Ontario’s Court of Appeal upheld a lower court ruling that a former rep must repay part of a $1.6-million recruitment bonus that was originally structured as an interest-free loan.
In February 2024, the Ontario Superior Court of Justice ruled in favour of a now-defunct Toronto-based brokerage firm, Brant Securities Ltd., which sued a former rep, Donald Goss, seeking repayment of $461,000. It claimed the amount had to be repaid under the terms of a promissory note between the firm and Goss.
According to the court’s decision, in 2013, Goss was originally recruited to Aston Hill Securities Inc., which was later acquired by Brant Securities. His initial employment agreement with Aston Hill included a $1.6-million recruitment bonus that was structured as an interest-free loan, which was designed to be paid back over 10 years. If he met certain revenue targets, that would trigger a $160,000 annual bonus that could be applied against the loan.
However, the terms of that arrangement were amended in 2016, shortly before Brant acquired Aston Hill. And in 2021, after Brant was acquired by Worldsource Securities Inc., Goss’ employment was terminated. The firm then sought repayment of the $461,000 that it said was still owing under the amended promissory note.
After Goss declined to meet the firm’s demand, it sued, and won — with the lower court ruling that the amended promissory note between Goss and the firm was valid and enforceable.
It ordered him to repay the money owed under the agreement, less $33,616.60 that the court found he was owed by the firm in unpaid benefits under provincial labour rules.
In the same ruling, the court also dismissed a counterclaim from Goss seeking damages for wrongful dismissal and seeking the performance bonuses that weren’t paid in 2014 and 2015, despite the fact that he met the revenue benchmarks that were required to trigger those bonuses. The court found that those claims were statute-barred and that he wasn’t entitled to offset the unpaid bonuses against the amount owing on the note.
Goss then appealed the lower court’s rulings.
According to the Court of Appeal, he argued that the revised promissory note between him and the firm regarding the repayment of the recruitment bonus was not valid, as it “imposed additional burdens on him without providing new consideration.” He cited the requirement to work for 12 years to pay off the bonus, rather than the 10 years set out in the original terms of recruitment loan — and that he didn’t receive any benefits in return for that change.
However, the appeal court sided with the lower court, finding that there was no error in its conclusion that Goss agreed to the amended terms of the loan, and that he did get some consideration under its renegotiated terms.
“The motion judge noted that the negotiation of the terms of the amended note took place when [Aston Hill] was on the cusp of selling its business to [Brant], and that there were several options available to the parties at that time,” the appeal court said in its decision.
For instance, they could have tried to enforce the terms of the original note through litigation, agreed to repudiate the agreement, or sought an immediate lump sum payment, the court suggested.
Instead, they signed a revised agreement, which was negotiated, the lower court said.
It also found that Goss did receive “consideration” for the changing terms of the deal — it clarified the terms of the arrangement, ahead of the firm changing hands; it provided certain tax benefits; and it maintained the interest-free status of the loan for more two years.
The appeal court upheld that finding, saying: “Our conclusion that the amended note is valid is sufficient to resolve this appeal.”
It also said that the terms of the amended note, “resolved any further claim to the unpaid bonuses for 2014 and 2015 and provided a waiver of any claims to set-off.”
As a result, the court dismissed the appeal, with $12,000 in costs payable to the firm.