Author: Stacey R. Ball

It is fair to assume that if one behaves poorly, their actions are more likely going to result in poor consequences. In the legal realm, courts can penalize parties for their bad behaviour with cost decisions. This was perfectly exemplified in the Gracias v. Dr. David Walt Dentistry decision released on July 12, 2022.

Gracias v. Dr. David Walt Dentistry: The Facts

The Plaintiff, Sonia Gracias, was dismissed without cause from her job as a dental hygienist with the Defendant, Dr. David Walt Dentistry Professional Corporation (“Walt Dentistry”). As a result, she sued Walt Dentistry for: (a) $50,000 in damages for discrimination for contraventions of the Ontario Human Rights Code; (b) $50,000 for common law damages for wrongful dismissal; and (c) $50,000 in punitive damages.

Walt Dentistry denied the human rights discrimination claim and also pleaded that it could have fired Ms. Gracias for egregious employee misconduct. In other words, The Defendant is alleging Ms. Gracias engaged in conduct that could have resulted in her termination for cause.

Following examinations for discovery, Ms. Gracias abandoned her human rights claim (without substantiating the allegations) and claim for punitive damages. Only a wrongful dismissal claim for a 7-month notice period compensation remained. The Plaintiff believed she was entitled to common law damages in lieu of notice because the employment contract unlawfully contracted out of the Employment Standards Act. Likewise, Walt Dentistry amended the Statement of Defence, abandoning the allegation of employee misconduct. The Defendant’s main argument was that the terms of her employment contract barred Ms. Gracias from claiming more than her Employment Standards Act entitlements.

Both Sides Behaved Poorly

Justice Perell described the two sides as dogs released in a litigation war. The Plaintiff and the Defendant were going for each other’s jugular. The persistently poor behaviour Ms. Gracias and Walt Dentistry engaged in was outlined by the court.

The following is a summary of the Plaintiff’s poor behaviour:

1.  Gracias made very serious allegations of Ontario Human Rights Code violations without substantiating them whatsoever;
2.  Gracias ultimately received an award of $17,587. This amount is within the monetary jurisdiction of the Small Claims Court (under $25,000), which means the Court may order that the Plaintiff shall not recover any costs. Yet, she still asked for partial indemnity costs of approximately $35,000; and
3.  Gracias did not take her important responsibilities to produce documents and answer undertakings seriously.

The following is a summary of the Defendant’s poor behaviour:

1.  Walt Dentistry submitted that Ms. Gracias falsified her evidence of mitigation efforts with fabricated records of the job applications she made over the internet. The Defendant provided no evidence of this;
2.  Walt Dentistry “had the nerve” to request its costs be paid in the amount of $17,387.88, which would have essentially ‘set-off’ the award to Ms. Gracias; and
3.  Walt Dentistry alleged that Ms. Gracias engaged in egregious misconduct worthy of termination with cause, without providing any evidence of this.

The Order and Main Takeaway

Justice Perell was unimpressed with the behaviour of the two sides. As a result of their actions, he decided it was appropriate that there should be no order as to costs.

The language Justice Perell used to describe the parties behaviour gave a clear indication of his feelings. Language such as ‘releasing the dogs of litigation’, ‘going for the jugular’, ‘chutzpah’, ‘audacity’, ‘gall’, and ‘the nerve’, make it evident that the actions of both parties were unacceptable.

As one can see, there are serious consequences for nonsense allegations and other poor conduct that parties may attempt to use in order to raise potential damages awards. Both clients and lawyers should keep this in mind while moving through litigation process.

The presumptive remedy for unjust dismissal is reinstatement with back pay. When tackling the appropriate remedy to award, adjudicators begin with reinstatement with back pay. Depending on the facts of the case, returning the employee to the workplace is the option unless there are circumstances in which it will not be ideal for either the employee or the employer to continue their employment relationship. There are also situations where neither party wants to reunite in the workplace. As we’ll see from the following decision, the facts of the situation can result in an adjudicator deciding it is best to award compensation in lieu of reinstatement rather than requiring the employee to return to work.

Hussey v. Bell Mobility Inc.: The Facts

Ms. Hussey was an employee with Bell’s Virgin Mobile division beginning in September of 2010 where she was a sales representative in one of its Toronto locations. She was promoted twice in her time with Bell. Ms. Hussey was ultimately dismissed in June of 2017, shortly after her second promotion.

While employed with Bell, Ms. Hussey would often arrive late for her shifts and leave early. Due to this issue, Bell provided Ms. Hussey with her one and only written warning in November of 2016 – before she had received her first promotion to a managerial position. However, she maintained her lax approach to the company requirements even after her written warning. Nonetheless, she was still promoted again to her final role at Bell before ultimately being dismissed following staff complaints about her.

Adjudicator Decision to Award Compensation in Lieu of Reinstatement

In 2020, the Federal Court held that Ms. Hussey was unjustly dismissed from her employment with Bell Mobility. However, adjudicator McNamee decided against reinstating the employee to her position with back pay. Instead, he awarded her compensation in lieu of reinstatement.

The adjudicator decided against reinstating her because Ms. Hussey showed a lack of remorse for her actions and felt it was highly probable she would repeat her bad behaviour. During her cross-examination, she continuously made excuses for her behavior, and in the view of the adjudicator, it was merely an attempt to avoid responsibility for her actions. Therefore, the adjudicator did not feel it would be beneficial to reinstate Ms. Hussey.

Once it was determined reinstatement was not appropriate, the next issue dealt with was damages in lieu of reinstatement. Ms. Hussey urged the Adjudicator to adopt the “fixed term approach” which means that the damages are calculated based on the assumption that the ‘dismissed employee would, if not for dismissal, have continued to work for the company from the date of their discharge to their expected retirement.’ This figure combined with a deduction for reasons such as the employee being dismissed again or leaving employment early for health reasons ultimately results in a range of 80-90%. However, he considered the fixed term approach too speculative and “at best an informed guess.” Yet, the Adjudicator did accept the basic premise of the fixed term approach that if an employee is reinstated, they would receive the benefit of the just cause protection under section 240 of the Canada Labour Code. This would then be factored into the damages calculation. As a result, she received 4 months of compensation for this protection as well as 8 months’ pay due to her length of service, salary and benefits at Bell.

Federal Court and Federal Court of Appeal

When it was brought to the Federal Court for judicial review in 2020, the Court found no issue with the decision of the adjudicator. The Federal Court of Appeal also reviewed the case and concurred with the decision.

LINKS:

https://www.canlii.org/en/ca/fct/doc/2020/2020fc795/2020fc795.html

https://www.canlii.org/en/ca/fca/doc/2022/2022fca95/2022fca95.html?autocompleteStr=Hussey%20v%20Bell%20Mobility%20(%202022%20FCA%2095)&autocompletePos=1#document

In an earlier blog post, we discussed the potential for courts to increase the notice periods awarded to employees where they are able to demonstrate clear mitigation efforts notwithstanding the many difficulties arising from the COVID-19 pandemic. At least two Ontario decisions have confirmed this possibility: Kraft v. Firepower Financial Corp. and Pavlov v. The New Zealand and Australian Lamb Company Limited. A more recent decision now suggests that Ontario is not the only Province taking this approach to determining reasonable notice of termination periods.

Miller v. Luminultra Technologies Ltd.: The Facts

This is a decision of the New Brunswick Court of Queen’s Bench. It concerned the termination of employment without cause of Ms. Miller, a 56-year-old employee of the Defendant employer. She was initially employed in 2014 as a marketing officer but held the position of Strategic Marketing Manager at the time of her termination in 2020. Ms. Miller, therefore, worked for the Defendant employer for just under six years.

When Ms. Miller was fired, she was offered a total severance of six months, inclusive of salary and benefits.

Was Six Month’s Severance Sufficient?

At common law, an employer has an obligation to provide an employee with reasonable notice of termination or pay in lieu of that reasonable notice where the employee has been terminated without cause. The goal is to provide the dismissed employee with enough notice to secure alternative employment. There is, however, no formula for determining what amounts to “reasonable notice”.  It must instead be determined with reference to each particular case. Factors which are likely to make securing alternative employment more difficult will often point towards a greater notice period being awarded in order to compensate for that increased difficulty. This is why, for example, we see greater notice periods being awarded to older employees, as it is assumed they will have a more difficult time finding new employment than younger employees.

Notably, Ms. Miller was dismissed from her employment approximately two months into the COVID-19 pandemic. As we are all well aware, the COVID-19 pandemic has had a damaging impact on the labour market. Many businesses have struggled and as a result have been unwilling to hire. According to the New Brunswick Court, Ms. Miller made “extensive efforts” to find new employment with no success. The Court acknowledged:

“While there is no evidence in the Record of the specific impact of the pandemic on Ms. Miller or the job sector in which she was seeking employment, there can be little doubt that the pandemic and the shutdowns associated with it would have had some impact on Ms. Miller’s ability to find new employment.”

The Court had to decide whether or not to extend Ms. Miller’s reasonable notice period as a consequence of her COVID-related difficulties in searching for new employment. The Court wrote:

“I agree with the reasoning in Iriotakis that the pandemic is one of many factors to be considered when assessing reasonable notice. I also agree that termination at the point in the pandemic when the Plaintiff was terminated would tend to “tilt” the reasonable notice towards a longer range.”

Based on the above, and in considering Ms. Miller’s age and length of service, the Court determined the reasonable notice period in her case to be ten months. This is an extension of two months over the approximate average of eight months for individuals in Ms. Miller’s circumstances.

In an earlier blog post, we discussed the possibility of employees rescinding, or “taking back”, their resignations. Much of that discussion focused on what makes a resignation valid. In a recent decision of the Ontario Superior Court, the issue of whether a resignation was indeed valid or not was raised once again.

Miller v Ontario Potato Distribution Inc.: The Facts

The Plaintiff employee in this case worked for the Defendant as a “lumper”. He had been with the Defendant for approximately 11.5 years. On April 29, 2020, the Plaintiff verbally resigned from his employment in the middle of his shift and signed a written confirmation of his resignation.

Why had he resigned? According to the Plaintiff, he resigned after a threatening incident led to him feeling unsafe in the workplace. In his view, the incident was evidence of a hostile environment that gave rise not to resignation but to a constructive dismissal.

What had made the Plaintiff feel so unsafe at work? He explained that on the morning of his resignation or constructive dismissal, he was led outside by a supervisor to a mysterious car parked in the parking lot. Outside the vehicle was, as the Plaintiff described, a “very tall man in a trench coat.” According to the Plaintiff, the man said he knew about the text messages the Plaintiff had been sending to a supervisor named Kim, and told him “it stops now and when your program is over so are your benefits.” The man then allegedly pointed his fingers in the Plaintiff’s face “like a gun.” When the Plaintiff told his supervisor he no longer felt safe at the facility, he was forced to sign a document and leave.

The Defendant’s Version of Events

The Defendant told a very different story about what happened that day. It was the Defendant’s evidence that the Plaintiff was not led outside by a supervisor and directed to approach a mysterious car. Rather, the supervisor had simply sent the Plaintiff outside for a customary smoke break because he was a smoker. He was never instructed to do anything further. The supervisor did not even go outside with the Plaintiff.

When the Plaintiff returned from his smoke break, he approached the supervisor and sad he “could not do it anymore” but did not explain. The Plaintiff then asked for a resignation form, which the supervisor provided. The Plaintiff signed it and did not seem confused about what he was signing.

Who Did the Court Believe?

The burden of proof rested with the Plaintiff to establish on a balance of probabilities that the parking lot incidence actually occurred and that the Defendant was involved in it or directed it. Ultimately, the Court held the Plaintiff failed in discharging his onus.

The Court assessed the Plaintiff’s credibility with reference to an often cited decision of the British Columbia Court of Appeal, Faryna v. Chorny, which provides:

“The credibility of interested witnesses, particularly in cases of conflict of evidence, cannot be gauged solely by the test of whether the personal demeanour of the particular witness carried conviction of the truth. The test must reasonably subject his story to an examination of its consistency with the probabilities that surround the currently existing conditions. In short, the real test of the truth of the story of a witness in such a case must be its harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions …”

Ultimately, the Court did not believe the Plaintiff’s version of fact was in “harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions.” The Plaintiff therefore failed to discharge his burden of proving that the events alleged actually occurred. As such, the Court could not find that he had been constructively dismissed.

What Does This Mean For His “Resignation”?

In order to be valid and enforceable, a resignation must be clear and unequivocal. It must objectively reflect an intention to resign, or conduct evidencing such an intention to resign. It must be voluntary. If a resignation is made in a spontaneous outburst during a highly emotional situation, its voluntariness may be in doubt. Furthermore, a resignation may actually be “taken back” by the resigning employee if the employer had not yet relied on the resignation to its detriment.

However, because the authenticity of the Plaintiff’s alleged parking lot encounter had been disproven, the voluntariness of the Plaintiff’s resignation could not be said to have been made during a highly emotional situation. The Plaintiff did not resign under any duress. His resignation, therefore, must have been voluntary. At no point afterward did he seek to take back his resignation.

As a consequence of all the above, the Court held the Plaintiff to have voluntarily resigned.

In a 2021 decision of the British Columbia Supreme Court, Verigen v Ensemble Travel Ltd., an issue was raised regarding whether an employee handbook was enforceable such that employees would be limited upon the termination of their employment to the statutory minimum notice period as opposed to common law notice (which often far exceeds the statutory minimum).

The Facts

This case concerned the employment of Ms. Verigen, a 58-year-old employee working within the travel industry. The travel industry was of course severely and detrimentally impacted by the COVID-19 pandemic. After a series of layoffs, Ms. Verigen’s employment was terminated as a consequence of the pandemic. Ms. Verigen then sought damages against her employer, for an amount reflecting a notice period of nine months.

Her employer argued in response that she had agreed to limit her claim to the statutory minimum notice period. They said her original offer of employment was made contingent on her accepting the terms of the employee handbook, which included a termination clause limiting her claim to the statutory minimum.

However, of critical importance to the ultimate decision was the fact the original offer of employment, made by email and accompanied by many other documents, did not actually provide the employee handbook. The employee handbook was not sent to Ms. Verigen. Ms. Verigen was only sent the employee handbook three months after she began working for the employer. When she finally received the document, she did sign it.

Was the Employee Handbook Enforceable?

Ms. Verigen, having finally signed the employee handbook three months following the start of her employment, appears to have agreed to the termination provision contained therein, limiting her entitlements upon termination to the statutory minimum. The key question, then, is whether or not the handbook is enforceable.

Ms. Verigen, in arguing that the handbook was not enforceable, stated the handbook amended her original employment contract without providing fresh consideration. Recall that she only signed the handbook three months after beginning to work for the employer. In considering this argument, the British Columbia Supreme Court referred to an earlier decision, Matijczak v. Homewood Health Inc., wherein Justice Verhoeven said:

“While the law relating to the requirement for consideration in order to support amendments to an agreement may be in a state of flux, it appears that the law in BC continues to require consideration where an employer seeks to impose an amended employment agreement with significant modifications, detrimental to the employee …” (emphasis added)

It is noteworthy that this also appears to be the approach taken by Ontario courts, as mentioned in the Ontario Court of Appeal decision Braiden v. La-Z-Boy Canada Limited.

In applying this reasoning, the British Columbia Supreme Court held that the employee handbook, as signed by Ms. Verigen after already commencing employment, cannot be binding on her insofar as it limits her claim on termination to the statutory minimum because no fresh consideration was provided in support of it.

What employers can take away from this decision is that if they wish to amend or add to an employment agreement, particularly where the amendment is something that is likely detrimental to the employee, they must ensure that proper and sufficient consideration is given to that new agreement, otherwise, they run the risk of it being unenforceable for lack of consideration.

Having found that Ms. Verigen was entitled to common law notice as opposed to the statutory minimum, the Court awarded her five months’ notice.