Employer didn't have change to bonus in writing, court said it didn't make sense
A former service manager at a Nissan dealership was awarded a $22,000 bonus by an Ontario court.
Francois Danis was the service manager at Rendez-Vous Nissan in Hawkesbury, Ont., from 1998 until he left in February 2002. Danis said he was entitled to receive a yearly bonus on the sale of parts and services for the period he was employed by the dealership.
But the dealership said it had already paid him all the bonuses he was entitled to and that Danis had agreed to cancel the existing bonus arrangement in March of 2000 in return for being allowed to earn commissions by selling cars. Danis agreed he was allowed to sell cars and earn commissions, but denied this replaced the bonus arrangement.
The first thing for Justice Robert Smith of the Ontario Superior Court of Justice to decide was whether the bonus arrangement had indeed been cancelled. There was nothing in writing about the bonus arrangement being cancelled, something that didn’t make sense given the history between the parties, the court said.
“Both when Mr. Danis was initially hired and when the terms of the bonus were amended on Feb. 28, 2001, Rendez-Vous put the terms of the bonus agreement in writing,” said Justice Smith. “The (dealership’s) evidence that it amended the bonus arrangement by a verbal agreement is inconsistent with its previous conduct of confirming any new bonus arrangement in writing, by way of an agreement or a memorandum.”
The court also said it wouldn’t make sense for Danis to agree to end the bonus in return for the ability to earn commission by selling cars.
“It would not accord with common sense for Mr. Danis to work additional hours to attempt to sell cars and earn the same bonus and to forgo his bonuses on the sale of parts and service, which was his primary responsibility as the service manager of the garage,” said Justice Smith. “To do so would require him to work extra hours to sell cars and to receive the same remuneration. I find that Mr. Danis’s evidence that he worked extra hours to sell cars and earn additional income, which benefited both him and Rendez-Vous Nissan, accords with common sense. The agreement to allow Mr. Danis to sell cars and earn commissions did not affect his responsibility for managing the service department and would not have removed his incentive to reach the sales targets.”
Nor would it make sense for the dealership to terminate the bonus arrangement on the sales of parts and service because it was “still very interested in ensuring that it reached its sales objectives for parts and service. The sale of parts and service was a very important part of the Nissan dealership.”
Justice Smith then turned his attention to calculating the amount of the bonus. When Danis was hired in 1998, he received a base salary of $42,000 plus a bonus of five per cent on parts and service sales above the set objective of $228,000 for service and $350,000 for parts, provided the profit margin on the sale of parts was equal to or above 30 per cent.
The bonus was amended in February 2001 to an amount of $10,000 if 100 per cent of the objective was achieved, namely gross profit on service sales of $349,776 to a lower amount of $7,000 if 70 per cent of the objective was achieved. The parts bonus was changed to $3,000 if $155,400 of gross profit was achieved (100 per cent of objective) and $2,7000 if 90 per cent of the objective was achieved.
The court calculated the total amount owing to Danis was $22,189.05.
For more information see:
• Danis v. 1292024 Ontario Inc., 2006 CarswellOnt 2832 (Ont. S.C.J.).
Francois Danis was the service manager at Rendez-Vous Nissan in Hawkesbury, Ont., from 1998 until he left in February 2002. Danis said he was entitled to receive a yearly bonus on the sale of parts and services for the period he was employed by the dealership.
But the dealership said it had already paid him all the bonuses he was entitled to and that Danis had agreed to cancel the existing bonus arrangement in March of 2000 in return for being allowed to earn commissions by selling cars. Danis agreed he was allowed to sell cars and earn commissions, but denied this replaced the bonus arrangement.
The first thing for Justice Robert Smith of the Ontario Superior Court of Justice to decide was whether the bonus arrangement had indeed been cancelled. There was nothing in writing about the bonus arrangement being cancelled, something that didn’t make sense given the history between the parties, the court said.
“Both when Mr. Danis was initially hired and when the terms of the bonus were amended on Feb. 28, 2001, Rendez-Vous put the terms of the bonus agreement in writing,” said Justice Smith. “The (dealership’s) evidence that it amended the bonus arrangement by a verbal agreement is inconsistent with its previous conduct of confirming any new bonus arrangement in writing, by way of an agreement or a memorandum.”
The court also said it wouldn’t make sense for Danis to agree to end the bonus in return for the ability to earn commission by selling cars.
“It would not accord with common sense for Mr. Danis to work additional hours to attempt to sell cars and earn the same bonus and to forgo his bonuses on the sale of parts and service, which was his primary responsibility as the service manager of the garage,” said Justice Smith. “To do so would require him to work extra hours to sell cars and to receive the same remuneration. I find that Mr. Danis’s evidence that he worked extra hours to sell cars and earn additional income, which benefited both him and Rendez-Vous Nissan, accords with common sense. The agreement to allow Mr. Danis to sell cars and earn commissions did not affect his responsibility for managing the service department and would not have removed his incentive to reach the sales targets.”
Nor would it make sense for the dealership to terminate the bonus arrangement on the sales of parts and service because it was “still very interested in ensuring that it reached its sales objectives for parts and service. The sale of parts and service was a very important part of the Nissan dealership.”
Justice Smith then turned his attention to calculating the amount of the bonus. When Danis was hired in 1998, he received a base salary of $42,000 plus a bonus of five per cent on parts and service sales above the set objective of $228,000 for service and $350,000 for parts, provided the profit margin on the sale of parts was equal to or above 30 per cent.
The bonus was amended in February 2001 to an amount of $10,000 if 100 per cent of the objective was achieved, namely gross profit on service sales of $349,776 to a lower amount of $7,000 if 70 per cent of the objective was achieved. The parts bonus was changed to $3,000 if $155,400 of gross profit was achieved (100 per cent of objective) and $2,7000 if 90 per cent of the objective was achieved.
The court calculated the total amount owing to Danis was $22,189.05.
For more information see:
• Danis v. 1292024 Ontario Inc., 2006 CarswellOnt 2832 (Ont. S.C.J.).
