David Matthews v. Ocean Nutrition Canada Limited

(Nova Scotia) (Civil) (By Leave)


Employment law - Constructive dismissal - Application of good faith principle in employment - Employee worked for employer for approximately 14 years - Employee resigned and sued employer for wrongful dismissal and for oppression remedy - Trial judge found that employee had been constructively dismissed, found appropriate notice period to be 15 months and awarded damages of approximately $1.085 million - Employer’s appeal granted in part - Damages awarded under employer’s long term incentive plan (LTIP) - Whether the majority of the Court of Appeal erred in failing to provide a remedy on the basis of a breach of the organizing principle of good faith and duty of honesty in contractual performance - Whether the Court of Appeal erred fundamentally in refusing to even consider Bhasin v. Hrynew, 2014 SCC 71 - Whether the Court of Appeal erred in treating employee as suing for the LTIP, rather than for damages - Whether equity would entitle employee to the LTIP - What standard of review is applicable under the circumstances.


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The appellant, Mr. Matthews, worked for the respondent, Ocean Nutrition Canada Limited, or its predecessors from January 1997 to June 2011. Mr. Matthews resigned from Ocean Nutrition on June 24, 2011, and commenced employment with TASA, a Peruvian company on August 1, 2011. In June 2011, he sued Ocean Nutrition for wrongful dismissal, seeking damages for breach of his employment contract and the loss of a Long Term Incentive Plan (“LTIP”, or the “plan”). The LTIP provided for a portion of the proceeds of the sale of the company, if it occurs during Mr. Matthews’ period of employment, be paid to him based on a formula provided in the plan. The LTIP further indicated that if Mr. Matthews was not employed by the company at the time of the sale, he would not be entitled to share in the proceeds, whether the end of employment was via resignation or wrongful dismissal. Ocean Nutrition was sold to Royal DSM N.V. on July 18, 2012, at which time Mr. Matthews portion of the proceeds of the sale would have been valued at approximately at $1.1M.

The trial judge found that Mr. Matthews had been constructively dismissed, found the appropriate notice period to be 15 months and awarded him damages of approximately $1.085M. Most of the damages were related to the LTIP, which plan the trial judge found would have crystalized if Mr. Matthews had remained employed throughout the notice period. A majority of the Court of Appeal upheld the finding of constructive dismissal with a reasonable notice period of 15 months, and held that the trial judge erred in awarding damages pursuant to the LTIP where that plan, by its plain wording, precluded any such payment. The majority of the Court of Appeal set aside the award of $1,086,893.36 for the LTIP. Scanlan J.A., dissenting, would have dismissed the appeal and would have maintained the award of $1,086,893.36 for the LTIP.

Lower Court Rulings

January 30, 2017
Supreme Court of Nova Scotia, Trial Division

Hfx No. 353606, 2017 NSSC 16
The applicant was found to have been constructively dismissed by the respondent. His damages included compensation for the loss of payouts under the respondent’s long term incentive plan. The claim for punitive damages was dismissed.
May 24, 2018
Nova Scotia Court of Appeal

CA 460556, 2018 NSCA 44
Appeal allowed, in part. The finding of constructive dismissal was maintained with a reasonable notice period of 15 months; however, the damages pursuant to the long term incentive plan were set aside.