By Stephen Dugandzic
In Kirke v Spartan Controls Ltd, 2025 ABCA 40, the Alberta Court of Appeal addressed the intersection of employment and shareholder rights in the context of wrongful dismissal damages.
Key Legal Issues:
1. Entitlement to Profit-Sharing Payments Post-Termination:
Mr. Kirke, after 24.5 years of service, was terminated without cause and awarded 20 months’ reasonable notice damages, including base salary and bonuses. He sought additional damages for loss of profit-sharing payments under Spartan’s Shareholder Profit Sharing (SHPS) program for the entire notice period. The Court found that while SHPS payments were part of his compensation, his entitlement ceased 90 days post-termination due to a clause in the Unanimous Shareholder Agreement (USA) allowing the company to repurchase shares with 90 days’ notice.
2. Validity of Share Buy-Back Clause:
The USA contained a provision permitting Spartan’s parent company to buy back shares at any time with 90 days’ notice. The Court upheld this clause, noting it was clear, unambiguous, and not contingent on active employment. Therefore, Spartan’s exercise of this right was lawful and limited Mr. Kirke’s entitlement to SHPS payments beyond the 90-day period.
3. Oppression Remedy Claim:
Mr. Kirke argued that the share buy-back was conducted in bad faith to deprive him of SHPS payments, invoking the oppression remedy. The Court rejected this claim, stating that enforcing clear contractual rights does not constitute bad faith or oppressive conduct. It emphasized that the SHPS program’s structure, including the buy-back clause, was known and accepted by Mr. Kirke.
Implications:
This decision underscores the importance of clear contractual terms in employment and shareholder agreements. Employers can limit post-termination entitlements through well-drafted clauses, while employees should be aware of how such provisions may affect their compensation upon termination. The case also aligns Alberta law with the Supreme Court’s stance in Matthews v Ocean Nutrition Canada Ltd, affirming that termination without reasonable notice constitutes a breach of contract.
*Always seek legal advice. The above is for information purposes only.
Stephen Dugandzic received his Juris Doctor degree from the University of Alberta in 2013 and is Calgary-based. He previously practised with Bennett Jones LLP and Taylor Janis LLP before founding YYC Employment Law Group in 2018.