Executive Summary: Key Legal and Evidentiary Issues

• Termination without cause raised the threshold question of whether the employer had induced the plaintiff away from secure prior employment.
   
• Determining reasonable notice required weighing the Bardal factors, including character of employment, length of service, age, and availability of comparable work.
   
• Bonus entitlement turned on whether the Short-Term Incentive Plan formed an integral part of compensation despite forfeiture language tied to active employment.
   
• Long-term incentive entitlement depended on whether separate grant documents could override the Employment Agreement's silence on termination consequences.
   
• Valuation of unvested equity required the court to select a methodology for pro-rating shares that had not vested by the end of the notice period.
   
• Claims for bad faith, punitive, and moral damages tested whether the employer's conduct during and after termination crossed the threshold set by Honda Canada Inc. v. Keays.
   

Facts of the case

Shadi Khatib joined Goeasy Ltd. as a Senior Vice President on May 16, 2016, after being approached by an executive recruiter while employed at Systems Micro [also rendered "System Micro" elsewhere in the source]. He was dismissed without cause on October 21, 2019. Mr. Khatib sued for 12 months' notice, payment of his 2019 bonus and a pro-rated bonus for the remainder of his notice period, the value of Restricted Stock Units (RSUs) and Share Options (SOs) under Goeasy's Long-Term Incentive Plan (LTIP), and bad faith, punitive, and/or moral damages of at least $100,000. Mr. Khatib argued that Goeasy induced him to leave secure employment by offering an enhanced compensation package, including a signing bonus increased from 2,500 to 5,000 RSUs, and that he was never told the RSUs and SOs carried expiry or forfeiture provisions. Goeasy denied inducing him, noting it had considered fifteen candidates and interviewed eight before hiring him. The trial heard from three witnesses: Mr. Khatib; Steve Goertz, Goeasy's former Chief Financial Officer; and David Cooper, Goeasy's Executive Vice President and Chief People Officer, who negotiated Mr. Khatib's contract. The court found Mr. Khatib generally credible but not entirely reliable, found Mr. Goertz generally but not entirely credible given his strained departure from the company, and found Mr. Cooper both credible and reliable.

Policy and legislative provisions at issue

The Employment Agreement (EA) stated that Mr. Khatib was "eligible to participate" in the Short-Term Incentive Plan (STIP) with an annual target bonus of 40% of base salary, and separately provided for participation in the LTIP, including an annual grant valued at 40% of base salary and a one-time grant of 5,000 units in 2016, vesting "at the end of three (3) years." The STIP's termination clause stated that STIP compensation "is not earned by a Participant who is terminated or resigns from employment... prior to the payout times previously described." The LTIP grant documents similarly provided that unvested units "shall terminate and be forfeited" on a participant's "Termination Date," and that no period of notice or payment in lieu would extend the employment period for plan purposes, with "no cash or other compensation" payable for forfeited units. Neither the grant documents nor the EA defined "Termination Date." The court also considered Goeasy's Management Information Circulars (MICs), corporate disclosure documents sent annually to shareholders, one of which referenced entitlement to vesting on termination in terms differing from the EA.

Reasoning and analysis

The court dismissed the inducement claim, finding Mr. Khatib's own employment history did not support a finding that he had been drawn from long-term secure employment, that Goeasy's competitive hiring process weakened any suggestion of aggressive pursuit, and that the EA's non-inducement clause was meaningful given Mr. Khatib's status as a sophisticated negotiating party. On notice, the court applied the Bardal factors from Bardal v. Globe & Mail Ltd. and fixed reasonable notice at eight months, rejecting both Mr. Khatib's request for twelve months and Goeasy's proposal of six, and finding that his post-termination job search difficulties were not attributable to Goeasy once he secured comparable employment at Flexiti within roughly three months. On the STIP, applying the two-part test from Matthews v. Ocean Nutrition Canada Ltd., the court found the bonus was an integral part of Mr. Khatib's compensation and that Goeasy failed to prove he had received the STIP's forfeiture terms at hire, entitling him to his bonus throughout the notice period at 40% of base salary rather than the higher percentage he claimed. On the LTIP, the court found the grant documents constituted separate agreements but that their forfeiture provisions were unenforceable due to the undefined term "Termination Date," an ambiguity resolved in Mr. Khatib's favour per Paquette v. TeraGo Networks Inc. The court declined to disturb the fifty-three-month vesting period for the 2017 Share Options, finding the larger grant size justified the longer vesting period, and rejected Mr. Khatib's request to deem those shares vested on February 14, 2020. The court found the MICs irrelevant to entitlement based on several factors: their public-disclosure purpose, the absence of any precedent treating an MIC as a binding undertaking, the more plausible explanation that the relevant reference was a drafting error, and the lack of evidence Mr. Khatib ever saw or relied on the document. It declined to gross up damages for tax purposes, finding no basis distinguishing this case from ordinary income taxation, and rejected the bad faith, punitive, and moral damages claims, concluding that Goeasy's conduct did not meet the threshold of malicious, oppressive, or highhanded behaviour required under Boucher v. Wal-Mart Canada Corp.

Ruling and overall outcome

The court granted Mr. Khatib's claim in part. His inducement claim was dismissed, and reasonable notice was fixed at eight months, ending June 21, 2020. He was awarded his 2019 STIP bonus and a pro-rated bonus through the end of the notice period, both calculated at 40% of his base salary, along with the value of LTIP shares that vested on or before June 21, 2020, and the pro-rated value of unvested LTIP calculated using a specified day-count methodology, though his request to alter the 2017 Share Options' vesting date was dismissed. He was also awarded $416.66 in lieu of medical and dental benefits after offsetting benefits received from subsequent employment. His claims for a tax gross-up and for bad faith, punitive, and moral damages were both dismissed. In supplemental reasons released July 21, 2026, the court further ruled that a $1,736.10 dividend relating to the May 3, 2017 RSU grant could be included in the final order, finding it flowed naturally from the earlier decision to award LTIP value, over Goeasy's objection that the point had not been specifically decided at trial. The court found success in the case "somewhat divided" and directed the parties to attempt to agree on costs, with a process for costs submissions if they could not, running from the date of the supplemental endorsement.