Month: July 2017

Series of Fixed Term Contracts Over 38 Years Yields Zilch Severance:

In Burns v University of New Brunswick ( 2017 NBQB 104) Justice Glendening had to decide whether the failure to offer a new contract to the plaintiff after a relationship of multiple contracts over a 38 year time span was a wrongful dismissal requiring reasonable notice .

The Judge said no, for the following reasons:

   I agree with the factors set out in the pre-trial brief of UNB which support the finding of fixed term contracts between Burns and UNB (ELP):

•         No continuous employment between the parties.  All ELP contract employees were told repeatedly that there was no guarantee of work in the future;

•         Contracts varied in length, duties and position.  Burns had the opportunity to and did negotiate terms of his contract;

•         Rate of pay was discussed and negotiated;

•         Burns refused contracts and, in particular, November 2015;

•         Records of Employment were issued over the years;

•         Burns did not receive benefits or pension from ELP or UNB;

•         Burns did contribute to the Public Service Shared Risk Plan under terms as established by PNB;

•         Burns did not receive vacation or sick time but he did receive vacation pay in his statement;

•         Burns had no authority over staff members or any students; and

•         Burns received the following training between 1978 and 2016:

–     three annual conferences in 1991 and two between 1991 and 2015;

–     one six hour session in 2008 and one three hour session as a workshop in 2013; and

–     a two day workshop at UNB’s College of Extended Learning in 2012.

  V.  DECISION

[17]                              I find that an employee whose contract is not renewed at the conclusion of a fixed term contract is not entitled to reasonable notice.  The case law indicates that the contract is simply terminated and neither party is under any obligation to continue the contract of hiring.  I find that the contracts were clear and comprehensive.  I find that Burns was not an indefinite hire employee but rather a contract term employee.  There were no ambiguities to be interpreted in regard to termination.   Burns is not entitled to any reasonable notice.  The plaintiff was not wrongfully dismissed.

In Ontario, this plaintiff still would have been entitled to both termination pay and severance pay under the Employment Standards Act, which would have come to around 34 weeks, depending on if and when the gaps in employment were  in excess of 13 weeks.

Two Court Decisions on Common Employer: Plaintiffs Lose Both:

The issue of a common employer usually arises when the entity that is the obvious employer ( that is the one whose name is on the paycheque), is insolvent but a related company has assets to satisfy a judgement.

  1. In Freeman v PetroFrontier Corp ( 2017 ABQB 340 ) Justice Neufeld had a situation where the Plaintiff had two separate employment contracts with two interrelated companies, each responsible for 1/2 of her combined salary.

This is what the Judge said :

47      The Plaintiff contends that in the circumstances of this case, Rodinia and PetroFrontier were common employers due to factors such as: a shared corporate history; shared office and equipment; similarity of directors; and shared executives and employees.
48      PetroFrontier argues that the common employer doctrine does not apply in this case. While acknowledging the commonalities relied upon by the Plaintiff, it says that this is not a case in which the true employer of Ms. Freeman is in doubt. Nor is it a case in which a business entity has continued to shield itself from liability to employees through the use of an asset-less “paymaster” company. Rather, it is a case where two separate companies have engaged in two separate businesses for the benefit of two distinct set of shareholders, and have entered into separate employment contracts.
49      I agree with PetroFrontier that the common employer doctrine does not apply in this case. There is no doubt as to who Ms. Freeman was employed by. Her employment contracts make it clear that she was employed by each company with separate terms of employment and separate confidentiality agreements executed for each. There is no need to lift the corporate veil, because it has never been let down.
50      To use the common employer doctrine to impose joint and several liability would constitute re-writing a contract that is clear on its face and that was executed in good faith. Although sympathetic to Ms. Freeman’s plight, I am not prepared to take such step.
2) In Rowland v VDC Manufacturing ( 2017 ONSC 3351) Justice Morgan had a plaintiff who first worked for HMV ( and was issued a T4 )  and then after 6 months was transferred to a related company , VDC, who from then on issued T4’s under its name.
When the Plaintiff did work for HMV,  VDC sent an invoice to HMV. The companies handled different ends of the business, one did engineering, one did manufacturing and another did the marketing.
 These are the comments that the judge made about why he held that the companies were not common employers:
14      The Plaintiff has not succeeded in establishing that there was anything like “a highly integrated or seamless group of companies which together operated” what was effectively one business and one employer: Downtown Eatery, at para 34. An example of such integration would be where one company in the group is the ‘paymaster’ for the others such that it is impossible to say which one is the real employer: Ibid., at para 33. On the evidentiary record before me, it cannot be said that the Defendants “apparently compete for the role of employer”: Sinclair, at 181.
I note that just as the Defendants market themselves on their website as a “Group of Companies”, the Plaintiff has marketed himself on his C.V. as working for a single company, AVL. In my view, neither of these marketing efforts is significant, as they are not aimed at the issue at hand. The Defendants’ website is targeted at customers, and is not designed to send a message to the Plaintiff or other employees with respect to the corporate identity of their employer. Similarly, the Plaintiff’s C.V. is targeted at prospective employers, and is not designed to make a point about the corporate or group identity of his former employer. These reciprocal marketing efforts are just that — marketing efforts — and should not be taken to reflect the views of either party with respect to the employment relationship.
11      It is significant that the Defendants have consistently kept a formal distance from each other not just in their corporate legal structures, but in their dealings with the Plaintiff. Whereas the Plaintiff worked for one of the Defendant companies, HMW, for the first 6 months after being hired, that company formally transferred him to AVL, where he continued to work for the rest of his 9 years on the job. Likewise, the Plaintiff himself has conceded that the companies issued invoices and Purchase Orders to each other for services he rendered to companies other than his formal employer, AVL. This documented separation between the Defendant corporations in terms of their responsibility for the Plaintiff militates against their having common control over the Plaintiff as employee: Sinclair v. Dover Engineering Services Ltd., [1987] B.C.J. No. 60 (B.C. S.C.), at 181.
12      In order to establish that two or more legal entities are his common employer, the Plaintiff must demonstrate that he had a reasonable expectation that the Defendants were each a party to his employment contract. “[M]ere allegation of corporate affiliation simpliciter is not sufficient to bring the common employer doctrine into play . . . Any plaintiff invoking the common employer doctrine must be able to demonstrate on the particular facts of the case that he or she held a reasonable expectation in the circumstances that each of the alleged common employers were parties to the employment arrangement governing that particular employee at all relevant times”: Mazza v. Ornge Corporate Services Inc., 2015 ONSC 7785 (Ont. S.C.J.), at paras 85-86, aff’d 2016 ONCA 753 (Ont. C.A.).
13      Where the employee is aware that he was employed by a single employer, the fact of interlocking shareholders with his formal employer does not itself establish a common employer: Dumbrell v. Regional Group of Cos. (2007), 85 O.R. (3d) 616 (Ont. C.A.), at para 83. The onus is on the Plaintiff to demonstrate that there was “effective control over the employee” by all of the alleged common employer companies: Downtown Eatery (1993) Ltd. v. Ontario (2001), 54 O.R. (3d) 161 (Ont. C.A.), at para 33. There must be evidence of an actual “intention to create an employer/employee relationship between the individual and the respective corporations within the group”: Gray v. Standard Trustco Ltd. (1994), 8 C.C.E.L. (2d) 46 (Ont. Bktcy.).
Unfortunately this Judge did not refer to a recent similar case on the Ontario Court of Appeal  entitled King v. 1416088 Ontario Ltd. (Danbury Industrial), 2015 ONCA 312, where similar facts involving interlocking ownership, common marketing and working for more than one company was found to be sufficient to uphold a finding of common employer.
The Rowland case  in particular would seem to impose a very high burden on an employee to be able to prove the issue of common ownership.
Think of this situation. Vince, the owner of 4 related companies operating out of the same site, tells the accountant, who is only on the payroll of one of the 4 companies, to go to the bank with a envelope of checks to be deposited . The envelope contains deposits for all 4 related companies. Can the accountant open up the envelope , extract only those checks that relate to the company that he gets his T4 from, and refuse to deposit the rest because that is not his job?
If the answer is no, that would be insubordination, then how it can he that he is not the employee of all four companies?
The Defendant is the one who sets up the corporate structure. The employee has no input into this process, nor can he object to be ” formally transferred” to another related  corporate entity. Why then should the employee get the short end of the stick when the owner decides to bankrupt one company and keep the other alive ?

Plaintiff Wins Summary Judgement Motion and Gets $24,576 for Claim and $35,000 for Costs.

In Thambapillai v Labrash Security Services ( 2017 ONSC 3299) Justice Goldstein found that a 72 year old security guard with 12 years service was entitled to 8.6 months notice and $7,500 for mental distress.

In the cost assessment, the Plaintiff beat his Rule 49 offer . Moreover the Judge noted that the Defendant refused to have the case mediated.

The result was a $35,000 substantial indemnity cost award, more than the amount awarded at trial for the claim. The judge had this to say about the defendant’s conduct:

” I found that the Defendant treated the Plaintiff – an elderly immigrant of very limited means and sophistication – unfairly. The Defendants then played hardball litigation. They are entitled to do that and it is not necessarily unethical or immoral. But it is expensive. When I take into account the offer to settle and the manner in which the case was litigated, I agree that $35,000.00 in substantial indemnity costs, all-inclusive, payable to the Plaintiff, is appropriate. ”

The Defendant submitted a cost claim for its side at 50% of the Plaintiff’s claim. We can therefore assume that they spent at least $17,500 for their own costs. Thus their total cost of this litigation would have been at least $24,576 + $35,000 + $17,500 = $77,076.

Apparently the main issue at trial was based on whether the 72 year old plaintiff was able to mitigate his damages.

That apparently was the $77,000 question.

Gee, I wonder what the outcome and cost would have been if the Defendant had agreed with the Plaintiff’s proposal to mediate.

Unfortunately Rule 24 .1 ( Mandatory Mediation ) and the relevant Practice Directions  do not require a mediation before a motion for summary judgement, only before a trial .

Fixing this loophole in the Rules  would go along way to reducing litigation costs, at least in the three jurisdictions that have Mandatory Mediation, namely Toronto, Ottawa and Windsor.

Aggravated Damages of $75,000 for Baseless Accusations of Just Cause:

In Lalonde v Sena Solid Waste Holdings ( 2017 ABQB 374 ) Justice Gill awarded $75,000 in aggravated damages to a 57 year old Millwright with 4 years service. He was also awarded 6 months notice .

This was the reasoning behind this award ;

2      In this case, I am satisfied that the actions of the Defendant amount to a breach of the obligation of good faith and fair dealing and support an award of aggravated damages. Those actions include the following:
1) The Plaintiff was summarily terminated after being accused of serious safety violations and insubordination relating to alleged retention of salvageable equipment and scrap metal and failure to supervise an unassigned contract worker.
2) The Defendant maintained these allegations which are described in the Statement of Defence as “serious safety violations and insubordination” from the date of suspension in June, 2012 until shortly before trial in May 2017 at which time they withdrew those allegations.
3) Two days after the Plaintiff’s suspension, without regard for his explanation and without giving him an opportunity to fully explain the alleged misconduct, a decision was made to terminate his employment on the 15th of June. An internal memo from the Maintenance Manager, Mr. Goegan, to the HR Manager, Ms. Burr, shows a decision had been made to terminate the Plaintiff; this despite not having any response from the Plaintiff as to the alleged breaches of conduct. The Defendant ignored a letter from an employee (Larry Dakin) which supported the Plaintiff’s contention that he had done nothing wrong in relation to the alleged lack of supervision of a contract employee. The evidence supports the conclusion that the internal investigation was essentially a sham.
4) The nature of the allegation concerning the mishandling of salvageable equipment and scrap metal implied some form of illegal conduct or dishonesty on the part of the Plaintiff. This suggestion can be found in the Statement of Defence where the Defendant outlined in detail the alleged cause for termination using such wording as “the plaintiff’s serious safety violations and insubordination.” The Statement of Defence suggested that the dismissal for cause included “unsatisfactory performance, dishonesty, insubordination, serious misconduct.” In the Statement of Defence the Plaintiff’s misconduct is described as constituting “serious misconduct, insubordination and conduct constituting cause.” It is stated that “the Plaintiff’s misconduct was such that it interfered with and prejudiced the safe and proper conduct of the SHTC thereby, justifying cause for immediate dismissal.”
73      Other examples include paragraph 36 in the Statement of Defence which indicates that the Defendant “could not justify continued employment of the Plaintiff given his cavalier attitude toward safety and clear lack of respect for his Supervisor’s authority” [Emphasis added].
74      Paragraph 37 states:
The conduct of the Plaintiff constitutes:
a) Breach of express or implied terms of the Plaintiff’s Employment Agreement;
b) Breach of express or implied terms of the Plaintiff’s Agreement to abide and be bound by SHTC’s Safety Manual and its Safety Policies and Procedures;
c) Disregard for his safety, the safety of his coworkers and the community;
d) Insubordination; and;
e) Incompetence or negligence.
75      I note also that there was evidence of the impact that the actions of the Defendant, before and at the time of dismissal, has had on the Plaintiff. I note that while the evidence from the Plaintiff’s wife was in letter form it was not contradicted and was supported in substance by the sworn evidence of the Plaintiff. As already discussed, the letter describes how the termination has greatly affected their relationship and how the Plaintiff is now depressed, miserable and uninterested in activities and relationships with family members that he previously relished. She explains the economic, physical and mental stress that he had gone through. In addition, his reputation has suffered. I note also, that the Plaintiff lives in a small town, and the Defendant was one of the larger employers located close to the small community where the Plaintiff lived and it is reasonable to infer that the information concerning his termination and the ongoing allegations may have had an effect on both his reputation in the community and also his ability to obtain similar work due to the rumors surrounding his termination.
76      I note also that the Plaintiff’s EI benefits were delayed as a result of the allegations of cause made by the Defendant at the time of the dismissal.
77      In summary, I am satisfied that the Defendant’s conduct during the course of dismissal was unfair, breached the requirement of good faith and the expectation that both parties to the contract had that the employer would act in good faith in the manner of dismissal.
78      The Plaintiff has proven that the manner of dismissal caused mental distress, particularly by the Defendant’s actions in attacking the Plaintiff’s reputation at the time of dismissal and representing that there was sufficient cause for dismissal for an extended period of time.
79      The Plaintiff seeks aggravated damages in the amount of $125,000.00. Reviewing the case law relied upon by the Plaintiff, including Karmel v. Calgary Jewish Academy, 2015 ABQB 731 (Alta. Q.B.) [“Karmel”] and Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419 (Ont. C.A.) [“Boucher”], I find the amounts awarded in those cases to be inappropriate for the facts of this case. In Karmel and Boucher the actions of the employers were much more prolonged, serious and arguably vindictive, thus in those cases the conduct supported a claim of $200,000 in aggravated damages.
80      In this case there was abusive conduct leading up to the dismissal, inappropriate and false reasons for dismissal and an inadequate and unfair investigation. The plaintiff did not receive procedural fairness. I would characterize the actions of the Defendant in this case to be less serious and egregious than in both Boucher and Karmel thereby warranting lower damages. Although the Defendants actions appear not to have been vindictive, they were intentional, unnecessarily prolonged and caused the Plaintiff significant mental distress. The wrongful allegations were maintained for almost 5 years causing the Plaintiff considerable mental distress during and after his sudden termination. He was publicly humiliated at the time of dismissal and the humiliation continued as rumors concerning the reasons he was dismissed continued to circulate. Consequently substantial aggravated damages are justified for the Defendants failure to comply with their duty to act in good faith.
81      It is difficult to quantify an award of aggravated damages. No case is identical or directly applicable. The following cases displayed similar unfair and insensitive conduct to what occurred in this case. Doyle v. Zochem Inc., 2016 ONSC 3188 (Ont. S.C.J.), aff’d 2017 ONCA 130 (Ont. C.A.) -$60,000; Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520 (Ont. C.A.) -$70,000; Zesta Engineering Ltd. v. Cloutier, 2010 ONSC 5810 (Ont. S.C.J.), additional reasons 2013 ONSC 385 (Ont. S.C.J.), reversed in part on other grounds 2014 ONCA 762 (Ont. C.A.) -$75,000; Tim Ludwig Professional Corp. v. BDO Canada LLP, 2017 ONCA 292 (Ont. C.A.) -$100,000 aggravated damages in a Partnership Context; Price v. 481530 B.C. Ltd., 2016 BCSC 1940 (B.C. S.C.) – $50,000 aggravated damages; Pate Estate v. Galway-Cavendish and Harvey (Township), 2013 ONCA 669 (Ont. C.A.) — $100,000. Taking into account the evidence in this case and the jurisprudence, I award aggravated damages in the sum of $75,000.
I like the fact that the Judge clearly articulated the reasons for finding that the employer breached their duty of good faith.
I also like the fact that the judge referred to the devastating effect of the termination on the Plaintiff’s personal life and that he accepted that evidence without the requirement of an expert medical opinion that the Plaintiff was truly depressed and upset  about the false accusations made against him.
In fact, it seems that the Judge approached the damages as if it were  a defamation claim, in which expert evidence is not required to prove damage to reputation.
This approach makes it easier and cheaper to prove moral damages.

Hired and Fired Before You Even Started Gets You 6 Weeks Pay in Lieu, Tax Free:

In Buchanan v Introjunction Ltd ( 2017 BCSC 1002) Justice Skolrood awarded 6 weeks  notice to a 27 year old Senior Software Engineer who was supposed to make $125,000 per year in this new job.

The Employer purported to ” retract” the offer of employment after it was accepted, which the Court found was a dismissal.

The employment agreement had an probationary clause , which the Defendant tried to rely upon, however the Judge rejected that argument saying as follows:

16      The defendant submits that the probation clause should be found to apply because it would be illogical for the plaintiff to have better rights before he commenced employment than once he started work, given that as of November 1, 2016, the defendant had an unfettered right to terminate the plaintiff without notice or cause.
17      I find that the defendant cannot rely on the probation clause to support its termination of the plaintiff without notice. I reach this conclusion for the following reasons.
18      First, on its face, the probation clause provides that the three month probation period commences as of the effective date of November 1, 2016. Thus, it was not in force on October 29, 2016 when the defendant retracted the Contract. Had the defendant intended to maintain a right to terminate the Contract without notice at any time after execution, it could have included a term to that effect. In DeGagne, Madam Justice Dardi similarly found that a probation clause had no application prior to the employee actually starting work (at para. 45).
19      Second, I reject the defendant’s argument that had the probation clause applied, it gave the defendant an unfettered right to terminate the plaintiff without notice or cause. The purpose of a probationary period is to permit the employer to engage in a good faith assessment of the employee’s suitability for the position in issue.
20      This point was recently confirmed by Madam Justice Morellato in Ly v. Interior Health Authority, 2017 BCSC 42 (B.C. S.C.) where she said at paras. 57-58:
[57] As addressed above, the test for dismissal in the context of probationary employment is suitability. Just cause need not be established. An employer needs only to establish that it acted in good faith in its assessment of the probationary employee’s suitability: Jadot.
[58] In determining whether an employer acted in good faith, courts have examined the process through which the employer determines whether the employee is suitable for permanent employment. While an employer is not required to give reasons for the dismissal of a probationary employee, that employer’s conduct in assessing the employee is reviewed by the court in light of various factors such as: 1) whether the probationary employee was made aware of the basis for the employer’s assessment of suitability before, or at the commencement of, employment; 2) whether the employer acted fairly and with reasonable diligence in assessing suitability; 3) whether the employee was given a reasonable opportunity to demonstrate his suitability for the position; and 4) whether the employer’s decision was based on an honest, fair and reasonable assessment of the suitability of the employee, including not only job skills and performance but also character, judgment, compatibility, and reliability: See Geller v. Sable Resources Ltd., 2012 BCSC 1861at para. 33; Ritchie; Jadot; Longshaw v. Monarch Beauty Supply Co., [1995] B.C.W.L.D. 2945 (S.C.); Rocky Credit Union Ltd. v. Higginson (1995), 27 Alta. L.R. (3d) 348 (C.A.); Jacmain v. Attorney General (Can.) et al., [1978] 2 S.C.R. 15 (S.C.C.); Gebhard v. Board of Education of the Wilkie School Division No. 59 (1986), 52 Sask. R. 272 (Q.B.).
21      Here, there was no good faith assessment by the defendant of the plaintiff’s suitability for the job for which he was hired. Suitability was not a factor at all; rather, the defendant changed its mind about its business and staffing needs. This is apparent from Mr. Nabavi’s October 29, 2016 letter to the plaintiff where he said:
This decision is due to further evaluation of our business priorities and resource needs. It, needless to say, has absolutely no reflection on you. We simply made a mistake of hiring too many front-end people.
22      While it was open to the defendant to do so, it cannot rely on the probation clause to escape its obligation to pay damages in lieu of notice.
Here is a little known tax fact. Because the Plaintiff was fired from his job before he actually started, his damages are not taxable. ( Schwartz v The Queen [1996] 1 SCR 254.