeau de la preuve, de démontrer que l’employé a été congédié pour de tels motifs.  C’est un fardeau qui est généralement difficile à renverser, surtout dans le cas où le motif du congédiement repose sur des critères subjectifs.  En l’occurrence, l’insatisfaction de l’employeur sur le rendement de son employé n’est pas retenu comme un motif de congédiement pour cause, à moins que l’employeur ne démontre clairement et objectivement l’incompétence flagrante de son employé[7].

[39]        Each case is to be decided on its particular facts.  That said, the Courts will take into consideration the employee’s performance, the seriousness of any failings by the employee, as well as whether the latter was given the opportunity to remedy the conduct or performance on which the employer bases the decision to terminate.

[40]        As regards termination, Article 2091 C.C.Q. reads as follows:

Either party to a contract for an indeterminate term may terminate it by giving notice of termination to the other party.

The notice of termination shall be given in reasonable time, taking into account, in particular, the nature of the employment, the specific circumstances in which it is carried on and the duration of the period of work.

[41]        Moreover, Article 2092 C.C.Q. stipulates:

The employee may not renounce his right to obtain an indemnity for any injury he suffers where insufficient notice of termination is given or where the manner of resiliation is abusive.

[42]        The Supreme Court of Canada[8] has taught that Article 2092 C.C.Q. is a rule of public order.

[43]        The Court must accordingly apply the stated criteria to each individual case in order to determine the reasonable period of time applicable to the notice of termination.

[44]        That determination is to be made as at the time of the dismissal since that is when the notice of termination is to take effect.  Therefore, the imperative rule of Article 2092 stipulates that the employee cannot renounce to appropriate notice by agreeing to it in advance[9].

[45]        When payment is made in lieu of the fired employee working during the notice period, the latter is entitled to be paid all the salary and benefits he would have received or which would have accrued had he worked during that period[10].

[46]        In other words, the proper approach to assessing the damages of an employee whose service is terminated without cause is to determine the benefits which would vest or accrue during the reasonable notice period[11].

5.2       Were the services of Tesson terminated with or without serious reason?

[47]        Firstly, given that the Employment Agreement[12] was signed slightly over one (1) month after Tesson had started working at Global in February 2007 and, further, that according to the said agreement, at section 2.3 (iii), the first three (3) months were on a “trial basis”, one could reasonably assume, absent proof to the contrary, that up to mid-May 2007 all went relatively well with Tesson’s employment.

[48]        What happened from then to October to explain Tesson’s dismissal?

[49]        Global admits that no written document was ever given to Tesson outlining what the employer considered to be cause for dismissal, although the employer refers to certain discussions regarding his conduct.

[50]        As for Tesson, he claims that he was never told why his services were terminated, nor was he ever given any opportunity to correct any issues of importance.  He states that he never felt that he was being disciplined or that any discussions involved a serious problem.

[51]        The proof establishes that Tesson was never provided a performance evaluation.

[52]        One was filed in the Court record[13], but it is unsigned and undated.  Even though Malz asserted that it was completed over the course of Tesson’s employment, he then acknowledged that he was not certain.  As well, Perlis believes it was only completed after Tesson was dismissed.  In any event, it was never shared with or given to Tesson prior to being communicated as an exhibit within the context of the Court proceedings.

[53]        That said, Global refers primarily to the following issues to explain its decision to terminate Tesson’s services:

            a)      The sales and marketing plan for which he was responsible was not up to the standards that it should have been;

            b)      His lack of professionalism at the office;

            c)      His failure to respect rules governing expense money for entertaining and travel, especially as regards a trip to Japan;

            d)      His failure to produce any results as regards a label convention during a 1 - week business trip to Europe.

[54]        It is interesting to note that Perlis, Tesson’s supervisor, acknowledged that the employer was either satisfied or had no recollection of being dissatisfied with Tesson’s performance regarding the majority of items described as being his “primary responsibilities”[14].

[55]        The items that Perlis described as not being satisfactory essentially relate to the itemized list described above. 

[56]        As regards managing and directing the sales team to meet sales and profit objectives, Perlis says they were not satisfied.  Why not?

[57]        Global does not really argue that sales figures were unacceptable or insufficient, and rightly so, given that the proof would not support such a position.

[58]        In fact, Perlis admits that he had never heard of any complaints from Malz about sales targets not being met.

[59]        Nonetheless, according to Perlis, Tesson was to turn the sales people into “hunters”, to push them into being “sharp sales people”.

[60]        Instead, he feels that Tesson was “pulling” them more than “pushing” them.  What that means is not clear, especially since the sales objectives were generally well respected over the course of his employment.

[61]        In this regard, Malz alleges that there were also complaints from the sales staff.

[62]        As regards any such alleged complaints, there are little in the way of details or specifics referred to by Global.  No sales representatives testified in that regard.

[63]        On the other hand, Tesson describes how he changed the system for the sales team, structuring it so that they would need to become more proactive.  He asserts that when he arrived, the sales team only sat waiting for clients to phone them.  No one had any assigned responsibilities for a given client or a given territory.  He had to reorganize the sales system.  He also added more sales people.

[64]        A description of his changes can be found in a draft marketing plan he developed[15].

[65]        He also claims that he mentored the sales team, on a one-to-one basis, as opposed to holding group meetings.

[66]        In this regard, it would not be surprising to learn that some sales people might not be entirely pleased with those changes and might, if invited to do so by the company owner, share their personal dissatisfaction.  It certainly would require more than that to establish cause.

[67]        Moreover, Perlis acknowledged that he never formally expressed dissatisfaction to Tesson in this regard, although he could have, over coffee, indicated to him to “do more of this or more of that”, to which Tesson seemed receptive.

[68]        Given the lack of details provided by Global as regards this issue, the Court is of the view that the latter has failed to meet its burden of establishing that any of this constitutes a serious reason for termination.

[69]        As regards Tesson’s responsibility to implement an acceptable marketing program, a plan[16] was presented but, according to Perlis, it was at a very high level and essentially did not have enough “meat”.

[70]        Perlis described the marketing plan as a “major” issue and that Tesson was told that additional work on it had to be done.

[71]        What specifically was wrong with the proposed plan?

[72]        The proof is not clear in this regard.  Perlis admits that he may have even informed Tesson that there were “too many words for Malz and that he likes pictures”, which could possibly explain why Malz preferred version Exhibit D-7 of the plan prepared by the Marketing Manager to version Exhibit D-8 prepared by Tesson.

[73]        Perlis also states that the “only feedback” to Tesson was that the plan contained “too many to-dos but not enough detail”.

[74]        As for Malz, his complaint appears to be that Tesson should have personally done a better job and that the Marketing Manager should not have had to do it.

[75]        In fact, Global never clearly explains the standards it expected the plan to meet or that those standards were ever discussed with Tesson.

[76]        Certainly Malz was entitled to dislike the plan or to be of the view that it could have been done differently, but, in this case, that does not constitute cause for termination.

[77]        Given the proof, the Court is of the view that once again Global has failed to provide sufficient explanation or details to enable the Court to conclude that it has met its burden of proof in that regard.

[78]        What then about Tesson’s alleged lack of professionalism at work?

[79]        According to Malz, Tesson had brought some of his model trains to the office.  Malz did not consider that to be appropriate.

[80]        There is no proof as to how many model trains there were, whether they were set up to be operational or whether Tesson ever sat in his office playing with them during work hours.

[81]        In this regard, the Court is of the view that no legal principle exists to the effect that, absent a known policy established by an employer, simply having a number of personal items of this nature in an office is grounds for dismissal.  There is certainly no proof of such a company policy having been made known to Tesson when hired or of the latter being told to remove the model trains from the workplace.

[82]        It appears that Tesson had also asked one of the company’s engineers to look at one of his model trains.  Tesson was told that that was inappropriate.  The proof confirms that he never made another such request.

[83]        In the circumstances of the present case, the Court is of the view that Global has not met its burden to establish that the said request or having some personal effects in his office was sufficiently serious reason for Tesson’s dismissal.

[84]        Nor was Malz’s displeasure that Tesson kept some food and water in a desk drawer.  Obviously, from his testimony, this seriously bothered Malz.  But there was no proof that to do so was against a company policy or that Tesson had previously been told not to do so.

[85]        Global considers Tesson’s conduct in this regard to be unprofessional.  The Court, in the present case, given the lack of details and lack of corporate policy, does not share Global’s view.  There is no serious reason for termination in that regard.

[86]        What about the issue regarding Tesson’s failure to respect the company’s rules governing expense accounts and travel expenses?

[87]        Global’s argument regarding a four-person dinner with certain Japanese businessmen in a West Island restaurant for slightly more than $500 certainly lacks seriousness.

[88]        Likewise regarding Tesson’s trip to Japan.

[89]        The trip had not been organized by the company’s travel coordinator, as it should have been.  However, according to Tesson, his attendance at a pharmaceutical trade show in Japan had been discussed with his supervisor, Perlis, and the Marketing Manager.  They all agreed he should attend, which he did.  This is not denied by Perlis.

[90]        Moreover, there is no proof that Tesson spent more money on the trip than he would have had it been organized by the travel coordinator.

[91]        As well, Tesson’s job description indicates that he was to travel 30% of the time[17], so a lot of travel was to be expected.

[92]        So why even raise the Japan trip as grounds for dismissal?  As it turns out, Malz did not agree with it since he did not want to focus on Asia for sales.  That is his right, but it does not mean that the trip, as authorized by Perlis, constituted cause for dismissal.  Nor does the proof demonstrate that Malz had ever made his views known on the subject before that trip was taken or that he should have been consulted beforehand.

[93]        Is the situation the same regarding the trip to Europe, which included attendance at a label trade show?

[94]        That is actually a different issue.

[95]        According to Tesson, he was already to be in Europe, visiting a client in the United Kingdom at the time of the trade show.  According to him, the Marketing Department had arranged the trip, including two (2) trade shows, one in Belgium and one in Germany.

[96]        Tesson claims he attended the label trade show, but that it was of little value to Global because it was all about glue for labels and not about printing labels.  He claims that he only met two (2) or three (3) potential clients.

[97]        When he returned, a travel report was not filed, which Tesson should have done after any trip.  So, Malz asked him about the trade show.  Tesson told him it was a “bust”.

[98]        Malz testifies that he does not believe that Tesson attended the label trade show; he must have been doing something else, but what, Malz cannot say.

[99]        In his mind, the fact that Tesson only returned with two (2) or three (3) business cards of potential clients “raises a lot of suspicion”.

[100]     Yet, when asked about the reason for Tesson to attend that show, Malz answered that Global is weak in Europe and attendance there was to “evaluate our competitors who were starting”.

[101]     This explanation by Malz seems contradictory, as it was not made clear how a focus on glues and assessing start-up printing competition would be useful to Global identifying new clients.  Similarly, evaluating the competition in a business that has little competition world-wide is certainly not the same as trying to identify new clients.  The entire issue is raised by Global without precision or clarity.  Frankly, Global’s position in this regard is confused.

[102]     This confusion, and the lack of details regarding Global’s position, are not in keeping with its burden of proof to establish cause for dismissal.

[103]     That said, the proof does indeed confirm that the trip was a point of contention for Malz.  It occurred only one (1) month before Tesson was dismissed.

[104]     It may well be that subjectively, Malz had become suspicious of Tesson.

[105]     But, contrary to what Global pleads, this is not a case of dishonesty by a high-ranking executive who is caught bringing his wife on vacation, charging it to the company and misleading the Accounting Department by saying that the company president had approved the expense[18].

[106]     Nor is it a case where an internal audit raises serious concerns about the integrity of an executive[19].

[107]     In other words, a lack of confidence in an executive must have some objective basis to constitute “serious reason” in the context of Article 2094 C.C.Q.

[108]     In the present matter, the Court is of the view that on all counts the Defendant has failed to meet its burden of proof to establish serious reason.  Accordingly, the Court concludes that Tesson’s services were terminated without serious reason.

[109]     The fact that no one ever explained to Tesson either the need to improve on issues or risk being fired or, ultimately, the reason for his being dismissed, only goes to undermine the credibility of Global’s position.

[110]     It is one thing to argue, as does Global, that it was not required to respect its own progressive discipline policy given that Tesson was a high-ranking executive, but even that cannot justify the end result that the fired executive does not know during his employment the level of the President’s dissatisfaction and later, why he has been dismissed.

[111]     The Court must consider all the factors, and those include the fact that the company’s owner, Malz, had been motivated, as mentioned above, not by his personal desire to put sales and marketing into the hands of a new vice-president, but by his clientele who had expressed concerns to him.

[112]     According to the proof, Malz had been handling sales from the day he had started the company, not to mention his involvement in handling marketing.  Once he fired Tesson, he appears to have again taken over at least the sales functions, and exercises them to this day.

[113]     In the Court’s view, this speaks more in favour of Malz’s purely subjective rather than objective assessment of Tesson.

[114]     Concluding as it has to the effect that Global has not established serious reason, the next question to be answered is whether Tesson was provided sufficient notice of termination.

5.3       Was Tesson provided with sufficient notice of termination?

[115]     Upon his termination on October 29, 2007, Global paid Tesson two (2) weeks salary in lieu of notice, as well as certain commissions.

[116]     Global professes to have calculated the two-week notice on the basis of clause 2.3 (i) of the Employment Agreement[20], which provides for the equivalent of one (1) month salary per uninterrupted year of service, up to a maximum of six (6) months.

[117]     Given that Tesson had only worked at Global for approximately eight (8) months, the employer determined that two (2) weeks was appropriate within the spirit of the said clause.

[118]     Tesson seeks a thirty (30) week notice, at $1,923 per week, for a total salary of $57,690, less the amount already paid by Global of $3,957.71[21], for a claimed balance of $53,732.

[119]     What is a sufficient and reasonable notice of termination in the circumstances of the present matter?

[120]     It is important to keep in mind that the purpose of the notice period is to give the employee a reasonable period of time to find new employment without incurring personal economic loss, albeit not so long as to render illusory the right of an employer to terminate an employee[22].

[121]     Consequently, each case must be assessed on the basis of its particular facts with a view to determining what is just and reasonable in the circumstances.

[122]     This determination of fact takes into consideration, as a whole, factors such as the following[23]:

            a)      Nature and importance of the Plaintiff’s position;

            b)      The number of years of service;

            c)      The employee’s work experience;

            d)      Whether the employees left a long-term stable employment to accept a position with the Defendant, and the related legitimate expectations;

            e)      The difficulty for Plaintiff to find new employment.

[123]     In the present matter, and as stated above, Tesson had approximately 25 years of sales experience, many of which were in technology fields, before accepting a senior management position with Global.

[124]     That offer followed a serious vetting process, although the Court was not provided much in the way of documents or details in that regard.

[125]     That said, Malz considered Tesson to be the ideal candidate for the position of Vice-President Sales & Marketing.  The required qualifications and requirements are set forth in the Job Description[24]:

required qualifications:

-   15 to 25 years of experience in sales and marketing, including direct sales, international sales and channel;

-   Familiarity with software and/or technology products and a successful track record of selling and leading sales for these types of products;

-   Capacity to analyze market segments and to design a strategy for an optimal positioning of a technology corporation;

-   Ability to develop and to maintain good relationships with distributors and to lead indirectly the sales team employed by these distributors;

-   To hold a bachelor’s university degree in a relevant field (can be replaced by strong experience);

-   Be fluently bilingual (spoken and written).

requirements:

-   To show senior leadership capacities and entrepreneurial skills;

-   To prefer and to be at ease working within the environment of a small to medium size company;

-   To be self-disciplined and reliable with actions items and deadlines, being able to work independently without lacking motivation and self-orientation;

-   To be ready to travel (approx. 30% of time).

[126]     And although the Job Description refers to a six (6) month trial period, the Employment Agreement reduces it to three (3) months[25].

[127]     Tesson described it as a dream job.  As to what he was doing professionally immediately prior to starting with Global, however, the proof provides very few details, and this notwithstanding the Court’s invitation to provide clarity in this regard.

[128]     Accordingly, the Court cannot reasonably conclude that Tesson had been working elsewhere at a particular good salary for a length of time immediately prior to his accepting Global’s offer of employment.  In other words, the Court cannot conclude based on the proof that Tesson had given up anything serious in order to work at Global.

[129]     That said, Tesson asserts that it took him fourteen (14) months to find employment after being dismissed by Global, and even that at lower remuneration than he had while with the Defendant.

[130]     Given all the circumstances, the Court is of the view that a reasonable notice period would be six (6) months.

[131]     Accordingly, the Court is of the view that the two-week notice given by Global was insufficient within the meaning of Article 2091 C.C.Q.

5.4       What additional amounts, if any, should be paid to Tesson?

[132]     An employer, who, without serious reason, provides an employee with a notice of termination, must treat the employee as being entitled to receive all his same benefits which accrue during the notice period.  Such benefits should include all financial benefits comprising salary, commissions, sickness benefits, premiums, vacation pay etc., given that the employment agreement continues to apply during the notice period[26], as well as bonuses where appropriate.

[133]     These principles apply to both those employees who work during the notice period and those who are not given that opportunity[27].

[134]     They also apply to an employee who is given an insufficient notice, and this for the entire notice period determined to be reasonable by the Court.  As stated by the Quebec Court of Appeal in Aksich:

The determination of the benefits which would vest or accrue during the reasonable notice period, but of which the employee was deprived, is the proper approach to assessing the damages to be awarded[28].

[135]     For the purpose of calculating the amounts owing, one need keep in mind that Tesson was fired on October 29, 2007, being just days before the end of the third quarter (Q3).  Accordingly, the six (6) month notice period would terminate April 29, 2008.

[136]     As well, for calculating compensations, Global’s first quarter (Q1) begins as of February 1^st 2007 and the fourth quarter (Q4) ends as at January 31^st 2008[29].

5.4.1.    Base salary

[137]     According to the 2007 compensation plan for Tesson, forming part of his Employment Agreement[30], his base salary was $100,000 per year.

[138]     Simply put, six (6) months salary would be $50,000.

[139]     Global paid Tesson in lieu of a two-week notice to November 9, 2007[31].  Hence a balance is payable by Global to Tesson in the amount of $46,154, using the weekly amount of $1,923, as claimed by the latter.

5.4.2.    Bonus

[140]     According to the compensation plan[32], a bonus would be payable as follows:

There will be a bonus of $5,000 paid to Ralph Tesson for reaching the annual revenue goal amount.  This amount is payable and (sic) the end of the quarter when this target is reached.

[141]     The same plan indicates that the revenue goal for 2007 was $5,262,000, being twenty percent (20%) greater than the 2006 sales amount, with sales figures being expressed in US funds and calculated using date from Global’s “CRM” system, the customer relationship management program.

[142]     By the time Tesson’s services were terminated on October 29, 2007, just days before the end of Q3, sales were at $3,735,000 US[33].

[143]     It is interesting to note that sales in the first three (3) quarters represent generally a total of 60% of Global’s annual sales.  Q4 is usually Global’s largest sales quarter, representing 40% of its annual sales, as is clearly illustrated in the Employment Agreement compensation plan.

[144]     Since Tesson was no longer at Global for Q4 2007-2008 or for Q1 2008, being the period to be covered by the six-month notice, calculating his claim is dependent on the Defendant’s financial data.

[145]     That data for those quarters has been the subject of many heated exchanges between the parties and much argument before the Court.

[146]     Plaintiff alleges that Global has been less than forthcoming in supplying the data, while the latter alleges that Tesson has been less than clear and precise in his requests for such financial information.

[147]     The end result is that the available information is less than precise.  The parties have focused primarily on procedural technicalities rather than on transparent cooperation.

[148]     And although this has certain importance for the bonus, it is even more important when it comes to evaluating what commission, if any, may be due to Tesson in relation to the notice period.  Calculations for both are dependant on the applicable sales data.

[149]     As regards fixing the sales figures for the purposes of determining both the bonus and the commission, there are three (3) issues that need be addressed given the adversarial positions of the parties.

[150]     Firstly, are the “sales” figures to be based on actual sales or on purchase orders (PO’s)?

[151]     Secondly, are the “sales” figures to reflect sales by the Defendant or by GVE Global Vision Sales Inc. (“Sales Inc.”), given that Global sells only to Sales Inc., which in turn is the only company that sells to third-party customers?

[152]     Thirdly, what is the appropriate proof to use for determining the applicable sales figures and what is the amount of “sales” to be applied?

(i)     Actual sales v. PO’s

[153]     As mentioned above, the compensation plan in the Employment Agreement[34], signed by Tesson March 19, 2007, and by Malz on March 20, 2007, confirms that the data is to come from the CRM system.

[154]     According to the proof, the CRM system is based on purchase orders, not on actual sales.

[155]     Global’s accountant, Joe Tuwaig, confirms that although for his purposes, including to preparation of financial statements, he uses actual sales, the CRM only represents the data based on orders being made[35].

[156]     Tesson essentially agrees, testifying that purchase orders are booked in the CRM and, as such, are registered as sales.

[157]     Accordingly, the Court concludes that purchase orders are the basis for determining “sales” for the purpose of calculating any bonus and commission that would be owing under Tesson’s compensation plan.

(ii)    Sales by Global or by Global Vision Sales Inc.?

[158]     Should the Court take into consideration the sales of Global or of Sales Inc.?

[159]     The answer to that question really depends on which purchase orders are booked into the CRM.

[160]     The parties did not bring much clarity in that regard.  That said, the PO’s filed for the period from October 29, 2007 to April 30, 2008, do not appear to include PO’s from Sales Inc. to Global, but rather PO’s from third party customers.

[161]     Regardless of which corporate entity is the supplier stated on those PO’s, the preponderance of proof is to the effect that those would be the only PO’s recorded in the CRM system.

[162]     Moreover, it is useful to note that the Employment Agreement is specifically stated to be between Tesson and both the Defendant and Sales Inc., referred to collectively as the “Employer” along with other subsidiaries, affiliates, associates or parent corporations or unincorporated business enterprises.

[163]     Accordingly, the Court is of the view that any PO’s placed with Sales Inc. would, for Tesson’s compensation plan, be placed with his employer.

[164]     This is of particular importance given that the Court was not provided with the actual content of the CRM system per se.

[165]     Therefore, for the purposes of calculating Tesson’s compensation, the Court will need rely on other elements of proof, particularly the PO’s provided by Global to Tesson[36], as well as Perlis’s list of sales for commission purposes covering Q1, Q2 and Q3 2007[37].

[166]     Accountant Tuwaig’s sales numbers[38] are only of secondary interest as he does not represent the sales numbers as per Global’s actual quarters, using other dates for some unknown reason.  This makes precise comparison impossible for the parties and the Court. 

[167]     The reason for Tuwaig having presented information in this way is difficult to understand, and one would be entitled to at least wonder whether it could possibly have been done for the purpose of rendering difficult a clear and precise calculation of sales in relation to Tesson’s compensation.  That said, the Court need not actually conclude in that regard.

[168]     In any event, not having clearer numbers from Global in this regard, the Court considers it appropriate to rely on Tesson’s analysis of the PO’s supplied by Global.  These PO’s were filed as Exhibit P-24.

[169]     In doing so, the Court adopts the view that given Global’s absence of proof to contradict Tesson’s analysis and calculations for the “sales”, which information Global no doubt does or at least should possess in its CRM system, the latter exposes itself to unfavourable inferences and holdings of fact.

[170]     In so stating, the Court does not adopt Global’s position that the entire issue is simply Tesson’s “dilemma”, given that he has the burden of proof.  That position carries the unpleasant odour of a “catch me if you can” strategy.

(iii)   What are the applicable sales totals for calculating the bonus and commission due to Tesson?

[171]     Tesson’s analysis thereof is found in a working document, identified as P-25, but not filed as proof.  Not having been informed of errors in this regard, the Court considers the said working document as a correct working reflection[39] of the purchase orders in Exhibit P-24.

[172]     Based on the preponderance of proof, the Court concludes that the quarterly “sales” numbers which should be used for calculating Tesson’s compensation are as follows:

            -    Q1 2007:                                                                 $1,753,179.42

            -    Q2 2007:                                                                 $    921,430.37

            -    Q3 2007, ending October 31, 2007:                    $1,276,370.00[40]

            -    Q4 2007-2008, ending January 31, 2008:          $2,145,523.75

[173]     Consequently, for the four quarters of 2007, the applicable sales total is US $6,096,503.54.

[174]     As for the remaining period, from February 1, 2008 to April 29, 2008, being Q1 2008, the data is even less certain and precise.

[175]     The PO’s for Q1 2008 as provided by Global and analysed by Tesson at working document P-25 amount to US $424,620.38.

[176]     Although that is a rather low figure compared to Q1 2007, the Court has no other available data for Q1 2008 purchase orders.  Even the invoices for actual sales in Q1 2008 are quite low compared to the Q1 2007.  The Court is of the view that it has insufficient information with which to presume a higher level of sales.

[177]     Accordingly, the applicable “sales” figure for calculating bonus and commissions in Q1 2008 is the said amount of US $424,620.38.

[178]     What bonus or bonuses are therefore due to Tesson?

[179]     As for 2007, given that the “sales” exceed US $6 million, versus the “sales” target of US $5.2 million, the Employment Agreement stipulates that a bonus of $5,000 will be paid to Tesson.

[180]     As for 2008, the Court has insufficient information to conclude that a bonus would be due to Tesson, keeping in mind that the bonus is to cover the entire year as opposed to a single quarterly target.  Clearly, given the proof, it would be unreasonable to award a bonus to Tesson for Q1 2008.

[181]     The claim for the said bonus is correctly expressed in Canadian dollars.

[182]     Accordingly, the Court concludes that a $5,000 bonus is due to Tesson for 2007 only.

5.4.3.    Commissions

[183]     The total “sales” amounts calculated above are those that also apply for commission calculation purposes.

[184]     According to the Employment Agreement compensation plan, three (3) percentage calculations are appropriate depending on the level of such sales, varying from 0.5% to 1.5%, and then at 4% for sales above US $4,998,900.

[185]     The commissions are stipulated to be payable in Canadian funds, using Global’s own internal exchange rates[41] to convert from the “sales” in US dollars.

[186]     Commissions were agreed to be calculated and paid, when appropriate, on a quarterly basis, using twenty percent (20%) of the annual sales target as the quarterly target for each of the first three (3) quarters, and then forty percent (40%) thereof for Q4.

[187]     However, according to Global, the parties had verbally agreed to modify the Employment Agreement so that for each quarter they would thereafter always use twenty-five percent (25%) of annual sales as an appropriate quarterly target for commissions.

[188]     The effect of such a modification would be to make it more difficult each quarter to meet the higher quarterly targets, such that less commission would be payable to Tesson per quarter.

[189]     However, one must keep in mind that quarterly commissions are stipulated in the Employment Agreement as being “advances towards year end”.

[190]     Consequently, the juridical debate as to the alleged amendment from quarterly 20% to 25% is of little consequence to 2007, as the commission calculation should be done using year-end totals, with actual paid advances being deducted therefrom in order to determine what remains payable, if anything.

[191]     As for 2008, Q1 “sales” amounts are so low that even if one were to assume[42] for argument sake that the annual sales target would have been the same as for 2007, no commissions would have been payable to Tesson.  Even more so, had the sales target been increased for 2008.

[192]     That said, the Court is of the view that Global has not, contrary to what it pleads, established a modification to the Employment Agreement.  What the proof establishes is that the sales were so high in Q1 2007, Tesson agreed to take less commissions for that quarter, and this to avoid the risk that at year-end he might have to reimburse money to Global in the event that sales did not maintain the same pace throughout the year.

[193]     Hence, in the Court’s view, the proof establishes that the parties agreed to use a one-time different calculation, and this without amending the Employment Agreement for the future.

[194]     What then is payable to Tesson as commissions for 2007?

[195]     According to his amended proceeding[43], Tesson claims that he was owed a total of US $70,230 for all four quarters of 2007, of which he admits[44] being paid US $22,480 by Defendant, leaving a balance owing of US $47,750.

[196]     The Court, given the proof and in view of the foregoing, accepts Tesson’s figures and fixes the balance owing on commission for 2007 at US $47,750.

[197]     That amount needs to be converted into Canadian dollars for payment purposes, as per the Employment Agreement.

5.4.3.1    What is the applicable conversion rate into Canadian dollars?

[198]     Tesson argues that he can choose to use the conversion rate of $1.4592 Canadian dollars per US dollar[45], applicable at the time of the Hearing, which is even more favourable to Tesson than the rate used in his most recently amended proceedings.

[199]     Tesson’s contention is that the creditor is entitled to benefit from the conversion rate date that is the most beneficial to him.

[200]     Global argues that the appropriate conversion rate would be the rate applicable at the time the commission would have become payable, being 2007, at which time the value of the Canadian dollar was greater than that of the US dollar, a situation far more beneficial to Global.

[201]     The only proof emanating from Global in this regard is found on Exhibit D-11, which demonstrates that as at Q3 2007, the conversion rate was ninety-six Canadian cents (CDN $0.96) per US dollar.

[202]     However, the proof does not demonstrate what the conversion rate would have been at the end of Q4 according to Global’s “internal accounting exchange rate”.  That is the rate stipulated in the Employment Agreement, as mentioned above.  Global chose not to file it, notwithstanding that its accountant testified and provided other financial information from Global’s records.

[203]     At the same time, however, Tesson does not appear to have attempted to identify the applicable conversion rate as stipulated by his Employment Agreement.

[204]     In other words, both parties were essentially negligent as regards establishing the applicable contractual rate, preferring to ignore same.

[205]     Although the Courts have often recognized that a creditor is generally entitled to choose the conversion rate most favourable to him, there is a caveat, being that such date is reasonable and, further, that there is an absence of negligence[46].

[206]     Under the circumstances, the Court considers it reasonable and appropriate to apply the conversion rate which was applicable at the date of institution of Tesson’s original proceedings, being $1.0981[47].  Using the rate now sought by Tesson ($1.4592) would be unreasonable.

[207]     Accordingly, the amount of commission still owing to Tesson is CDN $52,434.28.

5.4.4.    Vacation pay

[208]     Plaintiff seeks three (3) weeks of vacation pay at $1,923 per week, for a total amount of $5,769.

[209]     As mentioned above[48], the benefits payable during the period covered by a notice of termination are payable to the employee, including vacation pay.

[210]     In this regard, Section 4.1 of the Employment Agreement reads as follows:

Vacation Entitlement:  The Employee shall be entitled to three weeks (3) of vacation with pay at the end of each 12-month period of employment of the Employee (…).

[211]     Accordingly, taking into account Tesson’s actual time at Global coupled with a 6-month notice, Tesson is entitled to three weeks of vacation pay.  His claim is therefore valid.

5.4.5.    Moral damages

[212]     In addition to the salary-related claims described above, Tesson pleads that his dismissal was done abusively, in bad faith, giving rise to moral damages.  He is claiming $25,000.

[213]     Tesson’s claim in this regard is not without some merit.

[214]     According to the proof, the decision to dismiss Tesson was not made by his supervisor, Perlis.  It was ultimately made by Malz.

[215]     According to Perlis, he met Malz the morning of Monday, October 29, 2007.  The latter told him that he wanted to “get rid of” Tesson and that he could not “take this guy anymore”.

[216]     Perlis states that he “sensed it would not work out, so I said: then get rid of him”.

[217]     They then met Tesson.  According to Perlis, he believes that Malz took the lead and told Tesson that it was not “working out”.

[218]     Perlis confirms that no specific reasons were given to Tesson for his dismissal.  He does not know why none were given.  Since the ultimate decision was not his but Malz’s, he felt that it was not up to him to give Tesson any reasons.

[219]     Perlis also admits that the progressive discipline policy was not followed.

[220]     And although there had been discussions with Tesson, Perlis agreed that “things were not communicated directly to Tesson”.

[221]     Malz explains that he did not tell Tesson the reasons for his dismissal at his wife’s suggestion, so he could keep his dignity.  That explanation totally lacks credibility, and certainly would not be a justification for silence.

[222]     In fact, according to Tesson, he never was informed of the reasons for his dismissal until Global responded to his lawsuit.  He had reached out to Perlis who provided some input, stressing however that he could not provide an actual “reason” for dismissal.

[223]     Once dismissed, Tesson was then escorted out of the building.  He could not go retrieve any personal effects from his office, not even his passport.

[224]     His subsequent requests to be able to go retrieve such effects, even pick them up at reception, were denied.

[225]     Perlis states that he did not make that decision either.  He admitted that he had no indication of any misconduct by Tesson.  He had, however, been instructed by Malz not to allow Tesson back but to simply ship his things to him.

[226]     Malz explains that Global had a duty to protect its clients’ confidential information, hence his decision to keep Tesson out of the building.  He did not, however, explain how Tesson picking up a box at reception would endanger his clients’ data.

[227]     And there is more to this part of the factual story that needs be considered.

[228]     Days prior to Monday, October 29, 2007, being Thursday, October 25, Malz met with Tesson and the sales team.

[229]     He learned that sales projections were very positive and would probably exceed targets by forty percent (40%).

[230]     In fact, at paragraph 22 of its Plea, Global admits that the forecast for Q4 was extremely positive.

[231]     Tesson pleads that he was dismissed because of this, so that Malz and Global could avoid paying him a bonus and full commissions at the end of Q4, hence the move to dismiss him just before Q3.

[232]     In this regard, the Court is of the view that Tesson has not succeeded in establishing that Global dismissed him so that it could avoid paying the bonus and commissions that would become due at year end.  And the facts are not sufficiently serious, precise and concordant to give rise to the inference suggested by Tesson, especially considering the amounts in question.

[233]     In fact, given the proof, including the language used by Malz in front of Perlis to explain his decision to dismiss, the Court is of the view that Malz had developed a personal dislike of Tesson and, as well, did not feel that he needed the latter to improve Global’s sales.

[234]     But the issue does not entirely end there either.

[235]     On that same Thursday, October 25, 2007, even before informing Tesson days later that he would be dismissed, Malz decided to speak with the entire sales team to the exclusion of Tesson.

[236]     He admits to having communicated to them “what I was going to do” and that “the leadership will be changed back to me for sales”.

[237]     Later, in cross-examination, Malz tried to correct himself by saying that he did not tell the sales team that he would dismiss Tesson but only that he was dissatisfied with him because of bad sales results.

[238]     Malz’s self-contradiction does little for his overall credibility.  In any event, the Court considers that his attempt to change his testimony is not credible.

[239]     Speaking to the sales team in such a manner, while Tesson is still Vice-President of Sales, constitutes not only bad judgment, but bad faith.  He intentionally demeaned Tesson in front of his staff.

[240]     Malz attempts to justify this by referring to disappointing quarterly sales, but the proof only shows at most one (1) possible such quarter and, further, Malz already has admitted that the forecasts for Q4, representing the target quarter, were very positive.  Also, as stated above, Perlis testified that Malz had not complained about sales figures.  Thus, Malz’s reference to sales figures as a justification for Tesson’s dismissal is weak and unconvincing.

[241]     Malz had the right and authority to dismiss Tesson, so long as he properly compensated him, but he was not entitled to humiliate him, to not disclose his reasons for dismissal and to be less than frank and honest.

[242]     Employers have a duty to act in good faith, such that even in the dismissal process they must treat the employee in a frank, reasonable and honest manner, avoiding conduct that is inequitable or that constitutes bad faith[49].

[243]     In the present matter, the employer acted in a cavalier and unduly harsh manner, informing sales staff before the dismissal, dismissing abruptly without any explanation whatsoever, without providing an opportunity to correct perceived problems, and thereafter, contesting every request by Tesson whether to pick up his personal effects or to be paid what was reasonably due to him.

[244]     The issue of not disclosing the reasons for an employee’s dismissal may not always be a factor in determining the issue of moral damages.  But in this case, Tesson was left to wonder at his own competence while questioning his own self-esteem.  He had to seek out other employment at a senior management level without even the opportunity of explaining to potential employers what had transpired.

[245]     Such circumstances could conceivably lead others to wonder as to whether Tesson had been involved in illicit conduct.  In fact, Tesson testified that he decided not to disclose his months at Global on job applications since he could not explain why he was dismissed.

[246]     The Court considers these factors as favourable to Tesson’s claim for moral damages and concludes that Global failed in its duty of good faith.

[247]     In view of Tesson’s testimony as to the humiliation and lowered self-esteem that he encountered as a result, and given the foregoing, the Court sets the amount of moral damages suffered by Tesson at $5,000.

5.4.6.    Interest and the additional indemnity

[248]     Global requests that interest and the additional indemnity not be awarded as from September 10, 2012, due to the then trial postponement resulting from Tesson’s request.  The Court does not consider that to be appropriate in the present matter.

[249]     The Court cannot conclude that Tesson’s request for a postponement in 2012 was abusive or unreasonable.  Plaintiff had allegedly faced difficulties accessing financial information, which led to the postponement.

[250]     The lack of certain financial information from Global during the Hearing in this matter speaks unfavourably to Global’s request.

[251]     That said, the Court is of the view that the interest and additional indemnity payable in relation to revenue related matters should be awarded as of the date of the expiry of the six-month notice, whereas for the moral damages, they should be payable as of the date of the legal proceedings in which they were first claimed, being January 15, 2016.

FOR THESE REASONS, THE COURT:

            ORDERS Defendant to pay to Plaintiff the amount of $109,357.28 with interest thereon and the additional indemnity provided in Article 1619 of the Civil Code of Quebec, as from April 29, 2008, as well as an additional amount of $5,000 with interest and the additional indemnity thereon as of January 15, 2016.

            THE WHOLE, with judicial costs.

		__________________________________ Gary D.D. Morrison, J.S.C.
Mtre. Alain Daigle Attorney for Plaintiff
Mtre. Paul Déry-Goldberg SPIEGEL, SOHMER INC. Attorneys for Defendant
Dates of Hearing :	January 26, 27, 28, 29 and February 22, 2016