Plaintiff Wins $56,000 But Serves 20 Day Jail Sentence :

In Covenoho v Pendylum Ltd. ( 2017 ONCA 284) Justices Rouleau, Pepall and Roberts in a short endorsement dealt with an issue where an employee with less than 3 months service was terminated. She was employed by an agency which placed her at a clients location ( Ceridian) . She had a one year fixed term contract which had the following termination provision;

2.1 The term of this Agreement will commence on the date of this Agreement and will continue in full force and effect unless the Agreement is terminated as follows:

(a) immediately by PENDYLUM providing written notice to you if you violate or fail to honor any of these provisions of this Agreement or fail to perform your duties as set out in Appendix A in a satisfactory manner as determined by PENDYLUM (known as Cause); or if the PENDYLUM Client to which you have been contracted terminate[s] its contract with PENDYLUM for your services; OR

(b) by either party providing written notice of at least two (2) weeks to the other.

2.2 In the event of termination, we will have no liability to you, save and except to pay any accrued and earned compensation up to and including the date of termination.

The client then decided that they did not want the Plaintiff working for them anymore and thus the Defendant terminated the plaintiff with no notice, relying on the bolded section of the termination clause.

This was held by the Court of Appeal to be contrary to the ESA because if the termination had taken place after 3 months of employment, this clause, allowing termination without cause and without notice, would be illegal under the ESA.

This is how they said it :

In determining whether the contract is in compliance with the ESA, the terms must be construed as if the appellant  had continued to be employed beyond the three months ; if a provision’s application potentially violates the ESA at any date after hiring , it is void.

The Court went on to cite Wright v Young & Rubicon ( 2011 ONSC 4720), Shore v Ladner Downs ( 1998 BCJ 1045 BCCA) Machtinger v HOJ Industries ( 1992  1SCR 986 and the very recent decision of Justice Laskin in Wood v Fred Deeley Imports ( 2017 ONCA 158).

If the clause had said that the person would receive two weeks notice no matter what, as this was a fixed term contract of one year, that provision may have been enforceable as it would have complied with the ESA.

However the trial decision ( 2016 ONSC 4969) shows that in effect this was not a one year fixed term contract as it had an automatic renewal clause:

Term: 12 months, starting July 15, 2013 (Commencement Date) and ending July 14, 2014, automatically renewing for the same period unless either party gives to the other written notice at least 4 weeks prior to the current contract’s expiration of its desire not to renew the agreement.

The Court awarded her the balance of the contract, which came to $56,000.

Therefore even if the two week clause was in the agreement, as the contract could  have been extended, you could argue that that the two week provision was invalid.

Now for the big surprise. The Plaintiff was self represented. She was originally terminated because she refused to provide her consent for the client to do a background check after her hiring, claiming that it was not a condition of her employment at the time of hiring.

The Defendant then terminated her.

After that she tried to get her revenge. This is what the trial judge wrote:

Disclosure of Confidential Information – Threats, Injunction and Contempt Proceedings

[13] Over the course of the next several months, the Plaintiff threatened to release confidential information on several occasions. The Defendant and Ceridian commenced an action against the Plaintiff to prevent the Plaintiff’s disclosure of confidential information. On May 9, 2014, Justice Belobaba granted a five-day ex parte injunction that: 1) restrained the Plaintiff from publishing or otherwise disclosing any confidential information relating to the business methods and software applications of the Defendant and Ceridian; and 2) required the Plaintiff to provide the Defendant and Ceridian with a list of persons to whom she had disclosed the above information: see Ceridian Canada Ltd. v. Azeezodeen, 2014 ONSC 3801 (CanLII). The circumstances for the issuance of the injunction were described, at paras. 12-13, as follows:

In November 2013, the defendant sent a letter to Ceridian in which she made numerous defamatory statements about the plaintiffs’ business practices and operations, which she threatened to make public. [Covenoho] advised Ceridian that unless she was paid the sum of $23.2 million, she would make public confidential information relating to Ceridian, Pendylum and their customers. On January 6, 2014, [Covenoho] again wrote to Ceridian threatening to “go public” with numerous allegations about Ceridian and Pendylum. [Covenoho] now offered not to publicize the allegations in exchange for a “settlement” of $500,000.

On April 24, 2014, Ceridian received another letter from [Covenoho] in which she made another threat that she intended to circulate a “press release” to “every press agency and HR and payroll agency across Canada and the U.S.” and that she would do so on May 12, 2014. The “press release” [that Covenoho] threatened to publish contained confidential information regarding Ceridian and Pendylum’s business methods. It also made various defamatory statements regarding the business dealings of Ceridian and Pendylum, including their dealing with the independent contractors. On May 8, 2014, [Covenoho] wrote again to Ceridian repeating her threat that she would widely disclose her “press release” on May 12, 2014.

[14] After receiving a copy of the injunction, the Plaintiff paid for the publication of her press release containing the Defendant and Ceridian’s confidential information, in contravention of the injunction. The press release was published on May 13, 2014. On June 24, 2014, the Plaintiff was found in contempt of court by Justice Belobaba. On July 15, 2014, the Plaintiff was sentenced to 20 days in jail, to be served intermittently over five weekends.

No wonder she was self represented.

This is almost one of those “good news- bad news ” jokes.

The good news is you won $56,000. The bad news is you are going to jail for 20 days.

Court Awards Both Commissions Owing at Time of Termination and Severance Based on Average Commission Earnings :

In Carroll v Purcee Industrial Controls Ltd. ( 2017 AMQB 516 Madam Justice Pentelechuk had to deal with two issues regarding commissions.

Commissions on Deals Signed but Not Completed as of the Date of Termination : 

The Plaintiff sold industrial products with a sales cycle of some months, by which I mean that first the salesman would get the order, then some time later it would be shipped to the customer and then after another time period the invoice would be paid and only then would the salesman receive his commissions.

The Employee was terminated on June 7. The Employer paid all his commissions on invoices paid up to the date of termination.

Over the next number of unspecified months, the Employer received payment on all of the orders that the Plaintiff had placed prior to his dismissal. The commission on these sales came to $71,000. The Employer said that they had never paid out commissions of this nature in the past and refused to pay the plaintiff. He sued.

This is what the Court had to say :

89      There is no dispute that commissions are payable to Mr. Carroll upon completion of the sales cycle — that is, if and when Purcee Canada received payment from the customer. This was an innate understanding by the parties and is consistent with industry standard. However, the point at which Mr. Carroll became entitled to the commission payment was not specifically discussed by the parties. Similarly, the parties did not discuss payment of commissions if Mr. Carroll’s employment ceased. While Mr. Carroll concedes that Purcee paid him commissions after Purcee received payment for sales he effected, he argues that his entitlement to eventually receive commissions crystallized at the time the sales were effected. Accordingly, he argues he is entitled to receive commissions for sales that he effected prior to his dismissal, regardless of whether payments were received by Purcee before or after the date of termination.
90      Purcee argues that Mr. Carroll’s entitlement to receive commissions crystallized at the date of payment. Accordingly, Purcee argues Mr. Carroll is not entitled to receive commissions for sales effected prior to the date of termination if the customer had not paid for the order until after the date of dismissal.
93      No doubt, if a written employment contract between the parties unambiguously states the employee is not entitled to receive commissions if payment is not received at the date of termination, the employer would be entitled to rely on that contractual provision unless the employee could prove that, in law, the employer is estopped or otherwise prevented from relying on the plainly-worded contract: Styles at paras 22-23. That is not the case here, since the written contract (which had expired in any event) is silent on the issue of Mr. Carroll’s entitlement to commissions post-termination.
 
104      It appears, from review of the case authority, the courts have not hesitated to imply a term in employment contracts requiring the employer to pay terminated employees commissions for sales effected but not concluded prior to the termination. In Rowles v Al-wood Manufacturing Ltd (1979), 17 AR 306, 9 Alta LR (2d) 61 (Dist Ct), Decore J, after providing a thorough review of the authorities, found that implication of a term in the employment contract was clearly applicable and the employee was entitled to commissions on sales he effected while employed, the invoices for which were sent out after his employment was terminated.
105      In rationalizing these apparently diverse lines of authority, I consider the following factors to be germane. It is clear from the evidence that Mr. Carroll completed his role for all of the commissions claimed. He was directly involved in each and every one of the sales in question, and the sales can be primarily attributed to his efforts (similar to the case in Micallef). Further, it is clear on the evidence that the Defendants have now been paid for all of the sales, although specific dates of payment are not in evidence. While there was evidence from the Defendants that their policy was not to pay commissions following termination of employment, there is no evidence before me that this policy was ever brought to the attention of Mr. Carroll, nor was he ever asked whether he was aware of this policy. Ms. Parra’s testimony supports that a general policy was in place, but her testimony does not prove that Mr. Carroll was subjectively aware of the policy.
106      Even if it is not reduced to writing, credible evidence establishing the existence of a term precluding employees from collecting commissions earned post-termination may well justify denial of commissions on sales paid after termination, as was the case in Bixby. Further, it is open to the parties to lead evidence as to a widely known and accepted industry standard. No such conclusive evidence is before me.
107      Furthermore, the fact that commissions were typically paid only after payment was received from the purchaser does not necessarily imply that such commissions are not payable following termination. Following Micallef, a term in an employment contract requiring that an order be paid before the salesperson receives his commission does not necessarily imply that the salesperson’s entitlement to that commission crystallizes at the date the customer pays the invoice. Rather, it is entirely reasonable to conclude that the employee’s entitlement to receive a commission crystallized at the date the sale was effected, even if payment is delayed until sometime thereafter. At that point, the employee’s job has been performed, and the employer is set to reap the benefit of the employee’s labour once the customer remits payment.
108      In my view, this interpretation properly applies the business efficacy test as set out by the Supreme Court in Grover and MJB Enterprises. The Court should imply terms that are necessary to give effect to the consideration agreed to between the parties. In this case, Purcee agreed to pay Mr. Carroll a base salary plus commissions in exchange for Mr. Carroll effecting sales on Purcee’s behalf. It is reasonable to imply a term that Mr. Carroll’s entitlement to commissions crystallized at the moment the sale was effected, because that best gives effect to the consideration agreed to between the parties. At that point, Mr. Carroll had performed his duties, and he is entitled to the compensation for his labour that he bargained for. To find otherwise would lead to a windfall for Purcee.
109      This, in my view, is also consistent with what I term the “modern approach” to this issue. After all, it is recognized that where an employee’s compensation is based in whole or in part on commissions, a dismissed employee will be compensated for the loss of the opportunity to earn commissions over the applicable notice period. Sparling v DH Howden & Company, 68 CLLC 573, [1968] OJ No 399 (QL) (H Ct J); Sublett v Facit-Addo Canada Ltd, (1977) 16 OR (2d) 791, 79 DLR (3d) 286 (H Ct J); Goldberg v Western Approaches Ltd, 7 CCEL 127, [1985] BCJ No 937 (QL) (BCSC).
110      I conclude where an employee has been dismissed and the employment contract is silent on this issue, absent evidence of known company policy or accepted industry standard, a Court should not hesitate to imply a term that commissions earned on sales generated before termination but paid to the employer after termination, should still be paid to the employee.
111      Accordingly, Mr. Carroll is entitled to commissions for sales generated, including on sales paid after his termination.
What if the employee had resigned? Should he still not been paid for those sales earned before his resignation but paid to the employer after the resignation ?
Calculating Projected Commission Income Over the Notice Period:
However the Court went on to also award him a notice period of 8 months based on his projected commissions over the notice period which was based on a  historical average of the last 2 years less a 15% reduction because sales were on the decline.
Is this a double payment ?
On the one  hand if we calculate damages for reasonable notice based on how much he would have earned over the next 8 months, then part of that 8 month income, had he worked it, would have been the $71,000 in commissions that would have been received from sales he completed before his termination date. Thus by simply paying him a severance payment based on his average commission earnings over the notice period are we not properly compensating him with that payment alone.?
On the other hand, if he had been given 8 months working notice, he would have continued to make sales up to his last day of work  and at that time there would have been commissions ” in the pipeline”, that is commissions owing on sales placed before the end of the notice period but not yet owing to the salesman because the client had not yet paid the invoice.
This case seems to stand for the proposition that the employee receives both of these payments, unless there is a clear agreement to the contrary.

Offering to Resign if you Get a Severance Package is Not a Resignation :

In Carroll v Purcee Industrial Canada (2017 ABQB 211) Madam Justice Peantelechuk was faced with the situation where an employee repeatably told his employer that he would resign if they could work out a “termination on professional terms” which involved payment of commissions owing, severance and moving expenses.

Rather than engage in these discussions, the Employer simply purported to accept his resignation.

This is how the Court dealt with the issue :

50      Importantly, each time Mr. Carroll offered to resign his employment, the offer was coupled with an invitation to negotiate the terms of his departure, including a severance package. There is no evidence before me to demonstrate that Mr. Carroll ever indicated an intention to resign on a specific date without reference to a severance package. This is important in two respects. First, it is difficult in such a circumstance to argue that the resignation is clear and unequivocal when it is tied to a proposal for terms of severance. But secondly, it calls into question an employer’s ability to accept that resignation, if in fact it is valid, if the employer does not also accept the terms proposed by the employee. Here, Mr. Carroll’s resignation was not accepted as offered by Mr. Carroll in his May 31, 2013 email. It was purportedly accepted on completely different terms: Oxman v Dustbaine Enterprises Ltd (1988), 32 OAC 154, 23 CCEL 157 (Ont CA) at paras 6-7.
51      At any time following receipt of Mr. Carroll’s offer to negotiate the terms of his departure, Mr. Peterson could have confirmed whether Mr. Carroll truly intended to resign, or otherwise negotiate the terms of his departure. Instead, Mr. Peterson’s June 7, 2013 letter purports to accept Mr. Carroll’s resignation without further discussion and on completely different terms than those offered by Mr. Carroll.
52      Considering all of the circumstances before me, I conclude that Mr. Carroll has satisfied the onus of proving that he was dismissed. His resignation was not clear and unequivocal, but rather an invitation to discuss the terms of his exit from the Defendant companies and in any event, the employer purported to accept his resignation on completely different terms.
The Court went on to award the 41 year old Regional Manager with 4 years and 8 months service a notice period of 8 months.

40 Day Trial Nets $141,000 ” Win”.

In Merrifield v Canada ( Attorney General ) 2017 ONSC 1333, Justice Vallee heard a case involving  serious allegations of harassment against a RCMP officer by his superiors over a number of years.

The trial took 40 days, and stretched out from November 2014 to April 2016.  The record shows five lawyers for the parties.

In a 896 paragraph decision  the plaintiff won and was awarded two heads of damages:

  1. The Plaintiff’s rise in rank had been delayed a for 18 months , resulting in a career wage loss of $41,000.
  2. For the tort of intentional infliction of mental suffering, the Court had this to say :

What amount should be awarded to Mr. Merrifield for general damages?
Analysis
877. Amounts awarded for damages for intentional infliction of mental suffering and harassment have increased significantly since the 1990s.
878. In Clark v.Canada, [1994] 3 F.C. 323, 3 C.C.E.L. (2d) 172, a female member of the RCMP was harassed by her male co-workers. She was told to be a “real woman” and go home and have children. Her co-workers watched pornographic movies while she was in the office. Plastic breasts were left on her desk. When her body armour was delivered, it was set up with a mocking note attached to it. These are a few examples of what the plaintiff endured. When she complained to her supervisors, they were dismissive. These events caused her to have a documented mental health crisis. She resigned her position.
879. The court reviewed awards for intentional infliction of nervous shock prior to 1994, considered a “reasonable measure of consolation” for her particular mental condition and awarded the plaintiff $5,000. The defendants’ state that based on this decision, if Mr. Merrifield is entitled to damages, the amount should be nominal.
880 .The plaintiff relies on four cases decided between 1997 and 2014. They are Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R.701, Tipple v. Canada (Attorney General), 2012 FCA 158, 431 N.R. 257, 158, Joseph v. Tl’azt’en First Nation, 2013 F.C. 767, 9 C.C.E.L. (4th) 173 and Boucher v. Wal-Mart Canada Corp. The defendants state that these cases are not applicable because the plaintiffs were either terminated or constructively dismissed.
881. I disagree with the defendants’ position. In all of these cases, the court considered the events leading up to the termination or constructive dismissal. The defendants’ actions caused the plaintiffs to suffer from mental health conditions. Damages were awarded to the plaintiffs for mental suffering. I find that these cases are relevant and helpful on this issue.
882. In Wallace, the Supreme Court of Canada determined that the trial judge had discretion to extend the notice period with respect to the termination. The possibility of recovery for mental health damages remained. It noted that a tort for breach of good faith and fair dealing regarding a dismissal was not yet recognized.
883. In Tipple, the employer alleged that the plaintiff’s actions were a form of misconduct. The matter attracted a considerable amount of media attention. The court found that the allegations were unfounded. In the interval, the plaintiff had suffered a significant loss of reputation. He was awarded $250,000 for the loss of reputation and $125,000 for the psychological injury that he sustained as a result of the manner of his termination.
884. In Joseph, an employer made vile and serious allegations of fraud upon the employee’s termination. This resulted in significant damage to the employee’s reputation. The employee had considerable difficulty in finding other employment. Prospective employers stated that the plaintiff had to be vindicated before they would consider hiring him. The court awarded $85,000 for damage to the employee’s physical health, well-being, integrity, dignity and personal and professional reputation.
885. In Boucher, the plaintiff was a cheerful and productive employee. When the personal defendant became her supervisor, he belittled, humiliated and demeaned the plaintiff in front of others continuously and relentlessly for approximately six months. She complained of her supervisors actions to management who determined that her complaints were unfounded and told her that she would be held responsible for making them. The plaintiff became broken and defeated. She suffered from a number illnesses including depression. A jury awarded the plaintiff $100,000 for intentional infliction of mental suffering. The award was upheld on appeal.
886. Mr. Merrifield suffered from significant depression and post-traumatic stress disorder as a result of the actions taken by the RCMP. He was unable to work for various periods of time. At one point, he disengaged from his family and spent his days lying on a sofa. He did not bathe and developed bed sores. His depression during these periods deprived him of meaningful interaction with his wife and young children. It deprived him of successful performance in a job that he loved and for which he was acknowledged to be a national expert. It also deprived him of the gratification of positive interaction and collaboration with his colleagues.
887. Not only did Mr. Merrifield suffer from significant mental health issues as a result of the actions taken by the RCMP, those actions also stained his reputation. A number of people knew that he had been removed from national security work. They assumed that he had done something wrong. Even Insp. Van Doren, who was not Mr. Merrifield’s supervisor, knew that he had been removed from national security work. As a result of this, he considered Mr. Merrifield to be unsuitable to work at the SOC during a national security emergency.
888. Supt. Proulx accused Mr. Merrifield of using his Amex card for personal reasons, in other words stealing money from the RCMP. Sgt. Dickinson interviewed a number of people during the Part IV investigation. All of them knew the serious allegations against Mr. Merrifield which were tantamount to criminal conduct. The allegations were insidious. For example, Supt. Jagoe still believes that the allegations were substantiated. Just as the news of Mr. Merrifield’s removal from national security work spread among the RCMP management and other members, so too would the allegations of disgraceful conduct. Sgt. Dickinson stated that the members that he interviewed would not have known of the outcome of the Part IV investigation or that the allegations were unfounded.
Conclusion
889 Taking all of this into account, I award Mr. Merrifield general damages against the defendants for harassment and intentional infliction of mental suffering in the amount of $100,000.

 

One cannot begin to imagine the legal fees involved in this case. I do not know what has or will happen at the costs stage or  if the AG was smart enough to put in a Rule 49 offer of more than $141,000 well before the trial.

If they did, ( and as a taxpayer I sure hope they did ) the cost award in their favour would easily wipe out the $141,000 award and the plaintiff would owe a considerable amount to the Crown for costs.

If the Plaintiff put in a Rule 49 offer and beat it, well then the Plaintiff’s costs will dwarf the award.

I have not seen the pleadings but I cannot imagine that a plaintiff would launch an action of this enormity and only expect to receive $141,000.

So here we have it. A legal process that costs hundreds of thousands of dollars that in the end results in the  transfer of  $141,000 from one party to another, maybe.

How is this process proportional as required by Rule 1.04 of the Rules of Civil Procedure ?

INTERPRETATION

General Principle

1.04 (1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.  R.R.O. 1990, Reg. 194, r. 1.04 (1).

Proportionality

(1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.  O. Reg. 438/08, s. 2.

 

 

 

Another Woeful Case About Costs :

Regular readers of this blog will know that I often comment on costs awards in wrongful dismissal cases .

Have I got a doozy for you.

At the trial decision of Doyle v Zochem ( 2016 CarswellOnt 3188), the plaintiff was  awarded 10 months salary, human rights damages of $25,000 and moral damages of $60,000 for a total before costs of about $140,000.

The defendant made a number of Rule 49 offers, the last one being for $133,196.23.

Thus the defendant missed the mark by $7,653.

In a cost award found at 2017 CarswellOnt 1335,  Judge Trimble awarded the plaintiff costs of approximately $412,000.

The Defendant appealed but was only looking for a reduction in the moral damages award from $60,000 to a more modest $20,000.

Why spend more money on this appeal to save a lousy $40,000?

ANSWER: If the Court of Appeal had reduced the moral damages by at least $7654, the Defendants Rule 49 offer would have been operative and not only would they not have to pay the plaintiff anything for the actual trial ( 28 days ) but they would have received an offset for their trial costs, which would have wiped out the judgement and the Plaintiff would have owed the defendant a fortune .

Alas, the Court of Appeal denied the appeal and ordered further  costs of the appeal of $40,000.

According to the public record this little fiasco has cost the Defendant the following sums:

Judgement   :                                    $140,000

Costs to the Plaintiff for trial :      $412,000

Costs to the Plaintiff for appeal:  $40,000

Their  own costs of trial :               $682,415

Their costs of appeal ( my est.)      $40,000

TOTAL :                                              $ 1,314,415.

You gotta love our legal system.

CLC Adjudicator Denies Both Reinstatement & Costs to Winning Employee:

In Weed v Royal Bank of Canada (2017 CarswellNat 343) Adjudicator Michelle Somers heard an unjust dismissal case for 14 days, with 9 witnesses and ” voluminous ” documentary evidence.

Having found that Mr. Weed was unjustly dismissed , the Adjudicator declined to order reinstatement for the following reasons :

Reinstatement
196. It is well-established that s. 242 of the Code gives the Adjudicator broad powers of compensation, including reinstatement “Where an employee has been dismissed unjustly, there is a presumption in favour of reinstatement unless there is clear evidence to the contrary”: Pecoskie and Atomic Energy of Canada Ltd., 2015 CarswellNat 5573. The test whether there is a relationship of trust between the employer and employee is an objective one.
197. Counsel for RBC submitted that reinstatement would not be appropriate, while Counsel for Weed went no further than to acknowledge that I have the right to consider it In an October, 2014, email, Weed told a prospective employer that he was going through the Labour Board so he could have his position back with RBC but that he was sure that was a bad idea.
198. Weed believes that his role as a financial planner is to serve the best interests of his clients. He believes, apparently sincerely, that his employer’s emphasis on sales conflicts with those interests. RBC had shifted its business emphasis during Weed’s employment towards a drive to increase sales of its products, and I conclude that Weed either had difficulty or refused to accept this shift Prior to the onboarding of Leblanc as his manager, he had a clean record. Indeed, he was a very good performer. There may or may not have been insufficient training in the new business model.
199. These factors are not sufficient to excuse some of the decisions that Weed made during his employment As the Adjudicator said in Farrell v Royal Bank of Canada [1998] CLAD. No. 793, “My conclusion that the Bank did not meet the just cause standard in dismissing Farrell should not be understood as a vindication of her work performance in that regard.” [para. 144]
200. Although he did say to Leblanc and in his Decision-Making Exercise that he would change his conduct to be more in line with his employer’s standards, Weed did not acknowledge at the hearing that his conduct at the very least contravened his employer’s compliance standards, nor that he was in any way responsible for the breakdown in his relationship with his employer. That makes his prospects for a happy future with RBC dim. My lack of confidence is exacerbated by his avowal at the hearing that as between the bank’s standards and his own estimation of his client’s needs, he would disregard standards set by his employer.
201. I agree with RBC that the relationship between it and Weed has been irreparably damaged, and that reinstatement is not a feasible remedy.

The Adjudicator instead awarded him compensation in the sum of $230,000 which covered the period of time from his dismissal to the date of the award, a period of 35 months less mitigation income plus  a 15% reduction for what the Adjudicator thought was poor mitigation efforts.

In awarding costs the Adjudicator properly stated that :

It has now been established that an Adjudicator appointed under the Code has the jurisdiction to award costs. The leading case is Banca Nazionale del Lavoro of Canada Ltd. V Lee-Shanok [1988] F.C.J. 594, 1988 CarswellNat 254 (FCA). Stone J.A. determined the scope of the Adjudicator’s jurisdiction under s. 61.5(9)(c) of the Code [now s. 242(4)(c)]:
“I have no difficulty in reading it, with its broad reference to granting relief that is “equitable to require the employer to do in order to remedy or counteract any consequence of the dismissal”, as including the power to award costs. The difficulty I have is in viewing an award of compensation, gained at some considerable expense to a complainant in terms of legal costs, as having the effect of making him whole. Legal costs incurred would effectively reduce compensation for lost remuneration, while their allowance would appear to remedy or, at least, to counteract a consequence of the dismissal.” [para. 25]

 

The Adjudicator then went to refuse to award costs to the winning Mr Weeds with the following rationale.

212.  Counsel for Weed suggested that half of solicitor-client costs would be appropriate. However, I am going to adopt the reasoning in Pecoskie, supra. In that case, the Complainant was Executive Assistant to the Vice-President of Finance. She sent 35 emails that were “confidential and privileged” to her husband, who was a Project Leader in the same company. It was alleged she had also sent him emails that insulted and derided other managers and colleagues. Although her performance had previously been assessed in glowing terms, the company bypassed progressive discipline and dismissed her on the basis she had committed “a serious breach of trust, confidentiality and respectful workplace practices.” Adjudicator Clarke examined the emails in detail. They were largely related to issues that assisted her husband in his role at the company. A few said distasteful things about her manager and alleged that a colleague was not truthful. No one saw them but her husband. The Adjudicator determined that although she had violated the rules of the workplace, her actions were not sufficiently serious to warrant summary dismissal. Nevertheless, the Adjudicator made no costs award because the complainant could not be considered blameless.
213. Counsel for RBC submitted that no costs should be awarded given Weed’s conduct at the hearing. While I would not go so far as to say he made allegations that were proven to be false, I have already determined that that Weed has much to answer for in this matter, and I therefore decline to award costs.

This is a particularly troubling comment and result. The adjudicator seems to apply a exceeding high standard for a winning party to get costs, in that they apparently must be “blameless”, a standard which most of us would fail.

Although I am not usually the one to quote the New Testament, I am reminded of what Jesus said in John 8,  v 7. ESV:

“Let him who is without sin among you be the first to throw a stone at her.”

Let us do some math. The Adjudicator awarded $230,000.

Out of that amount he will have to pay his lawyer for a 14 day hearing and all the preparation. His lawyer was Richard Gilborn QC. Say a senior member of the bar in Calgary is charging his client $500/ hour or $4000 a day for a 8 hour day. Further assume that for every day of hearing there is about 2 days of preparation.

That makes for a bill of    14 X 3 = 42 days X $4000 / day = $168,000

The award was $230,000. After paying his lawyer he is left with $62,000 . Assume a conservative tax rate of 33%, he is left with $40,920.

Is that a  just result when one actually  wins a case ?

 

 

Latest IBM Notice Case Sets Clear Rules on Calculating Damages:

In Patterson v IBM ( 2017 CarswellOnt 2625) Justice Dunphy determined the appropriate notice period for a 67 year old Band 6 IT Specialist with 22 years service making $62,388 per year. He awarded a notice period of 18 months.

Dunphy J. made some interesting and helpful comments in the judgement on a number of topics:

  1. The usefulness of summary judgements in notice cases.

4. Wrongful dismissal cases lend themselves particularly well to resolution through summary judgment proceedings. Cause is seldom at issue and the criteria to assess damages typically involve few disputed facts. The difference between the low and high end of likely damages is seldom as great as the costs of finding the answer following a full trial with all the trimmings. In my view, the practice of resolving wrongful dismissal damages cases in a co-operatively managed summary judgment proceeding is to be strongly encouraged: Arnone v. Best Theratronics Ltd., 2015 ONCA 63 (CanLII), Fraser v. Canerector Inc., 2015 ONSC 2138 (CanLII).

 

2. The Lesser Importance of Character of Employment 

20. I am also mindful of the fact that “character of employment” is a criterion that is often of limited value in the modern context. This is a point that our Court of Appeal has recently emphasized in cases such as Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469 (CanLII). It bears in my view only some weight in a case such as this. It may be that this particular criterion is fast becoming a vestige of a by-gone era. It is certainly difficult to defend on a principled basis. However the near universal application of Bardal over the last fifty-six years is such that I must leave the consideration of that issue to a higher court on another day. It is not of any great weight in this case and I shall leave it at that.

3. Use of  Prior Cases with the Same Defendant 

There has been a number  of wrongful dismissal cases involving IBM in the last few years on the issue of notice. In this case the Judge seemed to rely heavily on prior IBM cases as shown in this paragraph.

27. In Quinn v. IBM Canada Ltd. (unreported, CV-16-552858 released November 28, 2016), Myers J. awarded a 55 year old “Band 7” IBM employee 20 months of notice. Mr. Quinn had worked his entire working life at IBM with more than 35 years of service. In Waterman v. IBM Canada Ltd., 2010 BCSC 376 (CanLII); (affirmed 2013 SCC 70 (CanLII)), another “Band 7” IBM employee terminated at age 65 with 40 years of service was also awarded 20 months of notice. In Liboiron v. IBM Canada Ltd., 2015 BCSC 1523 (CanLII) a 57 year old Band 6 IBM employee with 32 years’ service was awarded 20 months. In Lee v. IBM Canada Limited, (unreported, CV-15-532014 released February 4, 2016) a 62 year old part-time employee with 40 years of service was awarded a notice period of 21 months. The “Band” of this employee does not appear in the decision but her full-time equivalent income would suggest that it was at a similar level (i.e. Band 6 or Band 7).
28. These four cases were relied upon by both parties with differing emphasis. They are useful comparators here not simply because they all involve the same employer. However, the IBM internal employee classification system in “bands” referred to by three of them provides at least a superficial basis of comparison of the character of the employment within the same organization. Two were one band higher while one was also in Band 6 (the fourth likely being in that same range). Importantly, the employees in question were all quite long-serving, in the upper age range and each was described as having quite challenging job prospects going forward. Three of these cases awarded 20 months of notice while one awarded 21 months of notice. These four employees had considerably more years of service to their credit than Mr. Patterson.
29. Every case turns on its facts and no two cases are exactly alike. That being said, these four cases are the most similar to the facts before me of any of the cases presented to me by the parties and recommend themselves to me for that reason.

This is similar to what happened in the Canac line of cases in which the Court relied primarily on other Canac cases in determining reasonable notice.

4. Determining how  the issue of future mitigation can be recognized in the calculation of damages given the period of reasonable notice has not yet expired. 

40.  It is only relatively recently we have managed to get to the point of being able to render a decision on wrongful dismissal damages while the period of reasonable notice is still running. The practice in such cases is divided. Some judges have opted to apply the “trust and accounting” approach and require the plaintiff to account to the defendant for future income if any earned during the notice period: Drysdale v. Panasonic Canada Inc., 2015 ONSC 6878 (CanLII). Others have reasoned that future employment income damages are like any other contingent future damages and can be calculated with appropriate discounts for contingencies if necessary: Peticca v Oracle Canada, 2015 ONSC 2584 (CanLII).
41. I don’t think there is any hard and fast rule requiring me to adopt either approach and I may look at both for guidance on how best to achieve justice between the parties on the facts of this case.
42. Of the two approaches, the discounted approach appears to me to be the most consistent with general principles of calculating damages. It is also an approach that commends itself on other grounds. A “once and for all” calculation removes the incentive, even if only subconsciously, for the plaintiff to be lukewarm in his search for a new position if all income earned would have to be remitted immediately to a former employer. Society and the parties are all unquestionably better off if the plaintiff is able to resume productive, taxpaying work as soon as possible. A discounted approach also avoids the possibility of future legal entanglements between the parties.
43. In the present case, the notice period found by me has seven months to run. I have found it preferable in this case to fold into my consideration of the reasonable notice period the additional consideration of a minor discount for potential future earnings over the seven months or so I have found remain to be run in the notice period. Given the plaintiff’s poor prospects, the amount would at all events be quite minor relative to the total award and it seemed to me to be preferable to arrive at a global damages award rather than attempt to parse it artificially. I have thus applied the discounted approach but chosen not to break it out in a separate calculation here.

I especially like his policy analysis in paragraph 42. It recognizes that both the general law of mitigation and the trust approach used in some cases creates a situation whereby if an employee were to find a new but somewhat lesser paying job early on during the notice period, he or she is effectively working for free for the balance of the notice period as the former employer gets full credit for every dollar the employee earns in his new job. I don’t know about you, but as much as I like my job, I am sure not doing it for free.

No Mention of Benefits or Severance Invalidates ESA Termination Clause Says Ontario Court of Appeal :

In Wood v Fred Deeley Imports Ltd ( 2017 ONCA 158, Justice Laskin dealt with the important issue of whether an ESA only contract was valid.

The termination clause read as follows:

[The Company] is entitled to terminate your employment at any time without cause by providing you with 2 weeks’ notice of termination or pay in lieu thereof for each completed or partial year of employment with the Company. If the Company terminates your employment without cause, the Company shall not be obliged to make any payments to you other than those provided for in this paragraph, except for any amounts which may be due and remaining unpaid at the time of termination of your employment. The payments and notice provided for in this paragraph are inclusive of your entitlements to notice, pay in lieu of notice and severance pay pursuant to the Employment Standards Act, 2000. [Emphasis added.]

Laskin J.A. first summarized the jurisprudence on interpreting employment agreements and referred to the following 8  principles.

1. In general, courts interpret employment agreements differently from other commercial agreements. They do so mainly because of the importance of employment in a person’s life. As Dickson C.J.C. said in an oft-quoted passage from his judgment in Reference re Public Service Employee Relations Act (Alberta), [1987] 1 S.C.R. 313, at p. 368:

” Work is one of the most fundamental aspects in a person’s life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person’s employment is an essential component of his or her sense of identity, self-worth and emotional well-being.”

2 . As important as employment itself is the way a person’s employment is terminated, it is on termination of employment that a person is most vulnerable and thus is most in need of protection: see Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701.

3. When employment agreements are made, usually employees have less bargaining power than employers. Employees rarely have enough information or leverage to bargain with employers on an equal footing: Machtinger, p. 1003

4. Many employees are likely unfamiliar with the employment standards in the ESA and the obligations the statute imposes on employers. These employees may not seek to challenge unlawful termination clauses: Machtinger, p. 1003

5. The ESA is remedial legislation, intended to protect the interests of employees. Courts should thus favour an interpretation of the ESA that “encourages employers to comply with the minimum requirements of the Act” and “extends its protections to as many employees as possible”, over an interpretation that does not do so: Machtinger, p. 1003.

6.. Termination clauses should be interpreted in a way that encourages employers to draft agreements that comply with the ESA. If the only consequence employers suffer for drafting a termination clause that fails to comply with the ESA is an order that they comply, then they will have little or no incentive to draft a lawful termination clause at the beginning of the employment relationship: Machtinger, p. 1004.

7. A termination clause will rebut the presumption of reasonable notice only if its wording is clear. Employees should know at the beginning of their employment what their entitlement will be at the end of their employment: Machtinger, p. 998.

8. Faced with a termination clause that could reasonably be interpreted in more than one way, courts should prefer the interpretation that gives the greater benefit to the employee: Ceccol v. Ontario Gymnastics Federation (2001), 149 O.A.C. 315, Family Counselling Centre of Sault Ste. Marie and District (2001), 151 O.A.C. 35.

Laskin thereafter dealt with the various attacks on the validity of the ESA clause under these headings :

  1. Failure to provide for benefits during the ESA 8 week notice period.

The failure of the termination clause to actually refer to benefits was fatal. The term ” pay ” in the clause does not clearly include benefits. As this term is at best ambiguous, the interpretation that is to be favoured is the one favouring the employee.

The fact that the Company did in fact continue the Plaintiff’s  benefits after termination is irrelevant as it was an error of law to consider the post termination actions of the employer in interpreting the clause. One can only look at the wording and if it is illegal then the contract is null and void and cannot be used as a way of trying to determine what was  the true intentions of the parties.

Moreover in Roden v Toronto Humane Society the ONCA upheld a clause which did not mention benefits. However in that case the termination clause did not have an ” all inclusive ” clause like the one in this case that stated that :

If the Company terminates your employment without cause, the Company shall not be obliged to make any payments to you other than those provided for in this paragraph, except for any amounts which may be due and remaining unpaid at the time of termination of your employment. The payments and notice provided for in this paragraph are inclusive of your entitlements to notice, pay in lieu of notice and severance pay pursuant to the Employment Standards Act, 2000. [Emphasis added.]

Laskin J. found that this contract language difference was sufficient to distinguish the two cases.

2. Failure to refer to severance pay:

Simply put you cannot require an employee to work out his or her severance pay period by way of working notice. It must be paid as a lump sum within 7 days of the end of the last day of employment. The clause as drafted would have permitted the employer to require the Plaintiff to work out her entire 16 weeks of notice and severance, as she was employed for 8 years.

As this would have been contrary to the ESA, it is illegal .

Laskin J. upheld the trial judges assessment of 9 months reasonable notice. The Plaintiff was 48 years old, worked for 8 years as a Sales & Event planner making $100,000 per year.

This case is refreshingly easy to read and comprehend. It is almost as if Justice Laskin wants the average employer and employee to be able to read and understand it. Remarkable.

His clear listing of the 8 General Principles of Interpretation  of Employment Contracts and his application of those principles  to the facts provide us with a roadmap of how to approach similar cases in the future.

I wish Mr Justice Laskin had been on the  panel in Oudin v Le Centre Francophone de Toronto, Inc. ( 2016 ONCA 514 ). If so, I  doubt that it would have been decided in the way that it was.

Both Justices Feldman and Hourigan concurred with Justice Laskin’s reasons.

In previous blogs I commented that I wished that the Supreme Court of Canada would examine this issue of ESA contracts.

In light of this case, I think that is no longer necessary, at least for Ontario cases.

Court Outlines Procedures for Go Forward Payments in Summary Judgement :

In Holmes v Hatch Ltd ( 2017 ONSC 379 ) Pollak J. awarded 18 months notice to a 54 year old Project Manager and Engineer with 17 years service .

The motion for summary judgement took place only 6 months after the termination of employment so the Court had to deal with how to award damages for the possible future loss.

This is what the Court did:

[33] With respect to the issue of the Plaintiff’s continuing duty to mitigate, I find that the evidentiary record does not allow this Court to make a finding on whether the Plaintiff will have any employment income loss during the balance of the notice period or whether he will successfully mitigate. Even though the Plaintiff has argued that he has not been able to find employment to the date of this motion, he moved for summary judgment knowing that it would be heard before he suffered any loss of employment income. To remedy this difficulty, the parties have advised the Court that they agree to follow the approach the Court has taken in the case of Markoulakis v. SNC-Lavalin Inc., 2015 ONSC 1081 (CanLII), 253 A.C.W.S. (3d) 362.

[34] The Court has determined that the total reasonable notice period for Mr. Holmes is 18 months. It follows that the Defendant has the obligation to pay Mr. Holmes the appropriate monthly compensation for the balance of the 18 month notice period subject to the deductions I have referred to above. The Defendant’s obligation to pay is also subject to the Plaintiff’s obligation to mitigate his damages and to a deduction in the monthly payments by the Defendant for any earnings from employment or a business. If during the balance of the notice period, the Defendant challenges the mitigation efforts or earnings of the Plaintiff and does not make such payments to the Plaintiff, the parties should determine the appropriate procedure for resolving this dispute.

[35] The parties have not agreed to, or provided the Court with, evidence on the amount of compensation Mr. Holmes is entitled to on a monthly basis for damages during the notice period. The Court has therefore only provided the parties with the above-noted legal determination of the duration of the reasonable period.

[36] Partial summary judgment is therefore granted by way of a declaration with respect to Mr. Holmes’ entitlement to 18 months’ damages for wrongful dismissal. The parties did not make any submissions on the procedure to be used if they require adjudication on the remaining potential issues and the calculation of “mitigation and damages”. I therefore make no ruling in this regard.
[37] At para. 78 in Hryniak, the Supreme Court of Canada held that:

Where a motion judge dismisses a motion for summary judgment, in the absence of compelling reasons to the contrary, she should also seize herself of the matter as the trial judge.

[38] In my view, this is an appropriate case for me to follow the Supreme Court’s direction and remain seized of any necessary future proceedings in this matter, such as a trial of the remaining issues. I must, however, qualify this to be subject to the practical reality of our court’s ability to schedule trials in a timely and expeditious manner. I will not be seized of this trial if the effect of my unavailability would be to delay the hearing of the trial between the parties. If it is possible to do so without adverse delay or consequences to the parties, I seize myself of the trial of this matter as directed in Hryniak.

I believe that this is a better approach to deal with the issue of ongoing damages than either the trust method or the discount method for the following reasons :

  1. It best mimics what the law requires, that is paying compensation during the notice period less income earned through mitigation.
  2. It allows Plaintiffs to have actual benefit coverage during the notice period rather than a payment in lieu.
  3. It reduces the gamesmanship involved in setting the date for the motion for summary judgement in that no matter what the date is the duty to mitigate and the effects of mitigation remain the same,

I would however suggest that counsel should have suggested some procedure for adjudicating any future mitigation issues.

The parties could  agree that this issue would be decided either by arbitration or by returning to the motions judge. There should however be a provision that the employer is not allowed to unilaterally cut off the payments if they simply allege a failure to mitigate, rather they should be required to keep up the payments pending the Courts’ or arbitrators’ determination. This will avoid the circumstance of the Employer using the act of withholding payments as a pressure point to negotiate a discounted lump sum for the balance of the notice period. Any payment received by the Plaintiff in excess of what the Court or arbitrator determined was owing could simply be repaid.

The Labour and Employment section of the Ontario Bar Association, back in about 2009, produced a report for Chief Justice Winkler called the OBA Task Force on Wrongful Dismissal . In that report the Task Force had this to say about what they thought should be done about determining the on going payments after a motion for summary judgement.

The Court would assess the plaintiff’s mitigation efforts up to the date of the motion, and if the notice period continues beyond the date of the motion, the Court would, rather than order a lump sum payment of the entire notice period, order a payment to first bring the plaintiff’s wages and benefits up to the date of judgement. Then, the Court would make a further order that the defendant be required to continue to pay the plaintiff his or her salary and benefits to the end of the notice period, subject to the plaintiff’s continuing obligation to mitigate.

 If the plaintiff is to receive payments beyond the date of the motion, then the plaintiff will be required to report monthly, by statutory declaration to the defendant, what his or her mitigation efforts and mitigation income have been. The defendants’ payments would be reduced by any mitigation earnings, on a dollar for dollar basis. If the defendant believed that the plaintiff’s mitigation efforts were not reasonable, it could apply to the Court to amend the order requiring payment. The defendant could not unilaterally suspend the payments before the return date of the motion.

 If there were other issues that required determination, the Court could still order the payment of reasonable notice and order that the other issues be tried. For instance, if the parties agreed that the plaintiff’s base wage was $60,000 per annum but disagreed both on the quantum and the entitlement to a bonus, the Court could order monthly payments of the base wage only and defer the issue of the bonus entitlement to a full trial.

I was on that committee. it was a good idea then . It is still a good idea. I am glad to see that at least Madam Justice Pollak has adopted this procedure. I can only hope that it catches on with the rest of the Bar and Bench.

 

 

 

Reinstatement is the Default Remedy under the Unjust Dismissal Section of the CLC:

In Randhawa v The Bank of Nova Scotia ( HRDSC File # YM2707-10272 , not yet on CanLII ) Adjudicator Lorne Slotnick made these comments about the appropriate remedy in an Unjust Dismissal case under section 242 of the Canada Labour Code.

In my view, where a complaint of unjust dismissal under the Canada Labour Code is upheld, the default remedy must be reinstatement, as it is for unionized employees covered by a collective agreement. This is the clear implication of the Supreme Court’s analysis in the Wilson v. Atomic Energy case, in which the court agreed that the unjust dismissal provisions were meant to give non-unionized non-management employees in federally regulated workplaces “expansive

protections much like those available to employees covered by a collective agreement.” (at paragraph 1.)

Undoubtedly there are exceptions to the general rule that reinstatement will be ordered where the dismissal is found to be unjust. In general, this will be appropriate where the employment relationship is no longer viable. The bank pressed this argument, relying on its view of Ms.

Randhawa’s dishonesty and asserting it has lost trust in her. It referred to several cases where adjudicators have declined to reinstate employees who were found to have been unjustly dismissed. Those decisions predate Wilson v. Atomic Energy. However, in light of the court’s approach in Wilson, damages in lieu of reinstatement must be seen to be appropriate only in exceptional cases, as it is in labour arbitration. (See Alberta Union of Provincial Employees v. Lethbridge Community College, 2004 SCC 28 (CanLII).)

Several factors may be relevant in determining whether the employment relationship is not viable. (They are listed in Re DeHavilland Inc. and CAW (1999) 83 L.A.C. (4th) 157 (Rayner) and in Yesno v. Eabametoong First Nation Education Authority [2006] C.L.A.D. No. 352 (Kaufman).) Here, the bank relies most heavily on its statement that it is unable to trust Ms.

Randhawa because of her conduct in denying breaches of procedure until faced with clear proof.

I agree with the statement in Roda v. Bank of Montreal, a case cited above, that assessing whether the employer would be able to trust a reinstated employee is not a matter of simply accepting the assertions of the employer. The adjudicator in that case put it as follows (at paragraph 25):

In my opinion, determining whether the relationship of trust between the parties can be restored is not a matter of determining whether or not one party subjectively feels that the relationship of trust cannot be restored. Rather the test is an objective one based on tall the evidence to determine whether the relationship of trust can be restored.

Here, I agree with the bank that there is some foundation, based on Ms. Randhawa’s conduct prior to termination and on her evidence at the hearing, to question whether she can be relied on to be forthright when questioned by management if she is returned to a customer service

supervisor position. However, in my view, this factor is not strong enough to conclude that any employment relationship is no longer viable because of dishonesty.

This case once and for all makes it clear that the Unjust Dismissal provisions of the CLC are designed to give collective agreement type termination rights to non-unionized employees. It is not simply a statutory restatement of the common law right to reasonable notice .

I read almost every decision under the Unjust Decision section and I am continually struck by these  facts :

1) Most Complainants and many Employers appear on their own behalf , without lawyers.

2) The overwhelming majority of Complainants do not request reinstatement as a remedy .

3) Instead of reinstatement , the Adjudicators often award monetary compensation which is often much less that even the applicable common law notice period.

In this case Ms Rawdhawa sought reinstatement and got it, granted to a lower rated position because her previous position no longer existed in the Bank.

She also got back pay of about 27 months and substantial indemnity costs for a five day hearing.

This case shows that when properly represented by counsel, this   procedure can be as effective, if not more effective, than court based litigation.