Evidence of Events After Dismissal Admissible in Constructive Dismissal Case;

In Halifax Herald v Clarke ( 2019 NSCA 3) the Plaintiff’s commissioned sales position had been eliminated but the Defendant offered him another commission based job. The Plaintiff believed that if he accepted the new position his income would drop by 30% so he refused the job and claimed that he had been constructively dismissed. At trial the Defendant sought to lead evidence of the actual sales in the period after the departure to show that in fact his income would not have gone down.

The trial judge ruled that this after the fact evidence was not admissible, quoting the Supreme Court of Canada in Farber v Royal Trust and in Potter v New Brunswick Legal Aid Services Commission which stand for the proposition that evidence about what occurred after constructive dismissal is not relevant unless it reasonably could have been foreseen at the time of the dismissal .

However the Court of Appeal said that this evidence could be looked at to help determine what a reasonable person would have thought at the time. The Defendants’ view of the future earnings of this position were far more optimistic than that of the Plaintiff and they simply sought to introduce evidence to show that their forecast was more inline with reality that the Plaintiff’s. This is how the Court  put it

72      Here, the respondent alleged in his statement of claim that he would suffer a 30% reduction in his income at the new BDS position. The appellant pled that this was incorrect. It expected growth in the sales of non-media product, and sales outpaced 2014.
73      The proposed evidence of the 2015 actual sales for Bounty Print and Headline promotions were by no means determinative whether the appellant’s conduct did or did not breach the substantial terms of the employment contract. But the 2015 results were relevant to assess whether Mr. Clarke’s subjective beliefs were reasonable and whether a reasonable person could reasonably have foreseen the growth. They were also relevant to demonstrate what his 2015 income would likely have been as an account executive.
74      The trial judge prevented the appellant from challenging the respondent’s pessimistic outlook on sales with what actually happened.
The Court then went on to actually reverse the trial judges’ decision because it was found that she incorrectly applied the two stage analysis in Potter for determining whether or not a constructive dismissal took place.
My Comments :
On the surface it looks like the employer was trying to do exactly what the SCC said you cannot do, which is rely on information derived after the fact to determine what a reasonable person would do before those facts came into existence.
However in this case the Plaintiff was the one who pleaded that his income would go down, so clearly the Defendant should be able to lead evidence about why they disagreed with that analysis based on the information they had at the time.
It seems somewhat absurd to ignore what actually happened in trying to determine whose forecast of the future was reasonable and whose was not. The Court of Appeal seems to skate close to the line by declaring that the actual results were not determinative of this issue but were still relevant.
Perhaps this comment by the Court of Appeal tells us what they were actually thinking:
61      Alex Liot ( the Defence witness) disagreed with Mr. Clarke’s pessimistic outlook for sales at Bounty Print and Headline Promotions. When he attempted to discuss the actual 2015 sales, the respondent again objected. Ironically, it was the respondent during the discovery process that had demanded production of these numbers, obviously in the hope they would bear out Mr. Clarke’s pessimistic outlook. Apparently, they did not.

 

4 Months Pay as Punitive Damages to 4 Plaintiff’s:

In Martin, Allain, Leblanc, Bourque v Total Credit Recovery ( 2019 NBQB 102 ) Rideout J. awarded, in addition to reasonable notice , 4 moths extra pay as punitive damages for the reasons set out in this quote :
47. I realize as well that punitive or Wallace damages require “careful consideration”, and discretion to award these damages must be “cautious exercised”. With that in mind, I find the conduct of Total Credit Recovery Limited to be egregious. They knew what they were planning, told their clients about the closure but not the long-term employees until the day of the closure, gave them two weeks’ salary and then collapsed Total Credit Recovery (Atlantic) Limited so they would not have to pay reasonable notice; so they thought. To me, this conduct is harsh, vindictive, reprehensible and malicious. I believe that no employee should be treated by their employer this way and even more so when the four plaintiffs had worked for them for many years.

Indefinite Administrative Suspension = Terminated Without Cause:

In Hookimawillile v Payukotayno James and Hudson Bay Family Services ( 2019 ONSC 3514) Trembley J. dealt with a supervisor who was put on a indefinite investigative suspension without pay as a result of the death of a child.
A few days later the Plaintiff’s lawyer sent a letter to the Employer claiming that the Plaintiff had been constructively dismissed. A few days after that the Employer purported to fire her for cause for a number of incidents going back over a year.
The Court held that as there was no contractual right to suspend administratively without pay, the Plaintiff had been dismissed without cause.
Furthermore the Court held that ” the defendants cannot be allowed to retrospectively dismiss the plaintiff with cause on grounds that were known or ought to have been known to it when it constructively dismissed her.” 
The judge then made the following comment :
58      As eloquently stated in Doucet v. Spielo Manufacturing Inc., 2011 NBCA 44, 2011 CarswellNB 228(N.B. C.A.), “the law should not encourage employers to assume the role of employment archaeologists, looking through the remnants of an employee’s work history, in an effort to unearth grounds for dismissal.”

11 Months Notice for 3 Year Employee:

In Drepaul v Mikla Foods Canada ( 2019 ONSC 2387 Chalmers J. awarded a 65 year old Processing Improvements Coordinator making $80,000 / year with only 3,3 years service an astonishing high notice period of 11 months.
The Judge made special note of the fact that the Plaintiff had sent out over 230 job applications and still could land a job.
This case reemphasizes the fact that the best way for plaintiff’s to get a longer notice period is to mount and document an over the top job search. I am constantly amazed by how many times at mediation the Plaintiff arrives with little or no evidence of their job efforts and still expect to get a high end settlement. This gives an opening for the defendant to argue that the job search was inadequate and thus the notice period should be at the lower end of the scale.

Accusing Employer of ” Major Fraud” = Just Cause

In Hicks v Len Dubois Trucking ( CarswellNat 6591), an adjudication under the Canada Labour Code, Adjudicator Deeley had a situation where a truck driver with 2 years service had a dispute with his employer regarding a shortfall of $1,140  in a series of 34 pay checks.

When his employer did not get back to him in what he thought was a reasonable timeframe, the driver sent the following email to his boss:

Of the 34 pay periods I have my sheets for, only 6 were actually correct. Even the last pay I got was wrong and I was shorted crossings and picks/loads, again. If a driver got that many loads wrong, we’d be fired long ago. Two weeks to sort out the sloppy accounting Is more than enough time to pay me for the work I’ve already done. I think, considering its obviously been going on for years and you didn’t seem particularly concerned when we talked. If It isn’t sorted out by then, the courthouse and the Labour Board can deal with the issue, plus damages, as they’ve both already sent me the appropriate forms. In legal terms, this is fraud, and I doubt I am the only one being shorted regularly on my pay. That’s major fraud over $10,000.
This email was found to be just cause. This is what the adjudicator said:
61      Mr. Hicks was not fired because he questioned his pay. He was terminated because of the way or manner in which he questioned his pay. He assumed that he had been and would be treated unfairly. Even though in his original April 14th, 2017 meeting with Mr. Sawatzky it was pointed out to him that two of his areas of concern could not be sustained, namely the basis on which he had calculated his claim for mileage, and the fact that he had already been paid for some of his drops or deliveries to Loewen Windows, he still persisted in his belief that his other calculations were absolutely correct, and that the employer would not be able to offer any reasonable alternative explanation. Before even giving his employer an opportunity to review his revised claims, he wrote a totally inappropriate email on April 28th, 2017 that accused his employer of significant misconduct and threatened further action against them. These were serious allegations which amounted to gross insubordination. They were unreasonable and uncalled for at the time in question. They invited and called for significant disciplinary action on the part of the employer, I therefore find the actions of the Respondent to be reasonable on the facts of this case, and that the Complainant, Tim Hicks, was dismissed from his employment for just cause. This complaint is therefore dismissed.
My Comments:
The Employee’s email in essence  threatened two actions against the employer;
One, that he would bring either a civil action or a ESA complaint for unpaid wages and,
Two, that he would lay criminal charges if he was not paid the  sums he said were owing.
Hopefully the Adjudicator did not consider the threat of civil or administrative actions as insubordination. Every ESA statute contains an anti- reprisal section which allows employees to either assert their rights under the act or to state  their intention to do so.
However the veiled threat of the Employee to lay criminal charges unless he was paid what he felt was owing would not only be just cause but may also be also a criminal offence in itself, namely extortion under Section 346 of the Criminal Code, which reads  as follows:

 

Extortion

  •  (1) Every one commits extortion who, without reasonable justification or excuse and with intent to obtain anything, by threats, accusations, menaces or violence induces or attempts to induce any person, whether or not he is the person threatened, accused or menaced or to whom violence is shown, to do anything or cause anything to be done.

  • Saving

    (2) A threat to institute civil proceedings is not a threat for the purposes of this section.

In a subsequent Wage Recovery adjudication before the same Adjudicator ( 2019 CarswellNat 6592 ) it was found that the Employee was owed $312 for unpaid wages .

 

Another Huge Costs Award For a Motion:

In Joshi v. Allstate Insurance Company of Canada,( 2019 ONSC 5934) Justice Himmel set the costs to the plaintiff in an Anti-SLAPP motion brought on by Allstate ‘s counterclaim for defamation.
This is what the Judge had to say about her reasoning :
“I will begin by acknowledging that very significant amounts of time have been spent by the lawyers on both sides and that this was justified because the legislation is relatively new. The law remains in flux with the Court of Appeal having released recent decisions for which leave to appeal to the Supreme Court of Canada has been granted, and this is the first identified example of an Anti-SLAPP motion under s. 137.1 involving a counterclaim.”
The Plaintiff asked for $126,499. The Defendant said that there full indemnity was “only” $95,173.
The judge awarded the Plaintiff $95,173, exactly what the Defendant paid their own lawyers.
This is what she said :
I find that the appropriate amount of costs to award to Ms. Joshi in this case is $95,173.26.  This is an amount that Allstate could reasonably have expected to pay as the losing party since it is the full indemnity amount of costs charged by Allstate’s counsel.  While below the full and substantial indemnity costs claimed by plaintiff’s counsel, it is in the range of what was asked for and is a significant amount of costs that is consistent with one of the identified purposes of s. 137.1(7), which is to ensure that plaintiff’s counsel, who may be working on contingency, are compensated fairly for their work as an incentive for them to represent parties who might otherwise not have sufficient means to retain counsel.  (see Anti-SLAPP Advisory Panel October 28, 2010 Report to the AG).  

[23]           Further, the amount is significant enough to serve as a deterrent against plaintiffs resorting to the courts to shut down public debate.  (see Niagara Peninsula, at para. 12)  I find this to be a fair, reasonable and proportionate award of costs for a motion in a proceeding that is continuing and in which it is reasonable to infer that some of the fruits of the work done will be of use to the plaintiff in the pursuit of her action and were not exclusively incurred in relation to the dismissed counterclaim.

Andrew Monkhouse was the lawyer  for the Plaintiff, Seann McAleese was the lawyer for Allstate.

Court Upholds Severability Clause in Termination Provision:

In Waksdale v Swegon North America ( 2019 ONSC 5705) Morgan J. had a situation where the employment agreement had two separate termination clauses; one for just cause terminations which violated the Employment Standards Act and one for without cause terminations which did not violate the ESA.
There was also a severability clause applicable to the entire contract.
The plaintiff was terminated without cause and paid out in accordance with the contract. The Plaintiff argued that the illegality of the just cause clause made the entire termination provision, including the without just cause part, illegal and unenforceable.
The Judge said no, the clauses were distinct and only the just cause clause was void and since the defendant was not relying on that clause, its illegality was irrelevant.
I am advised by Plaintiff’s counsel that they will be appealing.

SCC Just Heard case of Matthews v. Ocean Nutrition Canada Limited. My First Impressions :

This morning the SCC heard this case which deals with exclusionary clauses in employment contracts. In essence the plaintiff would have received over one million $ had he been permitted to work through his 15 month notice period but for the language of the contract. The employer had been found to have acted in bad faith.

The SCC seemed to be thinking about the various issues.

1. If the contract language itself did not purport to allow the employer to act in bad faith , would the exclusionary clause itself even apply?

2. Can a contract even purport to allow one party to act in bad faith ?

3. If the essence of a wrongful dismissal action is the failure to allow the employee the right to work through the notice period , then should not the calculation of the damages be the same as if the employee had been permitted to so work?

4. It is not in dispute that an employer may limit the length of the notice period, but can they also exclude certain items of compensation from being considered in that time frame?

5. Is extending Bhasian to the performance of an employment contract, not just to the manner of the dismissal, too big a step at this time ?

Kudos to Howard Levitt, Andrew Monkhouse , Stacey Ball and Tim Lawson for their very interesting arguments .

More comments to follow in future blogs

Employee Presumptively Entitled to Back Pay to Date of Hearing Under CLC:

In Curran v MAG Aerospace ( 2019 CarswellNat 4803) Adjudicator Sinding was called upon the determine the proper remedy for an unjust dismissal where the employee did not seek reinstatement.

He made a few interesting findings:

1) Adjudicators are not limited to only awarding common law reasonable notice.

2) There is a presumption that the employee is entitled to be compensated up until the date either the hearing or the decision.

3) The calculation of the lost wages takes into account the deduction of mitigation earnings, even if the underlying contract was a fixed term.

4) To prove damages beyond this date requires real proof of lost future earnings and will always have a end date.

Wallace Damages Has Two Components :

In Headley v City of Toronto ( 2019 ONSC 4496 ) Sanderson J. awarded 18 months notice to a 40 year old Shift Supervisor at a homeless shelter who had been employed for 15 years .
Having found that the Plaintiff was unjustly dismissed due to false allegations of theft, the judge also awarded Wallace damages on two separate grounds:
First, $15,000 for the mental distress raising from the manner of dismissal.
Second ,$50,000 for the tangible financial loss caused by the manner of the dismissal as the false accusations of theft impaired his ability to find comparable employment . This is what the judge said :
Wallace Damages for Loss of Income
402      I am satisfied that the unfair allegations that Headley had committed theft, the City’s unfair dismissal on unsubstantiated suspicion of theft, fraud and wilful dishonesty, Anstett’s refusal to respond to his calls so he could request a letter of reference from his immediate supervisor and the inevitable cloud created by that unfairness have foreseeably led to tangible financial loss of income in the ensuing years. Hopefully this Judgment will dispel that cloud.
403      Almost seven years have passed since the termination. Despite having made what I have found were reasonable efforts, Headley has not succeeded in finding a comparable managerial position. At the time of the trial he was still earning roughly half the total income he was earning in June 2012. With the cloud lifted, I expect that Headley will now be able to find a comparable managerial position.
404      I have found that his employment history before the termination illustrates that he was highly motivated, consistently employed, often for more than 40 hours per week. He also volunteered and provided mentoring to others. But for the unfairness in the manner of his termination, including the unfounded allegations of theft, fraud and dishonesty, I find Headley would have had little difficulty obtaining a comparable managerial position and earning comparable income to the income he earned prior to June 25, 2012.
405      Given the guidance given by Iacabucci J. in Wallace that “if the manner of termination affects employment prospects” it may be worth of considerably more compensation” and given the direction of Bastarache J. in Keays that such damages are to be awarded, not by an arbitrary extension of the notice period but through an award that reflects the actual damages, this Court must attempt to assess the actual damages/tangible financial loss caused by the unfair manner of dismissal.
406      The financial consequences to Headley and his family of the manner of his termination have been significant.
407      Bearing in mind the need to avoid duplication by reason of his receipt of damages as a result of the dismissal under the previous heading, I award $50,000 for tangible financial loss caused by the unfair manner of his dismissal.
Lawyers often seem to forget this important aspect of Wallace Damages as they tend to focus on the mental distress element of the case. This case shows that it may be much more profitable to focus how the manner of the dismissal adversely affected the plaintiff’s employability.
I remember  reading about a US case in which the dismissed employee claimed damages for self defamation. In that case he had been falsely accused by his ex employer of theft. The Plaintiff claimed that when he went on job interviews after his dismissal and was asked why was he fired, he was forced to tell the truth by saying ” I was falsely accused of theft “. Not surprisingly, although the interviewer might have appreciated his candour, that comment turned out to be a job killer. His damages were the lost opportunity to land another job.