Ontario court ruling exposes critical gap in how bonus plans are built
A former employee's counterclaim for an unpaid bonus has succeeded at the Ontario Court of Appeal.
On April 24, 2026, in Riva Plumbing Limited v. Ferrari, Justices George, Copeland and Gomery upheld a finding that a profit-based bonus scheme was non-discretionary and that continuing employment was not a condition of receiving it. The court also dismissed the employer's allegations of economic torts, fiduciary duty breaches and breach of a settlement agreement that included non-competition terms.
Riva Plumbing Limited, MDJL Holdings Ltd. and their principal Luca Montanaro launched claims against Anthony Ferrari, 531302 Ontario Inc., Icon Plumbing and Heating Ltd., Mike Ladisa and Joseph Ferrari. The appellants alleged the respondents had committed economic torts and breached fiduciary duties. They also alleged that Anthony Ferrari had breached the terms of a settlement agreement, which included non-competition terms.
The trial, before Justice Robert Centa of the Ontario Superior Court of Justice, ended with all those claims rejected. The trial judge found that “the trial evidence failed to prove that any of the respondents competed unlawfully or in breach of any duties owed to the appellants,” and the trial judge repeatedly made credibility findings adverse to Montanaro during the proceedings.
On appeal, the appellants raised four grounds, arguing errors of law in fiduciary duty principles, interpretation of the non-competition terms, assessment of damages made in the alternative, and the bonus entitlement in the counterclaims. The ground involving Joseph Ferrari's bonus counterclaim was abandoned by the appellants during oral argument.
When the evidentiary record closes the door
The Court of Appeal found the appellants' arguments unpersuasive. The panel observed that “although the appellants frame many of their grounds of appeal as errors of law, their real complaints are with the trial judge's findings of fact."
The court found no error of law and no palpable and overriding error in the trial judge's findings of fact or mixed fact and law. It confirmed that Justice Centa had carefully and thoroughly explained his factual and credibility findings, and that the facts he found and the inferences he drew — and did not draw — were open to him on the evidentiary record.
With the non-competition claims and fiduciary duty allegations all dismissed and the credibility findings against Montanaro left intact, the appeal was dismissed. The Ferrari respondents were entitled to their costs of the appeal on a partial indemnity basis in the amount of $48,500, inclusive of disbursements and HST. The Icon respondents were entitled to their costs of the appeal on a partial indemnity basis in the amount of $45,000, inclusive of disbursements and HST.
The bonus clause that changed everything
While the employer's claims failed, a counterclaim by former employee Mike Ladisa produced the ruling most relevant to HR and total rewards professionals. Ladisa claimed an unpaid bonus for the fiscal year ending January 31, 2013.
Justice Centa, whose finding was upheld by the Court of Appeal, determined that the bonus scheme was "a non-discretionary and integral part of Mr. Ladisa's compensation, based solely on the company's profits." Continuing employment was not found to be a condition of receiving it, and Ladisa was awarded a pro rata share.
