Executive Summary: Key Legal and Evidentiary Issues

• Failure by the employer to deliver contractually promised shares under an employment agreement, resulting in a substantial damages claim based on the value the employee would have realized upon sale.
• Evidence of the employee’s clear intention to exercise and sell the share entitlement on a specific date, anchoring the valuation of damages for the undelivered shares.
• Unilateral changes to the employee’s role and duties, including marginalization and hiring a replacement to whom he was required to report, supporting a finding of constructive dismissal.
• Application of the Bardal factors to determine a reasonable notice period and corresponding damages in lieu of notice for wrongful termination.
• Award of aggravated and punitive damages in response to the employer’s egregious conduct in refusing to honour the employment agreement and in orchestrating a constructive dismissal.
• Substantial indemnity costs and pre- and post-judgment interest ordered against a non-participating corporate defendant that failed to attend or defend the trial.

Facts of the case
Jamie Flegg was employed by Sigma Lithium Corporation under an employment agreement that included a right to receive and then sell company shares as part of his compensation. The agreement made Flegg entitled to a specific allocation of shares, which he was contractually permitted to exercise and sell at a time of his choosing. He later notified Sigma Lithium of his intention to exercise his rights and sell the shares. On the date he communicated this intention, the shares had a determinable market value, and he stood to realize a large gain if the transaction had been completed as contemplated by his contract.
Instead of delivering the shares as required under the agreement, Sigma Lithium failed to fulfill this core contractual obligation. The court found that, had the employer complied, Flegg would have received and sold the shares, crystallizing their value on that date. The reasons emphasize that it was Flegg’s intention to sell the shares when he advised the company that he wished to exercise his rights, tying the loss directly to the employer’s refusal to perform. The court calculated his loss arising from the undelivered shares at $1,898,350, representing the amount he would have realized on their sale if they had been properly delivered pursuant to the employment contract.
In parallel with the share dispute, the evidence showed that Flegg’s working conditions deteriorated significantly. His duties were unilaterally altered in a way designed to marginalize his role. The employer took steps to hire another employee who, in substance, replaced Flegg, and Flegg was then required to report to this individual. This restructuring undermined his seniority and status in the organization and supported the conclusion that Sigma Lithium had fundamentally changed the employment relationship.
Sigma Lithium did not appear at trial and made no submissions. The action therefore proceeded on an uncontested basis, but the court still required the plaintiff to establish his case on the evidence. Justice Pollak expressly found that Flegg met his burden of proof on the key elements: the contractual entitlement to shares, the employer’s breach in failing to deliver them, the factual basis for constructive dismissal, and the quantification of damages flowing from both the contract breach and the termination.

Contractual and employment terms at issue
At the heart of the dispute was Sigma Lithium’s failure to honour contractual obligations under the employment agreement. The court accepted that the agreement required the employer to deliver a specified tranche of shares to Flegg when he elected to exercise his rights. When he communicated that election and the intention to sell, the company was obliged to transfer the shares so that he could realize their then-current market value.
The measure of damages for that failure was framed in orthodox contract-law terms: the court awarded the amount that would place Flegg in the position he would have occupied had the contract been properly performed. Because the evidence showed that he intended to sell the shares immediately upon exercise, the court treated the lost gain on that date—the $1,898,350 figure—as the appropriate measure of damages for breach of contract.
In employment-law terms, the court also addressed the employer’s obligations at termination. By unilaterally modifying his duties in a way that marginalized him and effectively replacing him with a new hire, the employer crossed the line from permissible managerial change to repudiatory change in the fundamental terms of employment. This constituted constructive dismissal, triggering an obligation on Sigma Lithium to provide reasonable notice, or pay in lieu, based on the well-known Bardal factors (which consider, among other things, the character of the employment, length of service, age, and availability of similar employment).
The plaintiff presented a draft order seeking $100,000 as the monetary equivalent of six months’ compensation in lieu of reasonable notice. The court reviewed this claim in light of the Bardal framework and found that the requested period was a reasonable estimate of how long it would have taken Flegg to obtain comparable alternate employment. On that basis, the $100,000 figure was accepted as an appropriate measure of damages for wrongful dismissal.

Damages for breach of contract and constructive dismissal
Justice Pollak separated and quantified the various heads of damages arising from the employer’s conduct. For the breach of contract related to the share entitlement, the court concluded that Flegg was “legally entitled to damages in the amount of $1,898,350” for Sigma Lithium’s failure to deliver the shares he was owed under his employment contract. That sum corresponded to the amount he would have realized on selling the shares had they been delivered and sold when he exercised his rights.
On the employment front, the court found that Flegg had been constructively dismissed when his role was unilaterally changed, his responsibilities were diminished, and another employee was brought in as his effective replacement, to whom he was required to report. The constructive dismissal finding entitled him to reasonable notice damages. Applying the Bardal factors and accepting the plaintiff’s evidence regarding a reasonable period of notice, the court awarded $100,000, which it described as the equivalent of six months of his compensation and a reasonable estimation of the damages for failure to provide proper notice of termination.
Beyond compensatory damages, the court considered the employer’s conduct in both refusing to honour the employment agreement and orchestrating the constructive dismissal. Describing Sigma Lithium’s behaviour as egregious, Justice Pollak awarded $250,000 for aggravated and punitive damages. The aggravated component reflected the impact of the employer’s bad-faith conduct in the manner of dismissal, while the punitive component served to denounce and deter similar misconduct in the future.
The court also addressed litigation costs and interest. In light of what was characterized as unacceptable conduct by the defendant throughout the litigation, the court ordered costs of $234,000 on a substantial indemnity basis, a level significantly higher than ordinary partial indemnity costs and reserved for particularly serious or blameworthy behaviour. In addition, pre- and post-judgment interest were ordered pursuant to sections 128 and 129 of the Courts of Justice Act, though the precise dollar value of that interest was not quantified in the reasons.

Outcome and total award in favour of the plaintiff
The proceeding concluded entirely in favour of the plaintiff, Jamie Flegg. Sigma Lithium did not appear or defend at trial, but the court still carefully assessed the evidence and quantified the appropriate remedies. Justice Pollak held that Flegg was entitled to $1,898,350 in damages for breach of contract relating to the undelivered shares, $100,000 in damages for constructive dismissal and failure to provide reasonable notice, $250,000 in aggravated and punitive damages, and $234,000 in substantial indemnity costs. The court further ordered pre- and post-judgment interest in accordance with the Courts of Justice Act, although the specific interest amount was not calculated in the decision. Taken together, the total quantified monetary award and costs in favour of the successful party, Flegg, equal $2,482,350, plus pre- and post-judgment interest in an amount that is not specified in the judgment.