Case Update: Styles v. Alberta Investment Management Corporation
On June 1, 2017, the Supreme Court of Canada dismissed an application for leave to appeal of the decision of the Alberta Court of Appeal in Styles v. Alberta Investment Management Corporation.1 This leaves the Alberta Court of Appeal’s decision undisturbed and binding on lower courts in Alberta.
As previously reported in Workwise, Styles had moved from Ontario to Alberta to work as an investment manager. He was dismissed without cause after 3 years of employment. The issue was whether Styles was entitled to a bonus under his employer’s Long Term Incentive Plan (LTIP). The Plan stated that no rights to the LTIP vested until there had been four years of employment and to be eligible, the employee was required to be an ‘active’ employee on the vesting date of the bonus.
In finding that the employee was entitled to the bonuses regardless of the plain wording of the LTIP, the trial judge found that the employer failed to reasonably exercise its discretionary contractual powers in terminating the employee’s employment without cause prior to the vesting date.
The Alberta Court of Appeal rejected the trial judge’s conclusion and held that any general principle of “reasonable exercise of discretion” in contractual performance constituted a radical extension of the law. In allowing the appeal, the Court provided useful guidance on the application of good faith in contractual performance, as established in the SCC decision Bhasin v. Hrynew 2. The Court also clarified that while the Bhasin principle related to the performance of the contract, “[i]t does not relate to the negotiation or terms of the contract.”3
Since the Supreme Court of Canada has now refused leave to appeal, employers can now be comfortable that the Court of Appeal’s limitation of the scope and application of Bhasin, as earlier reported, remains good law in Alberta. This will limit employees’ ability to use Bhasin to try to undermine clearly written employment contracts.
Field Law’s Labour and Employment Group can advise and assist employers in drafting and interpreting employment contracts and help to minimize costs and conflict when planning and making these sorts of organizational changes.
1 2017 ABCA 1
2 2014 SCC 71
3 Supra note 1 para 51