Executive Summary: Key Legal and Evidentiary Issues

• Enforceability of the employment agreement’s termination clause turned on whether it contained clear and express language limiting common law notice.

• Ambiguity in the termination clause led the court to apply contra proferentem, favouring Mr. Brocklehurst’s interpretation.

• The court assessed entitlement to damages based on total compensation, including salary, commissions, and benefits during the notice period.

• Evidence did not establish any failure by Mr. Brocklehurst to mitigate his loss through reasonable job search efforts.

• Micco’s position that commissions should be excluded from damages was rejected, as the SIP did not unambiguously limit entitlement during the notice period.

• The reasonable notice period was determined at eight months, applying the Bardal factors to Mr. Brocklehurst’s circumstances.

Facts of the case

Craig Brocklehurst was employed as a sales representative for 8 years and 4.5 months by Micco Companies Limited, a family-owned group overseeing businesses in retail hospitality and the alcohol beverage industries. His employment commenced on January 19, 2016, under a letter of employment (the “Agreement”) signed the same day. The Agreement outlined a base salary and eligibility for commissions under a separate Sales Incentive Plan (SIP), which was not attached but provided about a month after he started.

On June 3, 2024, Micco terminated Mr. Brocklehurst’s employment without alleging cause. He was paid four weeks’ salary in lieu of notice, meeting the minimum entitlement under the Nova Scotia Labour Standards Code, along with $6,379.18 in earned and unpaid commissions, accrued wages, and vacation pay for the statutory notice period. Micco also offered an additional two weeks’ pay in exchange for a release, which Mr. Brocklehurst declined, choosing instead to bring this application for wrongful dismissal damages.

Discussion of policy terms

The termination clause in the Agreement provided that on termination without cause, Micco would provide:
(i) earned salary and accrued vacation pay not yet paid;
(ii) continued participation in the group health plan as required by Nova Scotia Labour Standards legislation; and
(iii) only such minimum notice of termination, or pay in lieu thereof, and severance pay (if applicable) to which the employee is entitled under the Nova Scotia Labour Standards legislation.

The court found the clause ambiguous, particularly as the qualifier “to which you are entitled under the Nova Scotia Labour Standards legislation” could be interpreted as applying only to severance pay and not to minimum notice. The SIP referenced in the Agreement was expressly for the 2016 fiscal year, and there was no evidence it applied beyond that period. Accordingly, it did not unambiguously remove Mr. Brocklehurst’s common law rights regarding commissions during the notice period.

Outcome

Justice Chipman concluded that the termination clause did not clearly limit Mr. Brocklehurst’s entitlement to common law notice. Applying contra proferentem, the court interpreted the ambiguity in favour of Mr. Brocklehurst. Considering the Bardal factors, including his age (52 at termination), position, and length of service, the court determined the appropriate notice period to be eight months.

The court awarded damages based on total compensation, including base salary, commissions, and benefits (including car allowance), concluding that Mr. Brocklehurst’s annual total compensation was $80,000. Micco’s argument that commissions should be excluded was rejected as the SIP applied only to 2016 and did not limit entitlement during the notice period. The court found no failure to mitigate, as Mr. Brocklehurst had made reasonable efforts through internet job searches and outreach to industry contacts. Damages awarded were $53,333.33 (subject to deductions for amounts already paid), together with prejudgment interest and costs.