Pine Valley Mining Corporation (Re)

2008 BCSC 53 Pine Valley Mining Corporation (Re) IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Pine Valley Mining Corporation (Re), 2008 BCSC 53 Date: 20080115 Docket: S066791 Registry: Vancouver In the Matter of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended And In the Matter of the Business Corporations Act, S.B.C. 2002, c. 57, as amended In the Matter of Pine Valley Mining Corporation, Falls Mountain Coal Inc., Pine Valley Coal Inc., and Globaltex Gold Mining Corporation Petitioners Before: The Honourable Madam Justice Garson Reasons for Judgment (Concerning the Claim of John Stokmans a former employee of Petitioner Falls Mountain Coal Inc.) Counsel for Petitioners: T. Mackie Mr. Stokmans: Self-represented Counsel for Monitor, Ernst & Young Inc.: D. Gruber Date and Place of Hearing: October 29, 2007 Vancouver, B.C. Introduction [1] The petitioners, Pine Valley Mining Corporation ("PVMC") and Falls Mountain Coal Inc. ("FMC"), apply for an order setting the amount of compensation to which Mr. Stokmans, a former employee of FMC, is entitled. Facts [2] On October 20, 2006, FMC and PVMC obtained an order (the "Initial Order") staying all proceedings against those companies under the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the "CCAA"). [3] Pursuant to the Initial Order, Ernst & Young was appointed Monitor of the petitioner during the CCAA proceedings. [4] On December 8, 2006, the petitioners obtained an order (the "Claims Procedure Order") establishing a process for the Monitor to notify creditors of the call for claims. [5] In accordance with the Claims Procedure Order Mr. Stokmans filed a claim. Mr. Stokmans claimed $119,426.85 as follows: Outstanding Bonus Compensation $8,700 Benefit Premiums $1,282.60 Relocation Expenses $3,500 (later claimed in the amount of $7,500) Wage Increases $15,000 (plus $1,500 in additional bonus and $1,050 in additional RSP payments due to wage increases) Vacation Entitlement $1,394.25 Severance (12 months) $87,000 [6] His claim was not allowed in full by the Monitor. [7] Mr. Stokmans therefore filed a dispute notice. [8] Paragraph 17 of the Claims Procedure Order provides as follows: Where a Creditor delivers a Dispute Notice in accordance with the terms of this Order, such dispute shall be resolved as directed by this Court or as the creditor in question, the Petitioners and the Monitor may agree. [9] The parties come before this Court on a summary basis to resolve the disputed claim of Mr. Stokmans. [10] The facts underlying his claim are not in dispute. [11] Mr. Stokmans was hired by FMC as Senior Mine Geologist of the Willow Creek Mine, by way of a written employment agreement dated May 2, 2006 (the "Agreement"). Mr. Stokmans' employment commenced on June 5, 2006. [12] The Agreement sets out the terms and conditions of Mr. Stokmans' employment, including the following: (a) annual salary of $87,000; (b) discretionary bonus of up to 10% of his salary for the 2005/2006 fiscal year of FMC. The payment of any bonus for the 2006/2007 fiscal year is at the discretion of FMC; (c) FMC may terminate the Agreement and Mr. Stokmans' employment upon providing Mr. Stokmans with reasonable notice of not less than 30 days notice or salary in lieu of notice; (d) reimbursement for all reasonable direct moving costs incurred in moving to Chetwynd, B.C. from Fort St. John, B.C. to a maximum of $5,000; and (e) during his employment, FMC will make available to Mr. Stokmans the insured benefit plans customarily available to employees. [13] Mr. Stokmans was provided with a letter dated June 1, 2007, confirming that his employment with FMC would terminate on June 7, 2007. This letter also enclosed a proof of claim form from the Monitor. [14] On or about June 12, 2007, Mr. Stokmans began working for the new operator of the Willow Creek Mine, Western Canadian Coal Corp., as a Geologist, earning an annual salary of $102,000 per annum. [15] On July 25, 2007, the Monitor mailed Mr. Stokmans a Notice of Revision or Disallowance of Claim, which disallowed his claim in part and revised his claim from $119,426.85 to $2,812.01. [16] On August 27, 2007, Mr. Stokmans advised the Monitor by e-mail that he was disputing the Notice of Revision or Disallowance of Claim. [17] As a key employee, Mr. Stokmans received a retention bonus in the amount of $43,500 less withholdings and statutory deductions (net $21,780.60) in order that he would remain employed with FMC during the period that the petitioners were searching for or otherwise making a proposal under the CCAA proceedings. Mr. Stokmans accepted the Key Employee Retention Agreement payment and signed the Retention Agreement, which provided that all terms and conditions set out in his employment agreement would continue. [18] The remaining issues in dispute are Mr. Stokmans' claims to severance pay, relocation expenses, insurance benefit premiums, a wage bonus and a wage increase. Severance Claim [19] Mr. Stokmans argued that he was entitled to severance equivalent to 12 months' salary. The petitioners argued that he had mitigated his entire loss by accepting replacement employment at the same or higher salary. [20] Clause 1.6 of the Agreement specified notice periods in the event of the termination of his employment as follows: The Employee will be employed to perform the Services for a term commencing on 5th June 2006 or such other date as mutually agreed, and continuing until the employment is terminated by either party providing reasonable notice, which in the case of the company shall not be less than 30 days (or, in the case of the Company, by providing Salary in lieu of notice) [21] The Monitor acknowledges that at common law, but for the replacement employment, Mr. Stokmans would be entitled to between four and five months. The Monitor cites: Coles v. Dentech Products Ltd. (1994) 6 C.C.E.L. (2d) 105, [1994] B.C.J. No. 1680 (S.C.) (QL); Hennessy v. Excell Railing Systems Ltd., 2005 BCSC 734; Brunette v. A.V. Carlson Construction Co., [1993] B.C.W.L.D. 379, [1993] B.C.J. No. 20 (S.C.) (QL); and Billing v. Simon Fraser University (1995), 12 C.C.E.L. (2d) 273, [1995] B.C.J. No. 1334 (S.C.) (QL). However, the Monitor argues that because Mr. Stokmans mitigated his damages by accepting replacement employment, he has no entitlement to severance other than two weeks pursuant to the Employment Standards Act, R.S.B.C. 1996, c.113, s. 63. I disagree. The plain meaning of the termination and severance provisions of the Agreement (clause 1.6) entitles Mr. Stokmans to not less than thirty days. Real Estate Losses [22] Mr. Stokmans and the Monitor have since the October 29, 2007, hearing agreed that the loss which Mr. Stokmans suffered in respect to relocation and purchasing a home at a higher price is $30,000. Vacation [23] The Petitioners concede that Mr. Stokmans was entitled to $1,394.25 with respect to his vacation claim. Relocation Expenses [24] In the course of the hearing before me, the Monitor conceded that it would pay Mr. Stokmans $5,000 in relocation expenses despite having earlier agreed to only pay $3,500. Mr. Stokmans states that a reasonable amount of relocation expenses is $7,500. Clause 1.12 of the Agreement states that the company would pay a maximum total reimbursement of $5,000. Mr. Stokmans indicated at the hearing that the Chief Executive Officer of FMC told him in an oral conversation that FMC would pay an additional reasonable amount over and above the $5,000. That oral representation is in contradiction to the written Agreement and I cannot accede to his claim in that respect. I conclude he is entitled to $5,000 in relocation expenses. Insurance Benefit Premiums [25] Mr. Stokmans says that when he accepted the employment with FMC he had expected that his insurance premiums would be paid for by the employer. He claims $1,282.60 in this regard. [26] Clause 3.3 of the Agreement provides as follows: During the Term, the Company will make available to the Employee the insured benefit plans customarily available to employees (the "Benefits"). The terms and conditions of the Benefits will be determined by the plans or policies from time to time established or purchased by the Company. The Company retains the right to establish new Benefits and to modify or alter any Benefits from time to time and at any time in its sole discretion. [27] Mr. Stokmans drew my attention to a summary of the benefit plans that he was apparently given at the time he accepted the employment. This summary does not indicate that the employer would pay the benefits. [28] In my view, the terms of the contract govern this question and Mr. Stokmans is not entitled to additional payment in respect of the premiums. Moreover, this is a matter that does not arise from the termination of his employment, but rather is a question he should have taken up with his employer at the time he commenced employment. Wage Increase, Bonus, and RRSP Claim [29] Mr. Stokmans also claims entitlement to a bonus. The bonus provision in the contract reads as follows at clause 2.2: For the 2006/2005 fiscal year of the Company the Employee will be eligible for a discretionary bonus of up to 10 percent of the Salary paid to the Employee in that fiscal year, based on the performance of the Employee assessed against the requirements established by the Company, in discussion with the Employee, within 60 days of the date the Employee starts work. The payment of any bonus for 2006/2007 fiscal year and the terms and conditions of a bonus plan, if any, after the 2006/2007 fiscal year will be at the discretion of the Company. [30] The Monitor argues, and I agree, that the payment of the bonus was entirely discretionary. In my opinion, Mr. Stokmans cannot compel payment from the Monitor or his former employer, even though it was likely the bonus would have been paid if his employment had continued. A similar argument applies in respect to his claim to a wage increase. Such an increase, although likely, was in the discretion of the employer. The claim for additional RRSP contributions paid by the employer is linked to the salary increase and is similarly disallowed. Disposition [31] In summary, Mr. Stokmans is entitled to: severance in an amount equivalent to 30 days salary; $30,000 as agreed in respect to real estate losses as part of his severance package; $1394.25 vacation pay as agreed; and $5,000 in moving and relocation expenses. The balance of his claims are dismissed. "N. GARSON, J."