Mental Distress/ Aggravated Damages Require Actual Third Party Evidence, Says BCCA:

In Cottrill v Utopia Day Spas and Salons  ( 2018 BCCA 383) Justice Goepel reviewed a mental distress award of $15,000. In this decision the Judge reiterated in order to win aggravated damages the Plaintiff must prove 4 elements :

a) That the employer engaged in conduct during the course of the dismissal that was unfair or in bad faith , AND

b) That the manner of dismissal caused the mental distress, AND

c) That the damages must be more than the normal distress and hurt feelings resulting from dismissal AND

d) There must be real demonstrable evidence regarding the mental distress .

Here is the quote regarding the 4th requirement.

In this case, as in Lau , there was no evidence from the plaintiff or from family members, friends or third parties concerning the impact of the termination on Ms. Cottrill and her mental state. Although not required, there was no expert evidence, medical or otherwise. The only evidence of mental distress is that Ms. Cottrill cried during the March meeting, following which she had to go home early because she was so upset, and that at the June meeting, she went numb and could not take anything in. The evidence of Ms. Cottrill’s reactions at the two meetings at its highest establishes a transient upset. It falls well short of the legal standard that requires a serious and prolonged disruption that transcends ordinary emotional upset or distress.

Remember this was a fairly modest award for aggravated damages and still the Court required real third party evidence of the mental distress.

What is interesting about the trial decision is that the Judge found that the Plaintiff’s employment agreement had an enforceable ESA termination clause so that her recovery was limited to a lousy 8 weeks pay.

I suspect that the trial judges willingness to award aggravated damages was in part influenced by his inability to award reasonable notice. The trial judge seemed determined to award this plaintiff more than her minimal contractual entitlement. After all, she was a 11 year employee who was fired for poor performance and given no termination pay at all.

Call me a cynic or a realist, but I bet that if there was no termination clause, the judge would have awarded her a generous notice period and nothing for aggravated damages.

But what do I know. I am just meditator.

Not a Privilege Between Management and HR:

In Guthrie v St Joseph Print Group ( 2018 ONSC 1411) Master Champagne had to decide whether a series of emails between senior management and the human resources department had to be produced in an Affidavit of Documents .

The Plaintiff alleged that he was constructively dismissed when after 34 years as a salesman his compensation was reduced by 10% after being placed on  Performance Improvement Plan.

The Defendant claimed privledge on two grounds:

Litigation Privilege: Because the emails in question were about a year before the constructive dismissal, the Master held that it is not plausible that the Defendant contemplated litigation that far in advance and that because the predominant purpose of the  emails was performance issues, no privilege applied.

Wigmore Test : There are 4 required parts to the common law test as to whether or not a non statautory  privilege should exist.

1. the information or communications must originate in a confidence that they will not be disclosed;
2. this element of confidentiality must be essential to the full and satisfactory maintenance of the relationship between the parties;
3. the relation must be one which in the opinion of the community ought to be sedulously fostered;
4. the injury that would inure to the relationship by the disclosure of the communications must be greater than the benefit thereby gained for the correct disposal of litigation.
The Master held that items 1 and 2 of the test applied.
Regarding item #3, the Master found that there was not convincing evidence that in the community there was an opinion that the relationship between management and HR required confidentiality inorder




Clarity of Fixed Term Wins Out Over Ambiguous Termination Clause.

In Lawis v ProCabinet Design and Coastal Marine ( 2018 CanLII 95659) Judge Orr of then Provincial Court of Nfld and Labrador has a situation where the contract contained the following provisions:

This contract shall have a duration of 24 months from the date the Employee assumes his functions.

Notice of Resignation Should he /she wish to terminate the present contract, The Employee, agrees to give the Employer written notice thereof at least one week in advance.”

“The Employer must give written notice before terminating the contract of the Employee if the Employee has completed 3 months of uninterrupted service with the employer and if the contract is not about to expire. This notice shall be provided at least one week in advance.”

The Employee was terminated after 12 months due to lack of work.

The issue thus was whether the Employee was entitled to the balance of the contract ( 12 months ) or the one week notice.

Interestingly the Judge noted that ” there no provisions with respect to notice periods”.

In finding that the Employee was entitled to the 12 month balance of the term, the Judge said as follows:

 In Miller v. Convergys CMG Canada Limited, 2014 BCCA 311 (CanLII) 

The Court of Appeal considered the interpretation of employment contracts holding:

  • The court should strive to give effect to what the parties reasonably intended to agree to when the contract was made.
  • The language of the contract should be given its plain and literal meaning, and be interpreted in the context of the entire agreement. Consideration also may be given to the factual matrix surrounding the creation of the contract.
  • If the contractual language reveals two possible interpretations, the court should seek to resolve this ambiguity by searching for an interpretation that reflects the true intent and reasonable expectations of the parties when they entered the contract, and achieves a result consistent with commercial efficacy and good sense. Considerations of reasonableness and fairness inform this exercise.
  • If these principles do not resolve the ambiguity, then extrinsic evidence may be admissible to assist in ascertaining the parties’ intent.
  • As a last resort only, the principle of contra proferentem may be invoked to favour construction of the ambiguity against the party who drafted the agreement. The principle of contra proferentum may not be used, however, to create or magnify an ambiguity.
  • Employment contracts should be interpreted in a manner that favours employment law principles, specifically the protection of vulnerable employees in their dealings with their employers. Even so, the construction of an employment contract remains an exercise in contractual interpretation, and the intentions of the parties will generally prevail, even if this detracts from employment law goals that are otherwise presumed to apply.

[21]        In Mr. Lawis’s case, it would be unreasonable to interpret the clause in such a way that it allowed the employer to terminate the agreement without cause on one weeks’ notice. Considering all the facts and specifically that the agreement was for a term of two years and involved the employee leaving his current employment and traveling from the Philippines at his own expense. The clause does not specify any notice period and as a result must be read as not setting out a notice period. I find as a result that Mr. Lawis is entitled to be paid the balance of the unexpired term of the agreement.

The contract interpretative principles cited in this case are very similar to those set out in the Ontario Court of appeal case called Wood v Fred Deeley Imports (2017 ONCA 158) where Laskin J. set out the following guiding principles:

(c)       The jurisprudence on interpreting employment agreements

[25]     The question of the enforceability of the termination clause turns on the wording of the clause, the purpose and language of the ESA, and the jurisprudence on interpreting employment agreements. That jurisprudence is now well-established. I will summarize it briefly.

[26]     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 CanLII 88 (SCC), [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.

[27]     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 CanLII 332 (SCC), [1997] 3 S.C.R. 701. 

[28]     The importance of employment and the vulnerability of employees when their employment is terminated give rise to a number of considerations relevant to the interpretation and enforceability of a termination clause:

•        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

•        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

•        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.

•        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.

•        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.

•      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), 2001 CanLII 8589 (ON CA), 149 O.A.C. 315, Family Counselling Centre of Sault Ste. Marie and District (2001), 2001 CanLII 4698 (ON CA), 151 O.A.C. 35.

In spite of these clear statements from two Courts of Appeal, in my opinion some judges still seem to apply a strictly commercial interpretation to employment agreements and simply do not properly follow the special rules of interpretation that apply to employment agreements .

Working Beyond a Fixed Term Does not Automatically Turn the Employment Relationship into an Indefinite Term :

In Fontaine v White Buffalo Youth Inhalant Treatment Centre ( CLC -YM2707-10984) Adjudicator Koskie had a a situation where the employee on a fixed term contract worked for one week after the expiry of the contract and was then terminated.

Normally when one works beyond a fixed termination date, the contract morphs into a term of indefinite employment which can only be terminated upon providing reasonable notice.

However in this case the parties were in the process of actively negotiating whether to extend her contract, renew it for another term or bring the relationship to an end. As such there was no agreement between the parties and therefore the employers’ decision to not renew was not a dismissal, even though it was a week after the expiry date in the original contract.