CANADIAN CASES ON EMPLOYMENT LAW

CANADIAN CASESON

EMPLOYMENT LAWThird Series/Troisieme serieRecueil de jurisprudence canadienne

en droit du travail

VOLUME 100(Cited 100 C.C.E.L. (3d))

EDITOR-IN-CHIEF/REDACTEUR EN CHEFDavid Harris, B.A., LL.B.

Toronto, Ontario

ASSOCIATE EDITOR/REDACTRICE ADJOINTELiz Rice, B.A., LL.B.

Barrister & SolicitorToronto, Ontario

ASSISTANT EDITORS/ADJOINTS A LA REDACTIONRobert Bonhomme, D.E.C., B.L.L. Michael J. Weiler, B.A., LL.B.

Heenan Blaikie LLP Coutts Weiler & PulverMontreal, Quebec Vancouver, British Columbia

M. Norman Grosman, B.SC., LL.B. The Hon. Mr. Justice Randall ScottGrosman, Grosman & Gale Echlin, B.A., LL.B.

Toronto, Ontario Ontario Superior CourtToronto, Ontario

Malcolm J. MacKillop, B.A., LL.B. Magali Cournoyer-Proulx, D.E.C.,Shields O’Donnell MacKillop LLP L.L.B.

Toronto, Ontario Heenan Blaikie LLPMontreal, Quebec

Chevalier v. Active Tire & Auto Centre Inc. 175

[Indexed as: Chevalier v. Active Tire & Auto Centre Inc.]

Earl Chevalier (Plaintiff) and Active Tire & Auto Centre Inc.(Defendant)

Ontario Superior Court of Justice

Docket: St. Catharines 50737/08

2012 ONSC 4309

R.A. Lococo J.

Heard: June 18-22, 2012

Judgment: July 24, 2012

Labour and employment law –––– Employment law — Termination and dis-missal — Notice — Mitigation by employee — Accepting job with same em-ployer –––– Employee was laid off by employer — Employee commenced ac-tion for wrongful dismissal two weeks later — A few days later, employer wroteto employee calling him back to work at Niagara Falls location, stating that hehad acted under mistaken belief that employer could lay off employee — Actiondismissed — Employer had met required onus of establishing that reasonableperson would have accepted opportunity to return to work at Niagara Falls loca-tion when opportunity was provided to employee — Therefore, he failed to takereasonable steps to mitigate damages, with result that damages in lieu of noticewould be nil — In particular, accepting opportunity to return to company wouldnot have obliged employee to work in atmosphere of hostility, embarrassment orhumiliation.

Cases considered by R.A. Lococo J.:

Bardal v. Globe & Mail Ltd. (1960), [1960] O.W.N. 253, 24 D.L.R. (2d) 140,1960 CarswellOnt 144, [1960] O.J. No. 149 (Ont. H.C.) — followed

Evans v. Teamsters, Local 31 (2008), 65 C.C.E.L. (3d) 1, 2008 C.L.L.C. 210-019, 374 N.R. 1, D.T.E. 2008T-400, 292 D.L.R. (4th) 577, 253 B.C.A.C. 1,425 W.A.C. 1, 2008 CarswellYukon 22, 2008 CarswellYukon 23, 2008 SCC20, [2008] 1 S.C.R. 661, [2008] S.C.J. No. 20 (S.C.C.) — followed

Keays v. Honda Canada Inc. (2008), 2008 SCC 39, (sub nom. Honda CanadaInc. v. Keays) 2008 C.L.L.C. 230-025, 376 N.R. 196, 294 D.L.R. (4th) 577,(sub nom. Honda Canada Inc. v. Keays) [2008] 2 S.C.R. 362, 92 O.R. (3d)479 (note), (sub nom. Honda Canada Inc. v. Keays) 63 C.H.R.R. D/247, 66C.C.E.L. (3d) 159, 2008 CarswellOnt 3743, 2008 CarswellOnt 3744, 239O.A.C. 299, [2008] S.C.J. No. 40, EYB 2008-135085 (S.C.C.) — followed

Machtinger v. HOJ Industries Ltd. (1992), 40 C.C.E.L. 1, (sub nom. Lefebvre v.HOJ Industries Ltd.; Machtinger v. HOJ Industries Ltd.) 53 O.A.C. 200, 91D.L.R. (4th) 491, 7 O.R. (3d) 480n, (sub nom. Lefebvre v. HOJ Industries

CANADIAN CASES ON EMPLOYMENT LAW 100 C.C.E.L. (3d)176

Ltd.; Machtinger v. HOJ Industries Ltd.) 136 N.R. 40, 92 C.L.L.C. 14,022,[1992] 1 S.C.R. 986, 1992 CarswellOnt 892, 1992 CarswellOnt 989, [1992]S.C.J. No. 41 (S.C.C.) — referred to

Michaels v. Red Deer College (1975), [1976] 2 S.C.R. 324, 1975 CarswellAlta57, 1975 CarswellAlta 142, [1975] 5 W.W.R. 575, 5 N.R. 99, 75 C.L.L.C.14,280, 57 D.L.R. (3d) 386, [1975] A.C.S. No. 81, [1975] S.C.J. No. 81(S.C.C.) — referred to

Stolze v. Delcan Corp. (1998), 1998 CarswellOnt 4621, 40 C.C.E.L. (2d) 70,[1998] O.J. No. 4917 (Ont. Gen. Div.) — referred to

Wallace v. United Grain Growers Ltd. (1997), 123 Man. R. (2d) 1, 159 W.A.C.1, 152 D.L.R. (4th) 1, 1997 CarswellMan 455, 1997 CarswellMan 456, 219N.R. 161, [1997] 3 S.C.R. 701, [1999] 4 W.W.R. 86, 36 C.C.E.L. (2d) 1, 3C.B.R. (4th) 1, [1997] L.V.I. 2889-1, 97 C.L.L.C. 210-029, [1997] S.C.J.No. 94 (S.C.C.) — followed

ACTION by employee for wrongful dismissal.

Bradley J. Troup, Gillian Fahy for PlaintiffOrlando M. Rosa for Defendant

R.A. Lococo J.:

I. Introduction1 Active Tire & Auto Centre Inc. operates a chain of over 70 franchised

and corporateowned automotive service centres in Ontario, under thetrade name Active Green + Ross. Earl Chevalier was employed by Ac-tive Tire and a predecessor business for 33 years, and was a service cen-tre manager for 18 years. He was 55 years old when his employmentwith Active Tire ended in October 2008.

2 Mr. Chevalier became an employee of Active Tire in March 2007following Active Tire’s acquisition of 28 service centres from SpeedyMuffler, including six locations in the Niagara region. Prior to the acqui-sition, Mr. Chevalier had been the manager of a Speedy service centre inNiagara Falls. Like other Speedy employees who joined Active Tire afterthe acquisition, Mr. Chevalier entered in to a written employment agree-ment with Active Tire. One of the terms of the employment agreementrequired Mr. Chevalier to fully comply with and implement Active Tire’soperating procedures set out in its “Steps to Success” manual. The agree-ment also stated that Mr. Chevalier’s duties, responsibilities, reportingrelationships and the location of his employment could be changed uni-laterally by Active Tire.

Chevalier v. Active Tire & Auto Centre Inc. R.A. Lococo J. 177

3 The terms of Mr. Chevalier’s employment agreement were supple-mented by an email to all Speedy managers and staff from Peter Steele,General Manager of Active Tire, as well as a memorandum from RalphChiodo, Active Tire’s President. As agreed by the parties, those addi-tional documents form part of Mr. Chevalier’s employment agreement.Mr. Chiodo’s memorandum provided that for employees joining ActiveTire, years of service with Speedy counted as years of service with Ac-tive Tire. The memorandum also stated that should a change in an em-ployee’s work location be required, “then this change will not requireyou to travel further than 50 kilometres from your home, or the currentdistance from your home to work should this be greater than 50kilometres.”

4 Mr. Chevalier worked for Active Tire from the time of the Speedyacquisition in March 2007 until the end of October 2008. He was man-ager of Active Tire’s Niagara Falls location until November 2007, andagain worked at the Niagara Falls location as one of two managers fromAugust 2008 until his departure from the company. In the interveningtime (as set out in more detail later), he worked at two other locations inthe Niagara region and also worked in Toronto for approximately twoand a half months, at Active Tire’s head office and at its Queenswaylocation. While working in Toronto, Mr. Chevalier commuted each workday from his home in Niagara Falls, travelling on company time and atcompany expense.

5 On October 28, 2008, Mr. Chevalier was notified in writing by Mr.Steele that he was being laid off from Active Tire’s Niagara Falls servicecentre as of the end of that month. Mr. Chevalier commenced this actionfor wrongful dismissal two weeks later on November 13, 2008. A fewdays later, Mr. Steele wrote to Mr. Chevalier calling him back to work atthe Niagara Falls location, stating that he had acted under the mistakenbelief that Active Tire could lay off Mr. Chevalier. In subsequent corre-spondence, Active Tire’s counsel confirmed Active Tire’s willingness tocontinue Mr. Chevalier’s employment and conveyed Active Tire’s apol-ogy for its mistake in laying him off. Mr. Chevalier’s counsel confirmedthat Mr. Chevalier would not be returning to work, and would be contin-uing this litigation.

6 At the time Mr. Chevalier left Active Tire, his annual salary was$45,912, or $3,826 per month. He was also entitled to health care bene-fits, the premium cost to Active Tire being $180.61 per month. There-


fore, as agreed by the parties, his total monthly remuneration was$4,006.61.

7 After leaving Active Tire on October 31, 2008, Mr. Chevalier wasunemployed for 17 months. In April 2010, he was hired by a competitorof Active Tire in a similar position paying remuneration equivalent towhat he was receiving at Active Tire.

8 Mr. Chevalier’s position was that he was constructively dismissedwhen he was laid off by Active Tire in October 2008. According to Mr.Chevalier, he was entitled to 24 months notice of termination commenc-ing November 1, 2008. The amount of his claim for damages in lieu ofnotice was $64,105.76, the equivalent of 16 months remuneration withActive Tire. This calculation took into account the fact that Mr. Cheva-lier received his regular salary and benefits from Active Tire for onemonth after termination and that he received equivalent remunerationfrom his subsequent employer for the final seven months of the noticeperiod.

9 Mr. Chevalier also claimed an additional $30,000 for moral damages,based on the Active Tire’s conduct toward him leading to his dismissal.According to Mr Chevalier, Active Tire had been unfairly critical of hiswork, had treated him in a demeaning fashion and had ignored his con-tractual rights by requiring him to work in Toronto more the 50 kilome-tres from home.

10 Active Tire did not dispute that Mr. Chevalier was constructively dis-missed when he was laid off. According to Active Tire, he would beentitled to notice of termination in the range of 18 to 24 months, arguingfor the lower end of the range. As well, Active Tire did not dispute Mr.Chevalier’s method of calculating damages in lieu of notice, should theCourt determine that such an award would be warranted. However, Ac-tive Tire took the position that Mr. Chevalier was not entitled to anydamages in lieu of notice because he failed to mitigate his damages, intwo ways. First, he failed to return to work at Active Tire when calledback in November 2008. Alternatively, he failed to diligently look forsuitable work from another employer in the period following his depar-ture from Active Tire. Active Tire also denied that there was anything inits conduct toward Mr. Chevalier that would justify an award of moraldamages.


11 The issues to be determined are therefore as follows:

1. Notice period: What was the required period of notice oftermination?

2. Mitigation — resumption of employment: Did Mr. Cheva-lier fail to mitigate his damages by refusing to resume hisemployment with Active Tire?

3. Mitigation — search for alternative employment: Did Mr.Chevalier fail to mitigate his damages by not diligentlyseeking alternative employment?

4. Moral damages: Did Active Tire’s manner of conduct interminating Mr. Chevalier justify awarding moraldamages?

12 I will deal with each of these issues in turn.

II. Notice Period13 Consistent with case law cited by Mr. Chevalier’s counsel,1 the par-

ties agreed that Mr. Chevalier was constructively dismissed by ActiveTire as of October 31, 2008 when Active Tire laid him off. By doing so,Active Tire breached the implied term in Mr. Chevalier’s employmentcontract that required Active Tire to give him reasonable notice oftermination.

14 In order to determine whether Mr. Chevalier is entitled to damages inlieu of notice of termination, the first step is to determine the requiredperiod of notice in this case. Considering the factors referred to in Bardalv. Globe & Mail Ltd.,2 I agree with Mr. Chevalier’s position that therequired period of notice in this case was 24 months.

15 At the time Mr. Chevalier left Active Tire’s employ in October 2008,Mr. Chevalier was 55 years old. He had been employed by Active Tireand Speedy for a total of 33 years, and there is no dispute that his yearsof service with Speedy counted as years of service with Active Tire. Hehad been manager of various service centres for 18 years, a position thatput him in charge of the location in which he worked, with power to hire

1Stolze v. Delcan Corp., [1998] O.J. No. 4917 (Ont. Gen. Div.) at para. 19.2[1960] O.J. No. 149 (Ont. H.C.) at para 21. Cited with approval in Machtingerv. HOJ Industries Ltd., [1992] 1 S.C.R. 986 (S.C.C.) at para. 22.


and fire staff and accountability for the financial performance of thatlocation.

16 Active Tire conceded that the notice period for termination of Mr.Chevalier was in the range of 18 to 24 months, but argued that the re-quired notice should be set at the lower end of the range. I disagree,given Mr. Chevalier’s age, position and long history with his employer.As well, although unnecessary to do so in this case, I would also be enti-tled to take into account the difficult economic conditions at the relevanttime, which could reasonably have been expected to have a negative im-pact on the availability of alternative employment for someone of Mr.Chevalier’s age and background.

17 In any case, even if I accepted Active Tire’s position that the requirednotice period for Mr. Chevalier was at the low end of the 18 to 24 monthrange, it would not affect the calculation of damages in this case. Aspreviously noted, Mr. Chevalier conceded that in calculating damages inlieu of notice, it would be appropriate to deduct compensation that hereceived from Active Tire during November 2008 as well as equivalentcompensation that he received from a subsequent employer commencingin April 2010. Therefore, assuming Mr. Chevalier is correct that thereshould be no further reduction for failure to mitigate, the amount of hisdamages in lieu of notice would be equivalent to 16 months compensa-tion, no matter what I found the appropriate notice period to be withinthe 18 to 24 month range conceded by Active Tire.

III. Mitigation — resumption of employment

(a) Legal principles18 According to Active Tire, Mr. Chevalier was not entitled to any dam-

ages in lieu of notice because he failed to return to work at Active Tirewhen called back in November 2008. The legal analysis to determinewhether this position is correct involves the application of basic princi-ples of contract law relating to mitigation of damages.

19 Where an employee has been wrongfully terminated, the employeemust take reasonable steps to mitigate his or her damages as a matter ofcontract law. Any benefit derived from complying with this duty must be


deducted from damages awarded in lieu of reasonable notice.3 The onusis on the employee to establish the amount of his or her loss on the bal-ance of probabilities. However, if the employer takes the position that theemployee could reasonably have avoided part of the loss claimed by ob-taining other suitable employment available to the employee, the em-ployer has the burden of proof on that issue.4

20 In support of its position that Mr. Chevalier was required to return towork for Active Tire when called back, Active Tire relied on the decisionof the Supreme Court of Canada in Evans v. Teamsters, Local 31.5 Inthat case, the court held that in appropriate circumstances, a dismissedemployee would be required to return to work for the same employer inorder to mitigate the employee’s damages.6 The court set out the relevantconsiderations in making this determination as follows:

Where the employer offers the employee a chance to mitigatedamages by returning to work for him or her, the central issue iswhether a reasonable person would accept such an opportunity.In 1989, the Ontario Court of Appeal held that a reasonable personshould be expected to do so “[w]here the salary offered is the same,where the working conditions are not substantially different or thework demeaning, and where the personal relationships involved arenot acrimonious” (Mifsud v. MacMillan Bathurst Inc. 70 O.R. (2d)701, at p. 710). In Cox, the British Columbia Court of Appeal heldthat other relevant factors include the history and nature of the em-ployment, whether or not the employee has commenced litigation,and whether the offer of reemployment was made while the em-ployee was still working for the employer or only after he or she hadalready left (paras. 12-18). In my view, the foregoing elements allunderline the importance of a multi-factored and contextual analysis.The critical element is that an employee “not [be] obliged to miti-gate by working in an atmosphere of hostility, embarrassment orhumiliation” (Farquhar, at p. 94), and it is that factor which must beat the forefront of the inquiry into what is reasonable.7

3See Stacey Reginald Ball, Canadian Employment Law, loose-leaf (consulted on20 July 2012), (Aurora, Ont.: Canada Law Book, 1996) at p. 12-1.4Michaels v. Red Deer College (1975), [1976] 2 S.C.R. 324 (S.C.C.).5[2008] 1 S.C.R. 661 (S.C.C.).6Ibid. at para 28.7Ibid. at para. 30. [Emphasis added.]


21 Mr. Chevalier’s position was that the duty to mitigate did not requirehim to return to work for Active Tire after he was laid off in October2008. According to Mr. Chevalier, from as early as June or July 2007,Active Ross management personnel had engaged in conduct intended to“make his life miserable” in order to cause him to leave Active Tire’semploy. The conduct alleged by Mr. Chevalier included unfair criticismof his work, treating him in a demeaning fashion and ignoring his con-tractual rights by requiring him to work in Toronto more the 50 kilome-tres from home. According to Mr. Chevalier, by returning to work forActive Tire, he would have been obliged to work “in an atmosphere ofhostility, embarrassment or humiliation” (to use the formulation in theEvans decision), and he was accordingly not required to return.

22 In order to consider the validity of Mr. Chevalier’s position, it wouldbe helpful to consider the evidentiary basis for it in more detail.

(b) The evidence23 After the Speedy acquisition in March 2007, Mr. Chevalier continued

to be the manager of Active Tire’s Niagara Falls location for severalmonths until November 2007, when he was transferred within the Niag-ara region to Active Tire’s Welland service centre. During that initialperiod and subsequently, Mr. Chevalier reported ultimately to PeterSteele, General Manager of Active Tire. However, his principal interac-tions with company management were with manager/coaches who peri-odically visited the store locations. Mr. Chevalier recalled three man-ager/coaches, Tony Doyle, Jamie Kielbowich (both of whom weredefence witnesses at the trial) and a third person whom he rememberedonly as Mike.

24 According to the evidence of the defence witnesses, one of the princi-pal functions of manager/coaches was to monitor the performance of ser-vice centre locations and provide training and assistance to service centrepersonnel in carrying out operating procedures set out in the Steps toSuccess manual. Mr. Doyle testified that he recalled approximately 12occasions that he was in Active Tire’s Niagara Falls location during theperiod until November 2007. At the time, Mr. Doyle stated that he hadresponsibility for the Ontario west region of Active Tire, including theNiagara region. He stated that he was concerned about the financial per-formance of the Niagara Falls location, which he did not believe wasliving up to its potential. He noted in particular that Mr. Chevalier ap-


peared to be struggling with compliance with Steps to Success proce-dures, particularly those relating to his interactions with customers thatwere intended to generate sales. Mr. Doyle stated that as part of his roleas a manager/coach, he attempted to provide Mr. Chevalier with trainingand assistance, for example, by working with him behind the counter androle playing (customer/manager). According to Mr. Doyle, this course ofaction was intended to assist Mr. Chevalier in complying with the Stepsto Success procedures, as required by Mr. Chevalier’s employmentcontract.

25 Mr. Chevalier had quite a different perspective of the same events.According to Mr. Chevalier, he was initially excited and energized by thechange in ownership, but by June or July 2007, it became apparent tohim that under the guise of training and assistance, a harassment cam-paign was underway to cause him to leave Active Tire. According to Mr.Chevalier, he had had no performance issues as a manager working forSpeedy prior to the acquisition by Active Tire, and there was no justifica-tion for the criticism relating to his performance subsequent to the acqui-sition. He conceded that the financial performance of the Niagara Fallslocation had not been strong historically, but noted that the performanceof the location in fact improved subsequent to the acquisition by ActiveTire.

26 In any case, on November 7, 2007, Mr. Doyle notified Mr. Chevalierin writing that he was being reassigned to the Welland location of ActiveTire as of November 9, 2007. The letter stated that Mr. Chevalier was tobe one of two full time management staff at the larger Welland store, theother manager being Ken McDonald who was already working at thatlocation. In his letter, Mr. Doyle also expressed his appreciation for Mr.Chevalier’s efforts at the Niagara Falls location, but noted that unfortu-nately, the location “continues to struggle and has not achieved the levelof sales that I feel are obtainable.” According to Mr. Doyle’s evidence,part of the motivation in moving Mr. Chevalier to the Welland store wasto make him more effective, working at a busier location with anothermanager who was considered to have been more successful in carryingout Active Tire’s operating procedures.

27 Although unhappy about the move, Mr. Chevalier reported to theWelland location as directed. According to Mr. Chevalier, the campaignof harassment intensified at the new location. He claimed in particularthat Jamie Kielbowich, another manager/coach from Active Tire’s corpo-


rate office, visited the Welland location on a number of occasions, partic-ularly when the other manager was not scheduled to be working. Hestated that Mr. Kielbowich spoke to him in a demeaning and humiliatingmanner on a number of occasions, including berating Mr. Chevalierabout missing signage, tossing him keys to Mr. Kielbowich’s car andasking him to get it washed and asking Mr. Chevalier to pick up lunchfor him. In his evidence, Mr. Kielbowich agreed that if required signagenot been displayed, he would have mentioned that to Chevalier, and alsostated that it would not be unusual for staff that was leaving the buildingat lunch time to pick up lunch for someone who was not able to go out.However, he denied ever speaking to Mr. Chevalier in a demeaning orhumiliating manner, and categorically denied ever asking him to have hiscar washed. The other manager, Mr. McDonald, also testified for the de-fence, stating that he recalled being present on occasions on which Mr.Kielbowich visited the Welland location when both Mr. McDonald andMr. Chevalier were working. He denied that Mr. Kielbowich had everspoken to Mr. Chevalier in Mr. McDonald’s presence in a demeaning orhumiliating fashion, and also stated that Mr. Chevalier had never com-plained to him that Mr. Kielbowich had spoken to him in that manner.

28 The next significant event in the chronology was the notification ofMr. Chevalier by Active Tire on April 23, 2008, that the Welland loca-tion of Active Tire was being franchised, and that the franchisee did notrequire Mr. Chevalier’s services. The notification letter offered Mr.Chevalier a manager position in Active Tire’s Brampton store as of May1, 2008, Brampton being the nearest corporate store where a position wasavailable. The letter stated that the company would provide a companyvehicle to travel to and from Brampton on company time, and also askedMr. Chevalier to consider relocating to Brampton permanently, or stay-ing in Brampton during the work week, with the company paying for hisaccommodations.

29 The April 23 letter was signed on behalf of Active Tire by PeterSteele, the General Manager, who travelled to Welland from head officein Toronto to deliver the letter to Mr. Chevalier personally. Mr. Cheva-lier did not give Mr. Steele an immediate answer, stating that he neededtime to consider whether he would accept the offered position. In hisevidence, Mr. Steele stated that he followed up with Mr. Chevalier bytelephone a few days later since Mr. Steele was about to leave on holi-days, but Mr. Chevalier still did not have an answer for him. Mr. Steele


asked him to let him know as soon as possible, and to contact RalphChiodo, the President of Active Tire if necessary in his absence.

30 Mr. Chevalier responded on April 29, 2008, by faxing a letter to Mr.Steele’s attention, in which he declined the transfer to Brampton andstated that he would report as usual to the Welland store. Mr. Steele hadalready left on holidays, and the letter was directed to Mr. Chiodo. Mr.Chiodo called Mr. Chevalier that day and followed up with a letter faxedto Mr. Chevalier. In their telephone conversation (and also referred to inthe letter), Mr. Chevalier advised Mr. Chiodo of a potential openingwithin the Niagara region, stating that he was aware that the manager ofthe St. Catharines Glendale store would not be returning to work after aholiday because of health problems. Mr. Chiodo advised Mr. Chevalierthat the move to Brampton was not permanent, and urged him to acceptthe move until they could have a further discussion with Mr. Steele uponhis return from holidays.

31 The following day, Mr. Chevalier’s counsel wrote to Mr. Chiodo,confirming that Mr. Chevalier would not be reporting to work at theBrampton store. Active Tire’s counsel responded the same day, advisingthat Mr. Chevalier was to report to work at Active Tire’s St. CatharinesGlendale location the next day, May 1, 2008, and Mr. Chevalier did so.On that day, Mr. Chevalier and Mr. Chiodo had another brief telephoneconversation, which was followed by a testy exchange of correspondenceinvolving Mr. Chiodo and counsel for both Mr. Chevalier and ActiveTire. In that correspondence, among other things, Mr. Chiodo questionedMr. Chevalier’s commitment to carrying out the business method set outin the Steps for Success, and Mr. Chevalier’s counsel suggested that Ac-tive Tire was trying to elicit Mr. Chevalier’s resignation, which Mr. Chi-odo denied.

32 On May 22, 2008, soon after returning from holidays, Mr. Steelesummoned Mr. Chevalier to Active Tire’s head office in Toronto for ameeting. Mr. Chevalier travelled to Toronto that morning in his own car,after declining the opportunity to use a company vehicle. Mr. Steele’srecollection of what happened at that meeting was set out in a five pagememorandum to Mr. Chevalier prepared immediately after the meetingwhile Mr. Chevalier waited and provided to him before he left. In theevidence of Mr. Steele and Mr. Chevalier at the trial, there was no signif-icant disagreement between them that the memorandum accurately re-flected what happened at the meeting. However, there was some disa-


greement in their evidence relating to that meeting, particularly onmatters of timing and emphasis. For example, Mr. Chevalier claimed thatMr. Steele kept him waiting for an hour before seeing him, which Mr.Steele denied. Both parties agreed that there was an unpleasant, heatedexchange between them at the beginning of the meeting relating to Mr.Chevalier’s failure to report for work in Brampton as requested, his fail-ure to advise Mr. Steele of his intention before Mr. Steele left on holi-days and the embarrassment it caused Mr. Steele when Mr. Chiodo hadto get involved. In that exchange, Mr. Steele described Mr. Chevalier’sresponse as immature and inappropriate, and Mr. Chevalier called Mr.Steele a liar. According to Mr. Steele, this exchange formed only a verybrief part of a longer meeting, the rest of which was much more positiveand business-like, which did not match Mr. Chevalier’s characterizationof the meeting.

33 In any case, as reflected in the balance of the memorandum, there wassignificant discussion between them about the financial performance ofthe St. Catharines Glendale store, both under Mr. Chevalier’s manage-ment and that of the previous manager, and the reported shortcomings ofboth managers in complying with company procedures as set out in theSteps to Success manual. These shortcomings had been reported to Mr.Steele by Mr. Kielbowich as well as through “mystery shoppers” whocalled the location or attended in person to inquire about or request autoservices.

34 According to Mr. Steele and other defence witnesses, “mystery shop-pers” regularly called and visited Active Tire locations, particularly thosethat were struggling financially, as a means of monitoring store perform-ance and ensuring that the procedures set out in the Steps to Successmanual were being followed, and that this fact was well known to staff atActive Tire locations.

35 One particular “mystery shopper” incident referred to by Mr. Steele atthat meeting occurred on May 16, 2008, a few days previously. Mr.Steele agreed that this mystery shopper called the St. Catharines locationat his specific request on that day. A transcript of that visit was providedto Mr. Chevalier, indicating that he told the mystery shopper that he wasunable to accommodate his request for a quick oil change (advertised at$15.95) that day or the next day, directing him to a competitor to obtainthat service, noting that “were (sic) not a lube shop.” According to Mr.Steele, the $15.95 oil change program together with a free inspection was


designed to increase the volume of customers at a company location, pro-viding the opportunity to offer additional services to the customer, butMr. Chevalier had demonstrated a resistance to this program, as indicatedby his response to the mystery shopper and reported to him on other oc-casions. Mr. Steele also stated that he was particularly upset by the factthat Mr. Chevalier had suggested that the customer go to a competitor.As indicated in Mr. Steele’s memorandum, he told Mr. Chevalier thatthis and other departures from the Steps to Success operating procedureswould not be tolerated and would lead to termination if they continued.

36 As also reflected in Mr. Steele’s memorandum, the meeting ended ona more positive note, with Mr. Steele offering Mr. Chevalier a potentiallylucrative bonus opportunity tied to the sales performance of the St.Catharines Glendale location, which Mr. Steele stated was intended tomotivate Mr. Chevalier to improve his performance. Mr. Chevalier indi-cated in his evidence that he was surprised and pleased to be offered thisbonus opportunity, although he was aware that similar opportunities hadbeen offered in the past to other managers, and he wondered why it wasonly now being offered to him.

37 At Mr. Steele’s request, Mr. Chevalier stopped at another Active Tirelocation in St. Catharines on the way back from Toronto, arriving late inthe afternoon, in order to discuss Mr. Steele’s suggestions for perform-ance improvement with a manager at that location. Mr. Chevalier alsospoke by telephone to Mr. Kielbovich (who was at the St. CatharinesGlendale location that day), advising him that he was not planning toreturn to that location that afternoon as originally planned, and Mr.Kielbowich did not object. According to Mr. Chevalier, he had a latelunch and went home feeling sick. The next morning, Mr. Chevalier re-ceived a memorandum from Mr. Steele, asking for an explanation as towhy he had not returned to the St. Catharines Glendale store the previousafternoon. Mr. Chevalier faxed back a handwritten explanation, indicat-ing that he had advised Mr. Kielbowich what he was doing, and had gonehome feeling sick. Mr. Chevalier then left the store, stating that he wasagain feeling sick, shaking and vomiting. That day, he saw a doctor at awalk-in clinic, who completed a form stating that Mr. Chevalier wouldbe off work from May 23 to June 9, 2008 for medical reasons.

38 Mr. Chevalier returned to work at the St. Catharines Glendale loca-tion on June 9, 2008. When he arrived at work, he was instructed by Mr.Kielbowich to report to Mr. Steele in Toronto. Mr. Kielbowich offered


him a company vehicle for this purpose, but Mr. Chevalier drove to To-ronto in his own car. When he arrived in Toronto, he was assigned byMr. Steele to make “mystery shopper” calls to various Active Tire loca-tions. According to Mr. Chevalier, he did not object to doing so, since hehad just been away on sick leave for two weeks and did not want to“rock the boat.” Mr. Steele testified that mystery shopper calls were reg-ularly made by various persons on behalf of Active tire, including man-agement personnel, new franchisees and personnel from third party firmsengaged for this purpose. According to Mr. Steele, the persons con-ducting the calls received the benefit of obtaining practical training andexperience with respect to the Steps to Success operating procedures.According to Mr. Steele, he assigned Mr. Chevalier a volume of callsthat he should have been able to complete in a few days, and left himwithout supervision to make the calls. In fact, Mr. Chevalier took twoweeks to complete the calls, travelling back to his home in Niagara Fallseach evening on company time. According to Mr. Steele, it was neces-sary for mystery shopper calls to be made from head office since therewas special equipment to block the identity of the caller and record thecalls.

39 At the end of the two weeks, Mr. Steele assigned Mr. Chevalier towork as a manager at Active Tire’s Toronto Queensway location, to fill avacancy caused when a manager went to another store to fill in for a sickmanager. Mr. Chevalier started each day at the St. Catharines Glendalelocation at 8:00 AM and drove to Toronto in a company vehicle, re-turning to St. Catharines by 6:00 PM. According to Mr. Chevalier, he didnot object to this arrangement since he did not want to bring more stresson himself.

40 In August 2008, Mr. Chevalier was transferred back to Active Tire’sNiagara Falls location. According to Mr. Steele, the opportunity in Niag-ara Falls arose because that location, which had struggled financially,was being repositioned to attract wholesale business. A summer studenthad been assisting with setting up the necessary computer systems, andthe initial results had been encouraging. It was intended that Mr. Cheva-lier would be one of two experienced managers at that location whowould continue to develop the wholesale business. The following month,there was one incident when Mr. Chevalier and the other manager werereprimanded in writing by Mr. Steele for a mistake that occurred on anorder for a brake rotor that had not been processed electronically. Ac-cording to the written reprimand, Mr. Steele could not tell whether the


mistake was that of Mr. Chevalier or the other manager (both of thembeing involved), and Mr. Steele therefore concluded “I have to write upyou both.”

41 Mr. Steele testified that the hoped for boost in the wholesale businessdid not materialize, and in fact, the business “fell off a cliff” during Sep-tember and October 2008. According to Mr. Steele, the location could nolonger support two managers, and the decision was made to lay off Mr.Chevalier and keep the other manager. By letter signed by Mr. Steeledated October 28, 2008, Mr. Chevalier was advised that he was beinglaid off from his position at the Niagara Falls location of Active Tire.The letter expressed appreciation for his efforts at that location, butstated that the level of sales did not require two managers. According toMr. Steele, he travelled from Toronto to Niagara Falls in order to deliverthe letter personally, but Mr. Chevalier was out when he arrived and heleft the letter with the other manager to give to Mr. Chevalier.

42 Mr. Chevalier commenced this action for wrongful dismissal twoweeks later. As previously noted, Active Tire notified Mr. Chevalier tocall him back to work at the Niagara Falls location, apologizing for itsactions. However, Mr. Chevalier through his counsel declined to return.

(c) Analysis43 Mr. Chevalier argued that based on his version of events, I should

reach the conclusion that Active Tire did not meet the required onus ofestablishing that a reasonable person would have accepted the opportu-nity to return to work at the Niagara Falls location of Active Tire, takinginto account the critical element that an employee is not obliged to miti-gate by working in an atmosphere of hostility, embarrassment or humili-ation. According to Mr. Chevalier, I should reach this conclusion giventhe circumstances of his dismissal considered in the context of the priorconduct of Active Tire personnel that was intended to cause Mr. Cheva-lier to leave the company. Mr. Chevalier also noted that when the oppor-tunity to return to work was made available to him, he had already leftthe company and had already commenced litigation, factors that wereidentified in the Evans decision as relevant to the determination ofwhether a reasonable person would have returned.

44 Considering the evidence a whole and the submissions of counsel, Ihave concluded that Active Tire has met the required onus of establish-ing that a reasonable person would have accepted the opportunity to re-


turn to work at the Niagara Falls location of Active Tire when the oppor-tunity was provided to Mr. Chevalier. Therefore, he failed to takereasonable steps to mitigate his damages, with the result that his damagesin lieu of notice would be nil. In particular, I find that accepting the op-portunity to return to Active Tire would not have obliged Mr. Chevalierto work in an atmosphere of hostility, embarrassment or humiliation, thecritical element identified in the Evans decision for determining what isreasonable.

45 I reach this conclusion with some regret since, taking Mr. Chevalier’sevidence as a whole, I considered him to be an honest witness and do notbelieve that he was intentionally trying to mislead the court. However, heappeared to be very bitter about his experience as an employee of ActiveTire and I had the sense that the significance of various incidents coveredin his evidence became magnified and distorted in his mind over time. Inthis regard, I accept the evidence of the defence witnesses that their con-duct relating to Mr. Chevalier, viewed objectively, was directed towardmaking him a more effective contributor as an employee of Active Tire,rather than making his life miserable so that he would leave the com-pany. I also find that a reasonable person would reach that conclusion onan objective basis.

46 Mr. Chevalier had long-time experience in the automobile servicebusiness, and it may well be that it was beyond his capacity to embracethe almost missionary-like zeal that Mr. Steele, Mr. Chiodo and othermembers of Active Tire management exhibited in relation to the Steps toSuccess operating procedures. However, as set out in Mr. Chevalier’semployment agreement, it was a term of his employment that he followthose procedures. In my view, the conduct of Active Tire’s managementwas properly directed to assisting Mr. Chevalier in meeting the terms ofhis employment agreement, not driving him from the company.

47 Mr. Steele was the principal defence witness and I was impressed byhis evidence, although I found it frustrating at times. He seemed to con-sider his role to be as an advocate for the company, and I found myselfwishing he would just answer the questions he was asked rather thanmake repetitive speeches. However, I found his evidence as a whole tobe credible, and generally preferred it to that of Mr. Chevalier wheretheir evidence of events differed, including his evidence relating to theMay 22, 2008 meeting with Mr. Chevalier at Active Tire head office.While I have no doubt that Mr. Steele was very direct with Mr. Chevalier


at that meeting and did not mince his words, I find that Mr. Steele’s con-duct, viewed objectively, was intended to help him to improve his per-formance and was not part of a campaign to cause Mr. Chevalier to leavethe company.

48 I was also impressed with the evidence of Mr. Chiodo, Mr. Doyle,Mr. Kielbowich and Mr. McDonald, the other defence witnesses, whom Ialso found to be credible. After considering their evidence together withthat of Mr. Steele, I find that Mr. Chevalier was not treated to demeaningor humiliating conduct that would justify his refusing to return to ActiveTire. In particular, I do not accept Mr. Chevalier’s position that his as-signment to conduct mystery shopper calls in Toronto in June 2008 wasdemeaning, or that this assignment along with his subsequent assignmentto the Toronto Queensway location constituted retribution for his declin-ing to accept a position in the Brampton store. As well, I find that theexamples of objectionable conduct by Mr. Kielbowich identified by Mr.Chevalier in his evidence were either misinterpreted by Mr. Chevalier ordid not occur, and that on an objective basis a reasonable person wouldreach that conclusion.

49 I also took into account Mr. Chevalier’s argument that Active Tireignored his contractual rights by requiring him to work in Toronto fromJune to August 2008 and attempting to transfer him to Brampton earlierthat year, both being beyond the 50 kilometre limit set out in his employ-ment contract. Both Mr. Steele and Mr. Chiodo stated that the relevantprovisions were intended to allow Active Tire to assign employees towork more than 50 kilometres from their home location as long as anyrequired travel was during company time and at company expense. How-ever, whatever Active Tire may have intended, their interpretation didnot accord with what the documents actually said and was not consistentwith Mr. Chevalier’s understanding of the provisions. In my view, itwould have been a breach of Mr. Chevalier’s employment agreement torequire him to move to a work location beyond the 50 kilometre limitwithout his agreement. The fact was, however, that at the end of the day,Mr. Chevalier was not required to work beyond the 50 kilometre limitwithout his agreement. In the case of the proposed Brampton transfer,after being urged to accept the transfer to Brampton, Mr. Chevalier wasinstead assigned to work in St. Catharines within the 50 kilometre limit.As well, when assigned to work in Toronto in the period from June toAugust 2008, he did not raise any objection, as he was entitled to dounder his employment agreement.


50 In all the circumstances, considered in the context of the conduct ofActive Tire personnel as a whole throughout the period of Mr. Cheva-lier’s employment, I do not agree that the fact that Mr. Chevalier wasassigned to work at locations more than 50 kilometres from home,viewed objectively, was part of a campaign to cause Mr. Chevalier toleave the company.

51 In reaching the conclusion that a reasonable person would have re-turned to work for Active Tire, I also considered the particular circum-stances surrounding Mr. Chevalier’s departure from the company whenhe was “laid off” in October 2008. In my view, the conduct of ActiveTire personnel at that time was not consistent with the suggestion thatMr. Chevalier was treated in a humiliating or demeaning fashion. I ac-cept the evidence of Mr. Steele that the decision to lay off Mr. Chevalierwas made for economic reasons, given the financial performance of theNiagara Falls location, under the mistaken belief that Active Tire had theright to do so in these circumstances. I also took into account the fact thatMr. Steele traveled from Toronto with the intention of delivering thenews personally to Mr. Chevalier. As well, once Active Tire receivedlegal advice that they were not entitled to lay off Mr. Chevalier, ActiveTire promptly called him back to work and apologized for their mistake.

52 I have also taken into account the countervailing considerations thatMr. Chevalier had already left the company and had already commencedlitigation when he was called back to work. However, these factors werenot determinative and in all the circumstances would not tip the balanceagainst requiring Mr. Chevalier to return to Active Tire in this case.

IV. Mitigation — search for alternative employment53 In the event that I found that Mr. Chevalier was not required to return

to work for Active Tire when offered the opportunity, Active Tire arguedthat Mr. Chevalier failed to mitigate his damages by failing to diligentlylook for suitable work from another employer. Therefore, according toActive Tire, Mr. Chevalier would not be entitled to any damages in lieuof notice on this basis as well.

54 As previously noted, the defendant employer has the burden of prov-ing that the employee could reasonably have avoided the loss claimed byobtaining other suitable employment available to the employee. Upon re-view of the evidence relevant to Mr. Chevalier’s employment search


from other potential employers, I have concluded that Active Tire did notsatisfy this burden.

55 In support of the argument that Mr. Chevalier did not make a suffi-cient effort to find suitable alternative employment, Active Tire pointedto the lack of independent documentary evidence that he took any signif-icant steps in furtherance of an employment search before June 2009,shortly before his examination for discovery in this action. In his evi-dence, Mr. Chevalier conceded that he did not begin his search for alter-native employment immediately after being laid off by Active Tire onOctober 31, 2008, or after he was no longer being paid by Active Tire atthe end of November 2008, stating that he needed time to “clear hishead” before doing so. However, I accept Mr. Chevalier’s evidence thathe began his employment search by early 2009 by exploring job opportu-nities and making job applications, both on-line and in person. In thisregard, I note that Mr. Chevalier produced an acknowledgement datedFebruary 3, 2009 of an on-line application for employment to Casino Ni-agara, as well as other undated job search documentation. While it wouldhave been reasonable to expect Mr. Chevalier to be able to produce moreextensive documentary evidence of his employment search, I accept hisevidence on this subject nonetheless, and find that he made a reasonableeffort to obtain suitable employment from other potential employers.

56 As well, while I agree that it would have been preferable had Mr.Chevalier started his job search earlier than he did, I am not satisfied onthe evidence that it would have made any difference if he had. In thisregard, I note that Mr. Chevalier did not in fact find an equivalent posi-tion until April 2010, some 17 months after leaving Active Tire. Inreaching this conclusion, I took into account the evidence of Mr. Steelethat on at least two occasions during this period, Active Tire ran “blind”advertisements (without identifying Active Tire as the potential em-ployer) in Niagara area newspapers advertising for service centre man-agement staff, and Mr. Chevalier did not apply for these positions. How-ever, I accept the evidence of Mr. Chevalier that he did not see theadvertisements, and am satisfied that the fact that he did not apply didnot demonstrate a lack of diligence in his job search.

57 For the foregoing reasons, I am not satisfied that Mr. Chevalier failedto diligently search for suitable employment with another employer, andaccordingly would not have reduced the amount of damages in lieu ofnotice that Mr. Chevalier would have otherwise been awarded.


V. Moral damages58 Mr. Chevalier also claimed $30,000 in moral damages, based on the

manner of his dismissal, relying on the principles in Wallace v. UnitedGrain Growers Ltd.8 and Keays v. Honda Canada Inc.9

59 Under the principles set out in those cases, an employer has an obli-gation of good faith and fair dealing in the manner of dismissal of anemployee. The employee would be entitled to an award of damages if: (i)the employer breaches this obligation, (ii) the breach results in mentaldistress, and (iii) it was reasonably foreseeable that the breach wouldcause mental distress. The amount of damages must reflect an actualdamage award by way of financial compensation rather than through anarbitrary extension of the notice period.10

60 Mr. Chevalier’s counsel referred to a numbers of bases for findingbad faith and unfair dealing on the part of Active Tire, including thefollowing:

(a) The conduct of Active Tire personnel was intended tocause Mr. Chevalier to leave the company;

(b) He was harassed, belittled and demeaned by being requiredto perform demeaning tasks;

(c) Active Tire acted in complete disregard of Mr. Chevalier’scontractual rights by requiring him to work beyond the 50kilometre limit in his employment agreement;

(d) His performance was unfairly criticized and scrutinized as aresult of his declining to accept an assignment to theBrampton location; and

(e) Active Tire paid Mr. Chevalier the equivalent of fourweeks wages after his departure from the company on Oc-tober 31, 2008, whereas Ontario employment standards leg-islation would have entitled him to eight weeks.

61 The first four of the foregoing factors were already relied on by Mr.Chevalier to support his position that he was not required to return to

8[1997] 3 S.C.R. 701 (S.C.C.).9[2008] 2 S.C.R. 362 (S.C.C.).10Ibid. at para. 59. See also Natalie C. MacDonald, Extraordinary Damages inCanadian Employment Law (Toronto: Carswell, 2010) at p. 67.


work for Active Tire in order to mitigate his damages. Given the findingsof fact I have already made in that regard, these factors would not sup-port a finding that Active Tire breached of its obligation of good faithand fair dealing in the manner of Mr. Chevalier’s dismissal. As well, inmy view, the last factor cited would not support such a conclusion in thecircumstances of this case, given in particular Active Tire’s continuedwillingness to employ and pay Mr. Chevalier and his refusal to return towork without reasonable cause.

62 Even if I found Active Tire had breached its obligation of good faithand fair dealing, I am not persuaded that Mr. Chevalier has establishedany compensable damages for mental distress resulting from suchbreach. In this regard, Mr. Chevalier relied on his oral evidence relatingto his illness in May and June 2008, several months before his departurefrom Active Tire, which resulted in a two week absence from work afterhis meeting with Mr. Steele in Toronto on May 22, 2008. To recap, hewent home feeling sick at the end of the day on May 22, and the nextday, left the St. Catharines Glendale location, vomiting and shaking, afterbeing required to justify the fact that he had not returned to that locationthe previous afternoon. In support of his oral evidence, he provided aform filled out by a doctor at a walk in clinic stating only that he wouldbe away from work for medical reasons until June 9, 2008. He returnedto work as scheduled on June 9, 2008, and there was no evidence of anyfurther episodes of this nature.

63 Counsel for Mr. Chevalier argued that the evidence presented by Mr.Chevalier was sufficient to establish compensable damages for mentaldistress, and that it was not necessary to provide further independentmedical evidence to support this conclusion. While I agree that evidencefrom a medical practitioner will not necessarily be required in every case,I am not satisfied that Mr. Chevalier has established compensable mentaldistress in this case given the meagre nature of the evidence he hasprovided.

VI. Conclusion64 For the reasons above, Mr. Chevalier’s action is dismissed.65 On the question of costs, unless otherwise agreed between the parties

as to timing, the Defendant shall serve and file brief written submissions(not to exceed three pages) together with a bill of costs within 21 days.The Plaintiff will have an opportunity to respond with brief written sub-


missions within 14 days of receipt of the Defendant’s submissions. TheDefendant will have an opportunity to reply with brief written submis-sions within seven days of receipt of the Plaintiff’s response. Shouldcounsel for both parties prefer to make oral submissions, they shouldspeak to the Trial Coordinator to arrange a date.

Action dismissed.

McCormick v. Fasken Martineau Dumoulin LLP 197

[Indexed as: McCormick v. Fasken Martineau DumoulinLLP]

In the Matter of the Judicial Review Procedure Act, R.S.B.C.1996, c. 241

And In the Matter of the Human Rights Code, R.S.B.C. 1996,c. 210

Fasken Martineau DuMoulin LLP (Appellant / Petitioner) andBritish Columbia Human Rights Tribunal and John Michael

McCormick (Respondents / Respondents)

British Columbia Court of Appeal

Docket: Vancouver CA039128

2012 BCCA 313

Finch C.J.B.C., Newbury, Levine JJ.A.

Heard: April 3, 2012


Business associations –––– Nature of business associations — Nature of part-nership — Contrasted with other relationships — Master and servant ––––Complainant was partner in respondent law firm, limited liability partnership —Complainant was party to partnership agreement which, inter alia, includedmandatory retirement provision — Complainant reached mandatory retirementage, provision was triggered and complainant was forced to retire involuntary —Complainant commenced proceedings before Human Rights Tribunal, which as-sumed jurisdiction on basis that complainant had been discriminated against inemployment — Respondent’s application for judicial review from assumption ofjurisdiction was dismissed and respondent appealed — Appeal allowed —Human Rights Code grants jurisdiction over complaints of prohibited discrimi-nation in, inter alia, “employment” — On all established principles of partner-ship law, complainant qua partner was not in employment relationship with re-spondent — Complainant was in fact owner of respondent — Human RightsCode regime, while quasi-constitutional in nature, did not oust principles ofpartnership law — Absent “employment”, Tribunal incorrectly assumed juris-diction and appeal was accordingly properly allowed and complaint dismissed.

Human rights –––– Practice and procedure — Commissions, tribunals andboards of inquiry — Jurisdiction — General principles –––– Complainantwas partner in respondent law firm, limited liability partnership — Complainantwas party to partnership agreement which, inter alia, included mandatory retire-


ment provision — Complainant reached mandatory retirement age, provisionwas triggered and complainant was forced to retire involuntary — Complainantcommenced proceedings before Human Rights Tribunal, which assumed juris-diction on basis that complainant had been discriminated against in employ-ment — Respondent’s application for judicial review from assumption of juris-diction was dismissed and respondent appealed — Appeal allowed — HumanRights Code grants jurisdiction over complaints of prohibited discrimination in,inter alia, “employment” — On all established principles of partnership law,complainant qua partner was not in employment relationship with respondent —Complainant was in fact owner of respondent — Human Rights Code regime,while quasi-constitutional in nature, did not oust principles of partnership law —Absent “employment”, Tribunal incorrectly assumed jurisdiction and appeal wasaccordingly properly allowed and complaint dismissed.

Human rights –––– What constitutes discrimination — Age — Mandatoryretirement — Miscellaneous –––– Partners — Complainant was partner in re-spondent law firm, limited liability partnership — Complainant was party topartnership agreement which, inter alia, included mandatory retirement provi-sion — Complainant reached mandatory retirement age, provision was triggeredand complainant was forced to retire involuntary — Complainant commencedproceedings before Human Rights Tribunal, which assumed jurisdiction on basisthat complainant had been discriminated against in employment — Respon-dent’s application for judicial review from assumption of jurisdiction was dis-missed and respondent appealed — Appeal allowed — Human Rights Codegrants jurisdiction over complaints of prohibited discrimination in, inter alia,“employment” — On all established principles of partnership law, complainantqua partner was not in employment relationship with respondent — Complain-ant was in fact owner of respondent — Human Rights Code regime, while quasi-constitutional in nature, did not oust principles of partnership law — Absent“employment”, Tribunal incorrectly assumed jurisdiction and appeal was ac-cordingly properly allowed and complaint dismissed.

Labour and employment law –––– Employment law — Nature of employ-ment relationship — Elements constituting relationship between employerand employee — Control of employee by employer — Miscellaneous ––––Complainant was partner in respondent law firm, limited liability partnership —Complainant was party to partnership agreement which, inter alia, includedmandatory retirement provision — Complainant reached mandatory retirementage, provision was triggered and complainant was forced to retire involuntary —Complainant commenced proceedings before Human Rights Tribunal, which as-sumed jurisdiction on basis that complainant had been discriminated against inemployment — Respondent’s application for judicial review from assumption ofjurisdiction was dismissed and respondent appealed — Appeal allowed —


Human Rights Code grants jurisdiction over complaints of prohibited discrimi-nation in, inter alia, “employment” — On all established principles of partner-ship law, complainant qua partner was not in employment relationship with re-spondent — Complainant was in fact owner of respondent — Human RightsCode regime, while quasi-constitutional in nature, did not oust principles ofpartnership law — Absent “employment”, Tribunal incorrectly assumed juris-diction and appeal was accordingly properly allowed and complaint dismissed.

Cases considered by Levine J.A.:

Berg v. University of British Columbia (1993), 1993 CarswellBC 1261, 13 Ad-min. L.R. (2d) 141, 79 B.C.L.R. (2d) 273, (sub nom. University of BritishColumbia v. Berg) 152 N.R. 99, (sub nom. University of British Columbia v.Berg) [1993] 2 S.C.R. 353, (sub nom. University of British Columbia v.Berg) 26 B.C.A.C. 241, (sub nom. University of British Columbia v. Berg)44 W.A.C. 241, (sub nom. University of British Columbia v. Berg) 102D.L.R. (4th) 665, (sub nom. University of British Columbia v. Berg) 18C.H.R.R. D/310, 1993 CarswellBC 133, EYB 1993-67103, [1993] S.C.J.No. 55 (S.C.C.) — referred to

Blue Line Hockey Acquisition Co. v. Orca Bay Hockey Ltd. Partnership (2008),2008 BCSC 27, 2008 CarswellBC 36, 40 B.L.R. (4th) 83, [2008] B.C.J. No.24 (B.C. S.C.) — referred to

British Columbia (Ministry of Health Services) v. British Columbia (EmergencyHealth Services Commission) (2007), 2007 BCSC 460, 2007 CarswellBC669, 60 C.H.R.R. D/381, [2007] B.C.J. No. 681 (B.C. S.C.) — considered

Canada (House of Commons) v. Vaid (2005), 2005 SCC 30, 2005 CarswellNat1272, 2005 CarswellNat 1273, 333 N.R. 314, 41 C.C.E.L. (3d) 1, 252 D.L.R.(4th) 529, 28 Admin. L.R. (4th) 1, [2005] 1 S.C.R. 667, 2005 C.L.L.C. 230-016, 135 C.R.R. (2d) 189, [2005] S.C.J. No. 28, EYB 2005-90618(S.C.C.) — referred to

Canadian National Railway v. Canada (Human Rights Commission) (1987), 27Admin. L.R. 172, [1987] 1 S.C.R. 1114, 40 D.L.R. (4th) 193, (sub nom.Action Travail des Femmes v. Canadian National Railway) 76 N.R. 161, 87C.L.L.C. 17,022, 8 C.H.R.R. D/4210, 1987 CarswellNat 831, 1987 Car-swellNat 905, [1987] S.C.J. No. 42 (S.C.C.) — referred to

Coal Harbour Properties Partnership v. Liu (2004), 2004 BCCA 283, 2004 Car-swellBC 1143, 23 R.P.R. (4th) 206, 199 B.C.A.C. 185, 48 B.L.R. (3d) 237(B.C. C.A.) — referred to

Continental Bank of Canada v. R. (1998), (sub nom. Continental Bank LeasingCorp. v. Minister of National Revenue) 229 N.R. 58, 1998 CarswellNat1496, 1998 CarswellNat 1497, (sub nom. Continental Bank Leasing Corp. v.Canada) 163 D.L.R. (4th) 385, (sub nom. Continental Bank Leasing Corp. v.R.) 98 D.T.C. 6505, [1998] 4 C.T.C. 119, (sub nom. Continental Bank


Leasing Corp. v. Canada) [1998] 2 S.C.R. 298, [1998] S.C.J. No. 63(S.C.C.) — considered

Crane v. British Columbia (Ministry of Health Services) (2005), 2005 BCHRT361, 2005 CarswellBC 2059, 53 C.H.R.R. D/156 (B.C. Human RightsTrib.) — considered

Davis v. Ouellette (1981), 1981 CarswellBC 58, 27 B.C.L.R. 162, [1981] B.C.J.No. 1745 (B.C. S.C.) — referred to

Ellis v. Joseph Ellis & Co. (1905), [1905] 1 K.B. 324 (Eng. C.A.) — referred toFontaine v. Canadian Pacific Ltd. (1990), (sub nom. Canadian Pacific Ltd. v.

Canada (Canadian Human Rights Commission)) 120 N.R. 152, (sub nom.Canadian Pacific Ltd. v. Canada (Canadian Human Rights Commission))[1991] 1 F.C. 571, 1990 CarswellNat 123F, (sub nom. Canadian Pacific Ltd.v. Fontaine) 91 C.L.L.C. 17,008, 1990 CarswellNat 123, 16 C.H.R.R.D/470, [1990] F.C.J. No. 1028 (Fed. C.A.) — referred to

Forest & Marine Financial Corp., Re (2009), 2009 BCCA 319, 2009 Car-swellBC 1738, 54 C.B.R. (5th) 201, [2009] 9 W.W.R. 567, 461 W.A.C. 271,273 B.C.A.C. 271, 96 B.C.L.R. (4th) 77 (B.C. C.A.) — considered

Gould v. Yukon Order of Pioneers (1996), 1996 CarswellYukon 6, 133 D.L.R.(4th) 449, [1996] 1 S.C.R. 571, 194 N.R. 81, (sub nom. Gould v. YukonOrder of Pioneers, Dawson Lodge No. 1) 119 W.A.C. 1, 1996 CarswellY-ukon 6F, 18 B.C.L.R. (3d) 1, 25 C.H.R.R. D/87, 72 B.C.A.C. 1, 37 Admin.L.R. (2d) 1, [1996] S.C.J. No. 29, EYB 1996-67970 (S.C.C.) — referred to

Mans v. Council of Licensed Practical Nurses (British Columbia) (1990), 14C.H.R.R. D/221, [1990] B.C.C.H.R.D. No. 38 (B.C. Human Rights Coun-cil) — referred to

Mans v. Council of Licensed Practical Nurses (British Columbia) (1991), (subnom. British Columbia Council of Licensed Practical Nurses v. Mans) 20C.H.R.R. D/173, 1991 CarswellBC 1832, [1991] B.C.J. No. 2666 (B.C.S.C.) — referred to

Mans v. Council of Licensed Practical Nurses (British Columbia) (1993), 77B.C.L.R. (2d) 47, (sub nom. Council of Licensed Practical Nurses (B.C.) v.Mans) 39 W.A.C. 246, (sub nom. British Columbia Council of LicensedPractical Nurses v. Mans) 93 C.L.L.C. 17,014, (sub nom. British ColumbiaCouncil of Licensed Practical Nurses v. Mans) 20 C.H.R.R. D/177, (subnom. Council of Licensed Practical Nurses (B.C.) v. Mans) 23 B.C.A.C.246, 1993 CarswellBC 45, [1993] B.C.J. No. 371 (B.C. C.A.) — referred to

McKnight v. Hutchison (2002), 28 B.L.R. (3d) 269, 2002 CarswellBC 2289,2002 BCSC 1373 (B.C. S.C.) — referred to

Meyer & Co. v. Faber (No. 2) (1923), [1923] 2 Ch. 421 (Eng. Ch. Div.) —referred to

Nixon v. Vancouver Rape Relief Society (2005), 2005 CarswellBC 2911, 2005BCCA 601, (sub nom. Vancouver Rape Relief Society v. Nixon) 262 D.L.R.


(4th) 360, (sub nom. Vancouver Rape Relief Society v. Nixon) 55 C.H.R.R.D/67, [2006] 4 W.W.R. 213, (sub nom. Vancouver Rape Relief Society v.Nixon) 220 B.C.A.C. 109, (sub nom. Vancouver Rape Relief Society v.Nixon) 362 W.A.C. 109, 45 Admin. L.R. (4th) 91, (sub nom. VancouverRape Relief Society v. Nixon) 2006 C.L.L.C. 230-029, 47 B.C.L.R. (4th) 203,(sub nom. Vancouver Rape Relief Society v. Nixon) 135 C.R.R. (2d) 345,[2005] B.C.J. No. 2647 (B.C. C.A.) — considered

O’Malley v. Simpsons-Sears Ltd. (1985), (sub nom. Ontario Human RightsCommission v. Simpsons-Sears Ltd.) [1985] 2 S.C.R. 536, [1986] D.L.Q. 89(note), 23 D.L.R. (4th) 321, 64 N.R. 161, 12 O.A.C. 241, 17 Admin. L.R. 89,(sub nom. Ontario (Human Rights Commission) v. Simpsons-Sears Ltd.) 9C.C.E.L. 185, 86 C.L.L.C. 17,002, 7 C.H.R.R. D/3102, 52 O.R. (2d) 799(note), 1985 CarswellOnt 887, 1985 CarswellOnt 946, (sub nom. OntarioHuman Rights Commission v. Simpsons-Sears Ltd.) [1985] S.C.J. No. 74(S.C.C.) — referred to

Pilotes du Bas Saint-Laurent c. Bouchard (2004), (sub nom. Pilotes du Bas St.Laurent, S.E.N.C. v. Bouchard) 277 F.T.R. 10 (Eng.), 2004 CarswellNat6064, 2004 CF 1776, 2004 CarswellNat 6162, 2004 FC 1776 (F.C.) —considered

Roth v. Beaver Creek Improvement District (2008), 2008 BCHRT 133 (B.C.Human Rights Trib.) — referred to

Sharma v. Yellow Cab Co. (1983), 83 C.L.L.C. 17,017, 4 C.H.R.R. D/1432(B.C. Human Rights Comm.) — referred to

Thorne v. New Brunswick (Workmen’s Compensation Board) (1962), 33 D.L.R.(2d) 167, 48 M.P.R. 56, 1962 CarswellNB 8, [1962] N.B.J. No. 11 (N.B.C.A.) — referred to

Statutes considered:

Human Rights Code, R.S.B.C. 1996, c. 210Generally — referred tos. 1 “employment” — considereds. 1 “person” — considereds. 3 — considereds. 13 — considereds. 13(1) — considereds. 27(1)(a) — considereds. 27(1)(c) — considered

Interpretation Act, R.S.B.C. 1996, c. 238s. 29 “person” — considered

Partnership Act, R.S.B.C. 1996, c. 348Generally — referred tos. 1 “firm” — considereds. 2 — considered


s. 22 — considereds. 27(j) — considereds. 104 — referred tos. 105 — referred to

APPEAL by respondent partnership from judgment reported at McCormick v.Fasken Martineau Dumoulin LLP (2011), (sub nom. Fasken MartineauDuMoulin LLP v. British Columbia (Human Rights Tribunal)) 71 C.H.R.R.D/280, 93 C.C.E.L. (3d) 314, 335 D.L.R. (4th) 450, (sub nom. FaskenMartineau Dumoulin LLP v. BCHRT) 2011 C.L.L.C. 230-026, 2011 Car-swellBC 1340, 2011 BCSC 713 (B.C. S.C.), dismissing respondent’s applicationfor judicial review of decision of Human Rights Tribunal assuming jurisdictionover complaint of discrimination in employment of basis of age.

I.G. Nathanson, Q.C., P.R. Senkpiel for AppellantD.M. Tevlin, J. Chesko for Respondent, John Michael McCormickNo one for British Columbia Human Rights Tribunal

Levine J.A.:

1 The issue on this appeal is whether a partner in a limited liabilitypartnership is an employee of the partnership for the purpose of claimingthe protection of human rights legislation from age discrimination.

2 The British Columbia Human Rights Tribunal and a Supreme Courtchambers judge on judicial review decided that for the purposes ofhuman rights legislation, a partnership may be treated as a separate legalentity from its partners and as the employer of a partner, with the resultthat the Tribunal has jurisdiction to hear a complaint by a partner of dis-crimination in his employment. The partnership appealed, claiming theTribunal does not have jurisdiction to hear the complaint, because in lawa partnership is not a separate entity from its partners, and cannot in lawemploy a partner.

3 In my opinion, the principles of interpretation of the Human RightsCode, R.S.B.C. 1996, c. 210, which mandate a broad, liberal approachconsistent with its remedial purposes, do not change underlying legal re-lationships to the extent found by the Tribunal and the chambers judge.In particular, they do not extend to overriding the fundamental and well-established principle of law that a partnership is not, in law, a separateentity from, but is a collective of, its partners, and as such, cannot, inlaw, be an employer of a partner.

McCormick v. Fasken Martineau Dumoulin LLP Levine J.A. 203

4 In my opinion, the Tribunal does not have jurisdiction to hear thecomplaint. It follows that I would allow the appeal.

Background

Mr. McCormick5 John Michael McCormick is a lawyer and one of approximately 60

“equity partners” in the Vancouver office of the appellant, Fasken Marti-neau DuMoulin LLP, an international law firm operating as an extra-pro-vincial limited liability partnership registered under the Partnership Act,R.S.B.C. 1996, c. 348. Fasken globally provides the services of approxi-mately 650 lawyers, 260 of whom are equity partners.

6 Mr. McCormick has worked at Fasken for all of his legal career sinceMay 1970. He became an equity partner in approximately 1979. Heturned 65 years old in March 2010.

7 Mr. McCormick is a party to the partnership agreement that governsthe relationship of all of Fasken’s partners.

Retirement8 Section 9.2 of the partnership agreement addresses retirement of part-

ners. Absent an individual arrangement to the contrary, this provision re-quired Mr. McCormick to retire on January 31, 2011, the financial yearend of the firm in which he turned 65.

9 Section 9.2 of the partnership agreement provides:

(a) Each Equity Partner shall retire as an Equity Partner at theend of the Year in which the Partner reaches the age of 65,but as provided in paragraphs (d) and (e) of this Section 9.2may be permitted to continue working with the Firm.

(b) A Partner who retires from the Firm shall be deemed tohave withdrawn from the Firm as at the date of his or herretirement, which date shall be his or her date ofwithdrawal.

(c) Upon reaching the age of 62, each Partner shall prepare anddeliver to the Firm Managing Partner a practice transitionplan.

(d) Agreements for working past age 65 are at the discretion ofthe firm Managing Partner and will be the exception ratherthan the rule. The criteria for approval shall include the


value of the individual in coaching, business development,client relations, mentoring and community profile. Suchagreements shall either be approved by the Board or bewithin any written policy established by the Board for thispurpose.

(e) Partners who wish to continue in the practice of law withthe Firm after age 65 may enter into an individual arrange-ment with the Firm as an employee or a Regular Partner asdetermined by the Firm Managing Partner and, if the FirmManaging Partner so decides, such individual may have thetitle of “Counsel” to the Firm. The Firm Managing Partnermay at any time on three months’ prior written notice re-voke, in his or her discretion, the right of such individual tocontinue in the practice of law with the Firm, whether asemployee or Regular Partner, or to be Counsel to the Firm.

10 Starting in 2006, Mr. McCormick and the managing partner of thefirm had discussions concerning Mr. McCormick’s retirement from thefirm. No agreement was reached concerning any continuing role for Mr.McCormick within the firm.

Complaint to Human Rights Tribunal11 In December 2009, Mr. McCormick filed a complaint with the Tribu-

nal alleging that Fasken discriminated against him by requiring that heretire as an equity partner at the end of the year in which he turned 65,contrary to s. 13 of the Code which prohibits discrimination in employ-ment on the ground of age.

12 Fasken responded with an application to dismiss the complaint underss. 27(1)(a) and (c) of the Code, on the grounds that the Tribunal did nothave jurisdiction over the complaint and there was no reasonable pros-pect that it would succeed. The crux of Fasken’s argument was that Mr.McCormick was not an employee of the firm and there was no employ-ment relationship that could be the subject of a complaint under s. 13.

13 The Tribunal dismissed Fasken’s application, finding that it had juris-diction over the complaint on the basis that Mr. McCormick was, for thepurpose of the Code, employed by the firm.

14 Fasken applied for judicial review. The chambers judge agreed withthe decision of the Tribunal that Mr. McCormick was, for the purposes ofthe Code, employed by the firm, and dismissed the application.


Equity Partners of the Firm15 As an equity partner, Mr. McCormick has an ownership interest in the

firm. His income is a share of the profits of the firm and he is entitled toa distributive share of the assets of the firm on its dissolution. He has acapital account that is to be paid out to him upon retirement. He is per-sonally liable, with other equity partners, for the debts of the firm to theextent they are not covered by insurance or treated as an expense, withinthe limits established by the partnership agreement and the PartnershipAct. He is entitled to participate in meetings of the partners and to voteon various matters concerning the firm’s operations. He is eligible forelection to and to vote in elections for management positions and com-mittees within the firm. None of these benefits is available to employeesof the firm.

Management of the Firm16 The partnership agreement sets out in detail the manner in which the

firm is governed (Article 4) and managed (Article 5).17 Under the partnership agreement, the firm is governed by a board

composed of 13 equity partners, including 3 from the British Columbiaregion, the firm managing partner, and regional managing partners, all ofwhom are elected by the equity partners. The main functions of theboard, “as the elected representatives of the Partners” are “setting strate-gic direction for the Firm, determination of Firm policies, and planningfor the Firm”. The firm managing partner and regional managing part-ners are responsible for overseeing and implementing the firm’s strate-gies, policies and directives. The regional managing partners provideleadership by promoting individual practices of professionals and prac-tice groups, including ensuring an appropriate level of consultation withpartners, and developing client relationships.

18 The chambers judge summarized some of the aspects of the manage-ment and operation of the firm (at paras. 10-13):

[10] Fasken’s managing partner and the regional managing partnersexert control over individual equity partners through the enforcementof firm policies, strategies and directions. They may assign to equitypartners specific functions and tasks and supervise the performanceof these responsibilities. Practice groups appointed by the managingpartners set standards for all work product, including legal opinionsauthored by equity partners, which must be reviewed by another part-ner before being released to a client. Every form of work product


produced by an equity partner is owned by Fasken and any fee orpayment received by an equity partner that relates to the practice oflaw is deemed to be the property of the firm. To avoid conflicts ofinterest the firm prohibits equity partners from acting for certain cli-ents such as trade unions.

[11] Fasken’s financial management policy also includes detailed re-quirements governing client and file acceptance, billing procedures,retainers, time recording, collections and write-offs. Fasken appointsa client manager for each client who may not be the lawyer who se-cured the client for the firm. Even equity partners must take directionfrom a client manager with regard to matters assigned to them forperformance as file manager and they must accept supervision by theclient manager or a client service team, if one is appointed. Manage-ment and staff report to the managing partners and not to individualequity partners.

[12] The partnership agreement requires every equity partner todevote the whole of their working time and attention to Fasken un-less the managing partner consents to another arrangement, whichmay be revoked at any time. Partners are prohibited from enteringinto financial arrangements or contracts in the name of the firm with-out authorization of the managing partner, a board chair, a regionalmanaging partner, or two members of the board.

[13] The board establishes compensation criteria for equity partnersand may change these criteria at any time. The current criteria in-clude: quality legal work, teamwork, generation of profitable busi-ness from new and existing clients, profitable maintenance of ex-isting clients, contribution to the firm’s image, reputation andseniority, profitable personal production, businesslike personal prac-tice management, contribution to firm activities, ancillary incomegenerated for the firm, and peer review. Regional compensation com-mittees, made up of equity partners, make annual allocations to eq-uity partners from the net income of the firm, with a limited right ofappeal back to the committee. These committees may also determineextraordinary bonuses for partners for exceptional performance in ayear.

19 On several occasions, Mr. McCormick ran for election to firm com-mittees, and in 1998 was elected to a one-year term on the ExecutiveCommittee (similar in function to the present Board).

20 The Tribunal and the chambers judge both found that the governanceand management structure of the firm satisfied the indicia of an employ-ment relationship for purposes of the Code, applying factors of “utiliza-


tion”, “control”, “financial burden” and “remedial purpose” as set out inCrane v. British Columbia (Ministry of Health Services), 2005 BCHRT361 (B.C. Human Rights Trib.), rev’d on other grounds, BritishColumbia (Ministry of Health Services) v. British Columbia (EmergencyHealth Services Commission), 2007 BCSC 460 (B.C. S.C.).

21 Fasken says that the governance and management structure and thepolicies of the firm developed by the board and managing partners arethe delegated organizational structure through which the partners exer-cise their roles as owners of the firm. They deny that the managementstructure amounts to “control” of the equity partners as that term is usedin Crane and other employment law cases.

Issue on Appeal22 The issue is encapsulated in the chambers judge’s conclusion (at para.

62): ... it is not an immutable principle of law that a partnership is merelythe sum of its partners. As a consequence, there should be no legalimpediment to according a partner and the firm separate legal statusfor the purpose of a complaint under the Code. In my view, this con-clusion is consistent with a broad, liberal and purposive interpretationof ss. 1 and 13 of the Code.

23 Fasken maintains that the legal principle that a partnership is not aseparate entity but the sum of its partners is not displaced by a broad,liberal and purposive interpretation of the Code, but is determinative ofthe jurisdiction of the Tribunal. The firm says that in law, there can be noemployment relationship between a partner and the firm of which he is amember, and that legal conclusion precludes an analysis of any factualdetails that determine whether an employment relationship exists for thepurposes of the Code.

24 Mr. McCormick maintains that the common law characterization of alegal relationship does not apply for human rights purposes, and does notrestrict the analysis of the relationship in accordance with the factors thathave been found to bring a relationship not customarily considered thatof employment within the jurisdiction of the Code.

Statutory Interpretation25 Whether the Tribunal has jurisdiction over a complaint of discrimina-

tion is determined by the provisions of the Code, which are given a


broad, liberal and purposive interpretation consistent with the characteri-zation of human rights legislation as “quasi-constitutional”: see O’Malleyv. Simpsons-Sears Ltd., [1985] 2 S.C.R. 536 (S.C.C.), at 547; CanadianNational Railway v. Canada (Human Rights Commission), [1987] 1S.C.R. 1114 (S.C.C.) at 1136; Berg v. University of British Columbia,[1993] 2 S.C.R. 353 (S.C.C.), at 370. Any exemptions from the provi-sions of the Code must be clearly stated: Canada (House of Commons) v.Vaid, [2005] 1 S.C.R. 667 (S.C.C.) at para. 81.

26 That is not to say that the Code extends to every relationship andcircumstance: see Berg at para. 27, where the Supreme Court of Canadasaid: “This interpretative approach does not give a board or court a li-cense to ignore the words of the Act in order to prevent discriminationwherever it is found”. See also: Gould v. Yukon Order of Pioneers,[1996] 1 S.C.R. 571 (S.C.C.) at para. 5, 12, 90; Nixon v. Vancouver RapeRelief Society, 2005 BCCA 601 (B.C. C.A.) at para. 24; Roth v. BeaverCreek Improvement District, 2008 BCHRT 133 (B.C. Human RightsTrib.) at para. 53.

27 The broad, liberal and purposive interpretation of the Code extends tothe determination of whether an employment relationship exists. InVancouver Rape Relief, this Court said (at para. 18):

It is clear that the term “employment” in s. 13 of the Code has abroader meaning than is ascribed to it in employment law. For exam-ple, in Reid v. Vancouver Police Board (2005), 44 B.C.L.R. (4th) 49,2005 BCCA 418, Lowry J.A. for the majority, referring to Barrie(City) v. Canadian Union of Public Employees, Local 2380 (CUPE),[1991] O.P.E.D. No. 41 (Ont. P.E. Trib.) (Q.L.), said at para. 41 thatthe proper approach required “consideration of factors that are wellbeyond what traditional common law perceptions of the employer-employee relationship might dictate”. In the same spirit, the FederalCourt of Appeal has applied a broad meaning to the term “employ”and in Canadian Pacific Ltd. v. Canada (Human Rights Commis-sion), [1991] 1 F.C. 571 (C.A.), 120 N.R. 152, found it to encompassthe relationship between Canadian Pacific Ltd. and an employee of afirm with whom Canada Pacific Ltd. contracted for services. As well,in Pannu, Kang and Gill v. Prestige Cab Ltd. (1986), 73 A.R. 166(C.A.), 31 D.L.R. (4th) 338, the Alberta Court of Appeal interpretedthe words “employer”, “employee” and “employment” to encompassa relationship between a taxi company and taxi drivers in a fact situa-tion in which the taxi drivers were more in the nature of independentcontractors.


28 The provisions of the Code have been extended to many relationshipswhich are not considered to be employee-employer relationships at com-mon law. Only one case considered the relationship between a partner-ship and one of the partners: Pilotes du Bas Saint-Laurent c. Bouchard,2004 FC 1776 (F.C.) [Lower St. Lawrence Pilots], in which the Courtdismissed an application for judicial review of a decision of the CanadianHuman Rights Commission. The Commission had held it had jurisdictionto hear the partner’s complaint. There was no analysis in this decision ofthe legal nature of a partnership or the employment relationship, and thedecision is neither binding nor persuasive on this appeal.

29 Other cases have determined that an employee of an independent con-tractor providing services was an employee of the company to which theservices were provided (Fontaine v. Canadian Pacific Ltd. (1990),[1991] 1 F.C. 571 (Fed. C.A.)); an applicant for a licence to carry on heremployment was in an employment relationship with the licensing body(Mans v. Council of Licensed Practical Nurses (British Columbia),[1990] B.C.C.H.R.D. No. 38 (B.C. Human Rights Council); aff’d, [1991]B.C.J. No. 2666 (B.C. S.C.); aff’d (1993), 77 B.C.L.R. (2d) 47 (B.C.C.A.); the relationship between an owner/driver of a taxicab, who wouldbe characterized as an independent contractor at common law, with thecompany providing dispatch services, was one of employment (Sharmav. Yellow Cab Co. (1983), 4 C.H.R.R. D/1432 (B.C. Human RightsComm.)). In all of these cases, the decision-maker applied the broad, lib-eral and purposive approach to interpreting the applicable human rightslegislation, looking to the nature of the relationship between the partiesto the complaint rather than the characterization of the relationship atcommon law or the traditional legal concepts of employment law.

30 Fasken points out that in all of the cases referred to in this context(other than Lower St. Lawrence Pilots, with which I have already dealt),there were two identifiable parties to the dispute, and the question wasthe proper characterization of their relationship for the purpose of thehuman rights legislation. In this case, the firm says that there are not twoparties to the dispute. Mr. McCormick is a member of the collective bodyagainst whom he complains. The members of the partnership do not em-ploy each other; they work together in a business in which they jointlydetermine their working conditions, remuneration, and all other aspectsof the operation of the business. The fact that the management of theoperation of the business is delegated to some of the partners, whose


identity changes from time to time, does not change the fundamental factthat none of the partners is an employee of any or all of the others.

Relevant Statutory Provisions31 The relevant provisions of the Code are ss. 1, 3 13 and 27(1)(a) and

(c): Definitions

1. In this Code:

“employment” includes the relationship of master and servant,master and apprentice and principal and agent, if a substantial part ofthe agent’s services relate to the affairs of one principal, and “em-ploy” has a corresponding meaning;

“person” includes an employer, an employment agency, an employ-ers’ organization, an occupational association and a trade union;

Purposes

3. The purposes of this Code are as follows:

(a) to foster a society in British Columbia in which there are noimpediments to full and free participation in the economic,social, political and cultural life of British Columbia;

(b) to promote a climate of understanding and mutual respectwhere all are equal in dignity and rights;

(c) to prevent discrimination prohibited by this Code;

(d) to identify and eliminate persistent patterns of inequality as-sociated with discrimination prohibited by this Code;

e) to provide a means of redress for those persons who are dis-criminated against contrary to this Code;

Discrimination in employment

13(1) A person must not

(a) refuse to employ or refuse to continue to employ a person, or

(b) discriminate against a person regarding employment or anyterm or condition of employment

because of the race, colour, ancestry, place of origin, political belief,religion, marital status, family status, physical or mental disability,sex, sexual orientation or age of that person ...


Dismissal of a complaint

27(1) A member or panel may, at any time after a complaint is filedand with or without a hearing, dismiss all or part of the complaint ifthat member or panel determines that any of the following apply:

(a) the complaint or that part of the complaint is notwithin the jurisdiction of the tribunal;

. . .

(c) there is no reasonable prospect that the complaint willsucceed;

32 Also of relevance is the definition of “person” in s. 29 of the Interpre-tation Act, R.S.B.C. 1996, c. 238:

29. In an enactment:

. . .

“person” includes a corporation, partnership or party, and the per-sonal or other legal representatives of a person to whom the contextcan apply according to law.

33 The following provisions of the Partnership Act are also relevant: Definitions

1. In this Act:

. . .

“firm” is the collective term for persons who have entered into part-nership with one another;

Partnership defined

2. Partnership is the relation which subsists between persons carryingon business in common with a view of profit.

Fairness and good faith

22(1) A partner must act with the utmost fairness and good faith to-wards the other members of the firm in the business of the firm.

(2) The duties imposed by this section are in addition to, and not inderogation of, any enactment or rule of law or equity relating to theduties and liabilities of partners.

Rules for determining rights and duties of partners in relation topartnership

27 Subject to any agreement express or implied between the partners,the interests of partners in the partnership property and their rights


and duties in relation to the partnership must be determined by thefollowing rules:

. . .

(j) a partner may refer a difference concerning the interpretationor application of the partnership agreement to arbitration for afinal and binding decision under the Commercial ArbitrationAct.

The Legal Nature of a Partnership34 The legal nature of a partnership as a separate entity or a collective of

its members was the subject of much discussion in the decisions of boththe Tribunal and the chambers judge. I would say that it is not seriouslydisputed on appeal that a partnership is not, in law, a separate legal entityas is, for example, a corporation. Nor can it be: under Canadian law, apartnership is not a legal entity separate from the partners who are itsmembers.

35 Authorities supporting this principle are numerous. This Court hassaid this in recent cases: see for example, Forest & Marine FinancialCorp., Re, 2009 BCCA 319 (B.C. C.A.) [Asset Engineering] at paras. 15-18 and Coal Harbour Properties Partnership v. Liu, 2004 BCCA 283(B.C. C.A.) at para. 10, and the principles were discussed in Blue LineHockey Acquisition Co. v. Orca Bay Hockey Ltd. Partnership, 2008BCSC 27 (B.C. S.C.) at paras. 79-89. These recent authorities reflect along-standing principle of Canadian and English common law. The clas-sic English text on partnerships, R. C. Banks, ed, Lindley & Banks onPartnership, 18th ed (London, U.K., Sweet & Maxwell, 2002), is oftencited as an authority on the common law of partnerships in Canada.

36 The consequences of the nature of the legal relationship of partner-ship extend to every aspect of commercial relationships. For a discussionof the implications for debtor-creditor relationships, see AssetEngineering; Meyer & Co. v. Faber (No. 2), [1923] 2 Ch. 421 (Eng. Ch.Div.), at 439. A firm cannot sue a partner for indebtedness relating to thebusiness of the firm. The indebtedness of a firm is the indebtedness ofthe partners, and a person cannot owe a debt to himself.

37 Of more direct relevance, arising from the same principle, a partnercannot be an employee of the partnership of which he or she is a mem-ber, because he or she cannot employ him or herself: see Ellis v. JosephEllis & Co., [1905] 1 K.B. 324 (Eng. C.A.); Thorne v. New Brunswick


(Workmen’s Compensation Board) (1962), 33 D.L.R. (2d) 167 (N.B.C.A.).

38 The chambers judge was somewhat equivocal about this well-estab-lished principle. She commented (at para. 56) “it is apparent that thecommon law and the Partnership Act, to a large extent, do not recognizea partnership as a legal entity distinct from its partners” (emphasis ad-ded). She found that certain provisions of the Partnership Act and thepartnership agreement “recognize a distinction between individual part-ners and the firm for specific purposes” (at para. 56).

39 In particular, the chambers judge found (at para. 57) that s. 22 of thePartnership Act creates enforceable rights between a partner and “thecollective of the partnership in respect of acts constituting a violation oftheir fiduciary duties toward each other”. Citing two cases in which s. 22was referred to (McKnight v. Hutchison, 2002 BCSC 1373 (B.C. S.C.)and Davis v. Ouellette (1981), 27 B.C.L.R. 162 (B.C. S.C.)), she con-cluded that a “partner may sue the partnership and a partnership may suea partner pursuant to s. 22 of the Act and the court may grant remedies infavour of the partnership or an individual partner”.

40 This is a considerable over-reading of both s. 22 and the cases cited.Section 22 confirms that partners owe each other fiduciary duties. Proce-durally, partners may sue each other to enforce these duties. Also proce-durally, a firm may be named as a defendant in lieu of naming all of thepartners: see Supreme Court Civil Rule 20-1. If a partner sues the firm,he or she in effect is suing all of the partners, including himself. As ex-plained in Seckel & MacInnis, eds, B.C. Supreme Court Rules Annotated2011 (Toronto: Thomson Reuters, 2010) at 638-639:

Rule 20-1 streamlines the process that otherwise the common lawwould suggest should apply to an action against a partnership by per-mitting a firm to be sued in its firm name rather than by suing theindividual partners.

. . .

As the Rule is procedural, allowing the style of cause to contain onlythe firm name, it does not change the substance of a claim against afirm being a claim against each of the partners of the firm.

41 The chambers judge next considered section 27(j) of the PartnershipAct and Article 12 of the partnership agreement, which provide for arbi-tration of disputes concerning the interpretation of the agreement. Sheconcluded that these provisions acknowledged that for the purpose of


resolving disputes, individual equity partners are distinct from the part-nership (at para. 59).

42 Once again, the chambers judge’s conclusion is an over-reading ofthe provisions in question. A dispute between a partner and the partner-ship is a dispute among partners. These provisions provide proceduralmechanisms for resolving disputes among the partners. They do not cre-ate a separate legal entity.

43 Finally, the chambers judge considered the status of the firm as a lim-ited liability partnership. She found that the provisions of the PartnershipAct that limited the liability of limited partners, ss. 104 and 105, “signifi-cantly erode the common law concept of partnership as merely a collec-tive of partners without a separate identity” (at para. 60), despite the factthat in B.C., unlike in the U.K., a limited liability partnership has notbeen legislatively given separate entity status (at para. 61). She misinter-preted para. 15 of Asset Engineering] as supporting her conclusion.

44 Her analysis of these provisions of the Partnership Act and partner-ship agreement led her to conclude that “there should be no legal impedi-ment to according a partner and the firm separate legal status for the pur-pose of a complaint under the Code” (at para. 62). In light of the purposeof the Code, to extend basic human rights to a broad spectrum of per-sons, she found (at para. 63):

... It is inconsistent with this objective to exclude a category of per-sons from the protection of the Code based on a strict, legalistic cate-gorization of their status at common law. The commercial reality ofthe Fasken partnership is that there is a distinction between the firmand individual partners.

45 In my opinion, the chambers judge’s rationale for treating the firm asan entity separate from Mr. McCormick is legally unsupportable. Therecan be no doubt that in Canadian law, a partnership is not a separateentity from its partners, and a partner cannot be an employee of, or em-ployed by, a partnership of which he is a member.

46 The question is whether this well-established principle of law is over-ridden by a broad, liberal and purposive interpretation of the Code.

Application of the Code to Partnerships47 Mr. McCormick says that any exemption from the application of the

Code must be expressly stated, and there is nothing in the Code that ex-pressly exempts partnerships from its application.


48 That is clearly so. Section 29 of the Interpretation Act defines “per-son” as including a partnership. Applying that definition to the Code, asit must be, a partnership is a “person” for the purpose of the definition of“person” in s. 1 of the Code. Section 13 provides that “a person must notrefuse to employ or refuse to continue to employ a person”. As a partner-ship is a “person” under the Code, s. 13 must be read as: “A partnership,including an employer, must not refuse to employ or continue to employa person”. Thus, a partnership is expressly included in the provisionprohibiting discrimination in employment.

49 But that is not the end of the interpretative exercise, as the extensivereasons of both the Tribunal and the chambers judge, and the submis-sions of the parties throughout these proceedings, aptly demonstrate. Thequestion is whether for the purpose of the Code, the firm “employs” Mr.McCormick. Once again, there is no express exclusion in the Code.

50 There is no doubt that a partnership may employ other persons —Fasken concedes it employs associate lawyers and staff. In those employ-ment relationships, it normally makes no legal or commercial differencewhether the partnership is viewed as a separate entity or a collective ofthe partners. Third parties, including employees of the partnership, aregenerally entitled to the same rights and obligations as against a partner-ship as they are as against a corporation or a proprietorship, includingprotection from discriminatory employment practices. This result flowsfrom the somewhat complex body of law governing the relationship ofpartnership as among the partners, and between partners and thirdparties.

51 That same body of law makes it a legal impossibility for a partner tobe “employed” by the partnership of which he is a member. In my opin-ion, neither a broad, liberal and purposive interpretation of the Code northe analysis of the factual criteria of “utilization”, “control”, “financialburden”, or “remedial purpose” can change that legal conclusion. No ex-press exemption is required to exclude from the jurisdiction of the Tribu-nal under the Code a relationship to which, by law, the Code does notextend.

52 The management of the firm, as it is constituted by election of thepartners from time to time, may exercise aspects of control over the part-ners in accordance with the partnership agreement that are in virtually allways similar to the control that may be exercised by the executive andmanagement of a corporation over its employees. That does not change


the relationship from one of partners running a business to one of em-ployment by one group of partners over an individual partner. The Su-preme Court of Canada made this clear in Continental Bank of Canada v.R., [1998] 2 S.C.R. 298 (S.C.C.) at para. 34 (per Justice Bastarache (indissent, however, Chief Justice McLachlin, for the majority concurred onthis point: see para. 103):

The fact that the management of the Partnership was given to theManaging Partner does not mandate a conclusion that the businesswas not carried on in common. ... As Lindley & Banks on Partner-ship, supra, point out, at p. 9, one or more parties may in fact run thebusiness on behalf of themselves and the others without jeopardizingthe legal status of the arrangement.

53 In a partnership, whatever controls are exercised by those elected tomanage the firm are applied equally to all of the partners, including thosein management. The additional factors of “utilization” and “financialburden”, derived from Crane, similarly apply equally to all partners. Allof the features of the management and operation of the firm that the Tri-bunal and the chambers judge found to be indicative of an employmentrelationship between the firm and Mr. McCormick simply cannot createan employment relationship. Such a relationship must consist of two sep-arate “persons” who are an employer and an employee. In this case, oneof the supposed parties to the relationship, the firm, while a “person’ forthe purpose of the Code, is not separate from any individual equity part-ner such as Mr. McCormick. The only relationship that exists, in law andin fact, is among Mr. McCormick and all of the other partners of thefirm. And the relationship among them cannot be one of employer andemployee, as they are all equal in their rights and obligations with re-spect to the business of the firm.

54 The fourth Crane criterion, “remedial purpose”, creates a sort of legaltautology, which the chambers judge acknowledged (at para. 77):

... circular reasoning should not be used in respect of this factor; thatis, the purpose of the Code is to prevent discrimination, there is evi-dence of discrimination in this case, and therefore the Code must ap-ply to the relationship. The Code was not intended to apply to everyrelationship or every form of discrimination. The application of theCode in each case must be based on a conclusion that the complain-ant and the alleged offender are in an employment relationship in factand in substance, regardless of the label that describes theirrelationship.


55 The chambers judge concluded that the firm is in the best position toremedy the adverse effects of any discrimination that might be proven.She said (at para. 79):

... In the case at bar, it seems unlikely that the party who creates,controls and maintains certain working conditions or circumstancesis not the party in the best position to remedy any undesirable effectsattributable to such conditions or circumstances.

56 It is clear, however, that the firm could not, except in accordance withthe partnership agreement, remedy any discrimination. Only the equitypartners could amend the partnership agreement to change the retirementprovisions. That change would require at least a majority, and perhaps atwo-thirds majority for a special resolution. The remedy could resultfrom compliance with an order of the Tribunal or a court, which wouldrequire the equity partners to vote for the change. Without a vote of therequisite majority of equity partners, however, whether exercised freelyor in compliance with legal direction, the firm could not carry out theremedial purpose.

57 The legal consequences of the relationship of partnership are not a“label” that is different from the fact and substance of the relationship.They reflect the true nature of the relationship — that among personscarrying on business, operating under an agreement by which certain re-sponsibilities have been delegated to some of the partners, elected byother partners for periods of time. The elected group of partners whichexercises management responsibilities from time to time does not em-ploy the other partners during that time.

58 In his factum, Mr. McCormick refers to the firm’s position on thisappeal as “legalistic and technical”, and argues that the “theoretical his-tory of partnership law” is inconsistent with “commercial reality”. As theoft-cited Lindley & Banks on Partnership explains (at 36):

It is important to identify the precise significance of a firm namesince, as previously noted, it represents an attribute which tends toencourage the commercial rather than the legal view of a firm. LordLindley put it in this way:

... the name under which a firm carries on business is inpoint of law a conventional name applicable only to thepersons who on each particular occasion when the nameis used are members of the firm.

Once this point is understood, the fallacy of the commercial viewbecomes apparent. The firm name is a convenient method of describ-


ing a group of persons associated together in business at a certainpoint in time: no more and no less.

[Footnotes omitted.]

59 There is no distinction between “commercial reality” and the legalnature of a partnership. The interpretation of the Code, like all statutes, isa legal exercise, where well-established fundamental principles of lawapply. If the result of that exercise is that there are gaps in the legislation,it is the task of the legislature to remedy them.

60 The inevitable conclusion of this analysis is that there is no employ-ment relationship between the firm and Mr. McCormick, and his com-plaint is not within the jurisdiction of the Tribunal.

Conclusion61 I would allow the appeal, set aside the order appealed from, set aside

the decision of the Tribunal dated December 16, 2010, and dismiss Mr.McCormick’s complaint on the ground that it is not within the jurisdic-tion of the Tribunal, with costs payable by Mr. McCormick to theAppellant.

Finch C.J.B.C.:

I Agree:

Newbury J.A.:

I Agree:

Appeal allowed.

Zoltan v. Minister of National Revenue 219

[Indexed as: Zoltan v. Minister of National Revenue]

Kajla Zoltan - Maple Elect. (Appellant) and The Minister ofNational Revenue (Respondent)

Tax Court of Canada [Employment Insurance]

Docket: 2011-3070(EI), 2011-3072(CPP)

2012 TCC 286

Robert J. Hogan J.

Heard: May 3, 2012

Judgment: August 8, 2012

Public law –––– Social programs — Employment insurance — Entitlementto benefits — Insurable employment — Employment contracts — Contractof service –––– Electrical installation and maintenance business was awardedsubcontract by general electrical contractor to install electrical fittings andcables in new hospital wing — Business hired worker who was licensed electri-cian as subcontractor for project — Minister determined that worker was em-ployed in insurable and pensionable employment — Business appealed — Ap-peals allowed — Evidence showed that worker agreed to work on project asindependent contract, given interview notes, testimonial evidence and worker’sapplication for GST/HST number as self-employed electrician — Actions offoremen at hospital employed by general electrical contractor could be imputedto business, but foremen controlled workflow and standards of work rather thanmanner in which worker performed tasks — Given absence of evidence as torelative value of equipment provided by business and general contractor versusequipment provided by worker, ownership of tools was neutral factor — Workerwas paid hourly wage, given per diem meal allowance, and reimbursed for gaso-line and accommodation costs — While profit/risk of loss criterion was indica-tive of employee-employer relationship, greater weight was to be placed on par-ties’ intention and control factor — Facts were not inconsistent with parties’intention to form independent contractor relationship.

Public law –––– Social programs — Federal pension plans — Liability forcontributions –––– Electrical installation and maintenance business wasawarded subcontract by general electrical contractor to install electrical fittingsand cables in new hospital wing — Business hired worker who was licensedelectrician as subcontractor for project — Minister determined that worker wasemployed in insurable and pensionable employment — Business appealed —Appeals allowed — Evidence showed that worker agreed to work on project asindependent contract, given interview notes, testimonial evidence and worker’s


application for GST/HST number as self-employed electrician — Actions offoremen at hospital employed by general electrical contractor could be imputedto business, but foremen controlled workflow and standards of work rather thanmanner in which worker performed tasks — Given absence of evidence as torelative value of equipment provided by business and general contractor versusequipment provided by worker, ownership of tools was neutral factor — Workerwas paid hourly wage, given per diem meal allowance, and reimbursed for gaso-line and accommodation costs — While profit/risk of loss criterion was indica-tive of employee-employer relationship, greater weight was to be placed on par-ties’ intention and control factor — Facts were not inconsistent with parties’intention to form independent contractor relationship.

Tax –––– Income tax — Employment income — Employee or independentcontractor –––– Electrical installation and maintenance business was awardedsubcontract by general electrical contractor to install electrical fittings andcables in new hospital wing — Business hired worker who was licensed electri-cian as subcontractor for project — Minister determined that worker was em-ployed in insurable and pensionable employment — Business appealed — Ap-peals allowed — Evidence showed that worker agreed to work on project asindependent contract, given interview notes, testimonial evidence and worker’sapplication for GST/HST number as self-employed electrician — Actions offoremen at hospital employed by general electrical contractor could be imputedto business, but foremen controlled workflow and standards of work rather thanmanner in which worker performed tasks — Given absence of evidence as torelative value of equipment provided by business and general contractor versusequipment provided by worker, ownership of tools was neutral factor — Workerwas paid hourly wage, given per diem meal allowance, and reimbursed for gaso-line and accommodation costs — While profit/risk of loss criterion was indica-tive of employee-employer relationship, greater weight was to be placed on par-ties’ intention and control factor — Facts were not inconsistent with parties’intention to form independent contractor relationship.

Cases considered by Robert J. Hogan J.:

TBT Personnel Services Inc. v. Minister of National Revenue (2011), 2011 Car-swellNat 4907, 2011 CAF 256, 2011 FCA 256, 2011 CarswellNat 3755, 422N.R. 366, 97 C.C.E.L. (3d) 173, (sub nom. TBT Personnel Services Ltd. v.Canada) 343 D.L.R. (4th) 100 (F.C.A.) — considered

Wiebe Door Services Ltd. v. Minister of National Revenue (1986), [1986] 2C.T.C. 200, [1986] 3 C.S. 553, 1986 CarswellNat 366, 1986 CarswellNat699, 46 Alta. L.R. (2d) 83, [1986] 5 W.W.R. 450, 1986 C.E.B. & P.G.R.8023, 86 C.L.L.C. 14,062, 87 D.T.C. 5025, [1986] 3 F.C. 553, 70 N.R. 214,[1986] F.C.J. No. 1052 (Fed. C.A.) — followed

Zoltan v. Minister of National Revenue Robert J. Hogan J. 221


Employment Insurance Act, S.C. 1996, c. 23s. 2(1) “insurable employment” — considered

APPEALS by business from Minister’s determination that worker was em-ployed in insurable and pensionable employment.

Zoltan Kajla for AppellantJasmeen Mann for Respondent

Robert J. Hogan J.:

A. Introduction1 By letter dated December 13, 2010, the Appellant was notified by the

Minister of National Revenue (the “Minister”) that Yury Velichko (the“Worker”) was employed in insurable employment for the purposes ofthe Employment Insurance Act (the “EIA”) and in pensionable employ-ment for the purposes of the Canada Pension Plan (the “CPP”) whileworking for the Appellant during the period from March 8, 2010 to Sep-tember 29, 2010 (the “Period”).

2 The Appellant requested a review of those determinations, whichwere confirmed. The Appellant alleges that the Worker was an indepen-dent contractor providing subcontracting services to the Appellant as alicensed electrician in the course of a business carried on by the Workerfor his own benefit.

B. Factual Background3 The Minister alleges that in determining that the Worker was em-

ployed in insurable and pensionable employment, he relied on the fol-lowing assumptions of fact:

The Appellant

(a) the Appellant operated an electrical installation and electricalmaintenance business (the “Business”);

(b) the Business operated under the trade name “Maple Electric”;

(c) Kajla Zoltan controlled the day-to-day operations and madethe major decisions for the Business;

(d) the Appellant’s normal business hours were, 7:00 am to 4:00pm, Monday to Friday;


(e) the Appellant advertised for the Worker’s position in a localRussian newspaper;

(f) the Worker was part of a crew of workers that was assignedto specific jobs that were contracted by the Appellant;

The Worker

(g) the Worker was hired as an Electrician, for an indefinite pe-riod of time, pursuant to a verbal agreement;

(h) the Worker’s duties included the following:

(i) installed electrical switches, outlets and light fixtures;

(ii) fastened metal boxes to walls and ceilings; and

(iii) ran pipes and tubing inside walls or other concealedareas and ran run wires or cables through them;

(i) the Worker was certified as an Electrician — in constructionand maintenance;

(j) the Worker had experience in performing electrical installa-tion work;

(k) the Worker did not hold an Electrical Contractor License is-sued by the Electrical Safety Authority, which is required tooperate an electrical contracting business in Ontario;

(l) the Worker performed his duties at various job locations inWindsor, Waterloo and Toronto;

(m) the Worker provided his services exclusively to theAppellant;

Control

(n) the Worker normally worked the following schedule:

(i) Monday, 8:00 am to 6:00 pm;

(ii) Tuesday to Thursday, 6:00 am to 6:00 pm; and

(iii) Friday, 6:00 am to 1:30 pm;

(o) the Appellant determined the Worker’s hours of work;

(p) for out of town jobs, the Worker would leave with the Appel-lant’s crew on a Monday morning and return home on a Fri-day afternoon;

(q) the Appellant determined the Worker’s deadlines andpriorities;

(r) the Worker’s hours of work were recorded on timesheets bythe Appellant’s Foreman;


(s) the Worker was supervised by the construction site Supervi-sor and the Appellant’s Foreman;

(t) the Worker was required to report to the Appellant;

(u) the Appellant’s Foreman provided the Worker with written ororal directions, such as:

(i) the work that was to be completed each day and inwhat priority;

(ii) where he was to install boxes, pipes, etc.;

(iii) what materials to use; and

(iv) for more complicated jobs, what tools to use to get thejob done;

(v) the Worker was required to obtain the Appellant’s ap-proval prior to taking certain actions, such as request-ing time off, medical appointment leave, changing hishours of work or changing the order in which workwas to be completed;

(w) the Appellant terminated the Worker’s services;

Ownership of Tools and Equipment

(x) the Appellant provided the Worker with a hammer drill andmasonry bits, heavy hummer [sic] drill and bits, conduit pipebenders, sawzall, chop saw, hacksaw blades, hydraulic andmanual knockout punch set and ladder (worth approximately$3,160), necessary for the Worker to perform his duties, at nocost to the Worker;

(y) the Appellant provided the Worker with the materials re-quired to complete the work, such as wires and receptacleswitches;

(z) the Worker provided his own hand tools, such as an extensioncord, screwdrivers, cordless drill and bits, pliers, hammer,hacksaw, tape measure, snips and utility knife (worth approx-imately $479);

(aa) the Appellant and Worker were responsible for the mainte-nance and repairs of their own tools and equipment;

Subcontracting Work and Hiring Assistants

(bb) the Worker provided his services personally;

(cc) the Worker did not hire helpers or replacements;

(dd) the Appellant was responsible for hiring and paying replace-ments or helpers;


Chance of Profit and Risk of Loss

(ee) the Worker was initially paid $14.00 per hour, which in-creased to $14.50 after a couple of months;

(ff) the Appellant determined the rate of pay;

(gg) the Appellant determined the bi-weekly timing of paymentsto the Worker;

(hh) the Appellant determined the method of payment to theWorker which was payment by cheque;

(ii) the Worker was paid in his personal name;

(jj) the Worker did not receive bonuses, benefits, vacation pay orpaid leave;

(kk) the Worker was paid his hourly rate for travel time to andfrom out of town work locations;

(ll) the Worker was paid a $20.00 per diem allowance whenworking out of town;

(mm) the Worker was reimbursed for fuel, meals and accommoda-tion expenses;

(nn) the Worker invoiced the Appellant;

(oo) the Worker was covered under the Appellant’s Worker’sSafety and Insurance Board plan;

(pp) the Appellant was ultimately responsible for resolving cus-tomer complaints which resulted from the Worker’sperformance;

(qq) the construction site Supervisor and/or the Appellant’s Fore-man determined if work needed to be redone;

(rr) the Appellant provided the guarantee on work performed bythe Worker;

Intention

(ss) the Worker did not manage his own staff;

(tt) the Worker did not advertise his services;

(uu) the Worker did not have a business bank account;

(vv) the Worker registered for a GST number with the CanadaRevenue Agency after he started working for the Appellant;and


Other Relevant Information

(ww) the Worker reported his income as “Other Employment In-come” and did not claim any expenses on his personal incometax return for the 2010 taxation year.

4 The assumptions set out in paragraphs (r), (s), (t), (u), (x), (y) and(qq) are inaccurate.

5 The evidence shows that the Appellant was awarded a subcontract toinstall electrical fittings and cables in a new wing of the Windsor Hospi-tal that was under construction during the relevant period. This subcon-tract was awarded by the general electrical contractor for the project,J.M.R. Electric (“JMR”).

6 The Appellant hired the Worker to work on that project. In all, theAppellant hired four subcontractors for the project. The Appellant didnot work on the project site himself as he preferred to work in the generalToronto metropolitan area so that he could return home at night. TheRespondent does not dispute this fact.

7 Below is the Worker’s resume provided in response to the Appel-lant’s advertisement for an electrician:

. . .

Dear Sir

I am writing in response to your advertisement for construction elec-trician. I was talking with you about this vacancy over phone onMonday February 22, 2010 at 11.50 AM, and am sending my resumefor your review.

. . .

Objective

To obtain a position as a Construction Electrician.

Summary of Qualifications

a. A Licensed Electrician (309A Red Seal) with more than twoyears of Canadian commercial and residential experience.Adept in performing electrical installations, maintenance andrepairs in plant facilities, knowledgeable in all areas of thenational electrical code and excel in analyzing and solvingproblems with various electrical controls and systems

b. G Driver Licence with clean abstract and own vehicle

c. Own tools and safety equipment


Professional Skills

d. Electrical Service Panels

e. Switches & Circuit Breakers

f. Lighting fixtures, electrical control and distributionequipment

g. Generator & Transformers

h. Wire fishing

i. Knob and Tube removing

j. Trouble-shooting

k. Blueprints & Schematics

l. Wiring Diagrams

m. Testing Instruments

n. Electrical Code

o. Safety & QA

Work Experience

Construction Electrician

contractor ANDREI PARFENOV, Canada, Toronto (2008-2010)IOB Electric ltd, Canada, Toronto (2008)

Performed electrical-related wiring and installation for commercialand residential construction projects, including new construction, re-trofits, remodels and plant expansions. Key Results:

• Served as an electrician on more than 30 constructionprojects.

• Earned a reputation for expertise in complex troubleshootingand problem resolution

• Gained extensive experience in analyzing and followingmanuals, schematic diagrams, blueprints and otherspecifications

• Mastered the use of measuring/testing instruments such asammeters, ohmmeters, voltmeters and testing lamps

• Consistently commended for team-player mind-set, “doing itright the first time” and working with minimal supervisionunder tight deadlines

Education

• Ability Learning Network — EP for Trades Workers & Ap-prentices (2010)


• Construction & Maintenance Electrician’s License — 309ARed Seal (2008)

• High School Diploma (1991)

I am confident that my education coupled with my extensive experi-ence can be an asset to your company. Please feel free to contact me,either by email: ... or by leaving a massage [sic] on .... I look forwardto speaking to you soon.

. . .

8 The Appellant testified that the Worker and the other three subcon-tractors assigned to the Windsor project received their instructions fromtwo foremen employed by JMR. The Worker was not subject to his di-rection and control. The Worker and the three other subcontractors wereskilled licensed electricians requiring little supervision. However, theydid have to get instructions from the JMR foremen as to which tasks theyshould complete first. This was done for scheduling reasons in order toavoid unnecessary delays. For example, the metal conduits and wiringand electrical boxes must be installed prior to the drywall installation.Fixtures are installed afterwards. According to the Appellant, this occurson every worksite. In the case of residential construction, the generalcontractor often controls the work flow for all of the tradespeople work-ing on the site. On larger commercial projects, the general electrical con-tractor often controls the work flow for the electrical subcontractors.

9 The Appellant also explained that all electrical work in the provinceof Ontario is subject to certification by the Electrical Safety Authority(the “ESA”). The ESA had inspectors present on a full-time basis at theWindsor project. If the electrical work did not meet the ESA’s certifica-tion standards, it had to be redone.

10 The Worker testified that for the Windsor project he used his owntools and heavy equipment supplied by JMR. He acknowledged that theAppellant did not provide him with tools or equipment to work on thatproject.

11 The Worker was hired by the Appellant on March 8, 2010 andworked on the Windsor project until August 4, 2010. While the Appel-lant was in Europe visiting his family for the first time in 10 years, theWorker quit without giving the Appellant any notice of his intention todo so. According to the Worker, he left because his family resided in theGreater Toronto Area (GTA) and he was unhappy being away from themall week. Shortly afterwards, the Worker contacted the CRA to enquire


about his tax filing and remittance obligations and the possibility of re-ceiving employment insurance benefits.

12 When the Appellant returned to Canada from his European family va-cation, he contacted the Worker to settle the amounts owed to him. TheWorker was required to submit substantiated invoices for the amountowed to him and invoices for the period from May 9, 2010 to August 4,2010. The Worker had been paid for that period on the basis of the timerecords kept by JMR.

13 Shortly after the Worker received payment of the sum owed to himby the Appellant, he agreed to recommence working for the Appellant.According to the Appellant, the Worker was interested in working on jobsites in the GTA. The Appellant had a subcontract for electrical work ona hotel project in Markham and the Worker agreed to work on that pro-ject. The Appellant himself did not work on the Markham project andthere is no evidence to show that he employed a foreman to supervise thework there.

14 According to the testimony of the Appellant and the Worker, theWorker worked on the Markham project alongside other electricianshired by the Appellant. The Worker worked on that project from aroundAugust 21, 2010 until September 29, 2010, the date he was fired. TheWorker claims he was fired because the Appellant discovered he hadcontacted the CRA to ask questions concerning his status as an employeeas opposed to an independent contractor.

15 The Appellant claims he fired the Worker because he was involved inpersonal conflicts with other workers on the worksite and because hesmeared the Appellant’s reputation by making comments which heviewed as disparaging, such as “slave driver” and “capitalist”.

C. Analysis

(1) Intention16 The Appellant submits that he has presented evidence that shows that

the Worker agreed to work on the Appellant’s project as an independentcontractor. According to the Appellant, the evidence presented by theRespondent is insufficient to justify ignoring the parties’ agreement toenter into a subcontracting arrangement.

17 I agree with the Appellant’s submission that the worker agreed toenter into an independent contractor relationship. The Worker applied for


a GST/HST number shortly after he began working with the Appellant.His major business activity was described as:

. . .

a self-employed electrician who do[es] electrical work for electricalcompany1

. . .

18 The registration was effective March 8, 2010, the first day of theWorker’s presence on the Windsor hospital project. The Worker’s curric-ulum vitae,2 which the Appellant relied on when he hired the Worker,emphasizes that the worker was:

. . .

• consistently commended for team-player mind set, doing itright the first time; and working with minimal supervisionunder tight deadlines.

. . .

19 The Appellant’s interview notes3 indicate that the Worker agreed towork as a subcontractor. The form shows that the Worker was to supplyhis own hand tools and that he owned a vehicle, which could also beused to transport equipment to the worksite. The testimonial evidence ofboth parties confirms these facts.

20 Although he may have agreed to be treated as an independent con-tractor, the Worker insists that he did not understand the ramifications ofhis agreement with Appellant. His letter to the CRA justifying his claimfor employment insurance makes reference to inconsistencies with hisdesignation as an independent contractor, as follows:

Dear Sir or Madam

Cover Letter to Questionnaire for a Worker — 110690707002

1. Please pay attention to attached copies of pay checks and in-voices (copies are in calendar order). Bringing here all thesedetails, I would like to show that Zoltan Kajla did not use my

1Exhibit A-2.2Exhibit A-4.3Exhibit A-1.


invoices as information source to determine the compensationhe should have paid for my work.

a) a word “accommodation” was used in invoices insteadof a word “allowance” (I did not pay for hotel. ZoltanKajla did)

b) the pay check March 8-13 2010 does not include GST,because I did not have the GST number at that time

c) Total paid money amount in the pay checks March15 — May 8 2010 and total money amount in the in-voices do not much. Also, a quantity of work hours inthe pay check March 28-Apr 10 does not much withthe invoice for the same time period.

d) after May 9 I understood that Zoltan Kajla did not payattention to my invoices and I ceased to write outthem. Zoltan Kajla continued to send me pay checkswithout any invoices from me

e) the invoices May 10 — Aug 7 2010 were backdatedon Aug 24 2010 because Zoltan Kajla refused to payme money for the last two work weeks until I sendhim invoices for the past few months. As you can seein the corrected invoices (June 21-Aug 7) which hesent me back it is clearly visible that I was not awarehow much money an hour he actually paid me

2. My work hours were recorded by the supervisor of the con-struction site and were sent directly to Zoltan Kajla.

3. I have attached the certificated translation of the advertisingannouncement of employment which Zoltan Kajla places innewspaper. There is no any word in this announcement thathe is looking for independent contractors. On the contrary,the announcement says about hiring construction electricianor beginner electrician. When they get a job in the MapleElectric Ltd they mysteriously turn into “independent con-tractors”. I used exactly the same advertising to find the job inMaple Electric Ltd.

4. “As of January 1, 2007 no person shall operate an ElectricalContracting Business in Ontario without first obtaining anElectrical Contractor Licence issues by ECRA/ESA.” - thisinformation I took from official Internet site of ElectricalSafety Authority. I insist that I worked for Maple Electric Ltdas an employee electrician with license 309 A which did not


allow me to work as an independent contractor and was su-pervised by the foreman of the construction site who con-trolled my work and checked whether all my work was doneproperly. Zoltan Kajla insists that electricians who workedand are working now in his company are subcontractors. As Iguess, it is very serious offence to subcontract electricians toperform the work as independent contractors without neces-sary qualification (master electrician license), liability insur-ance (there will not any responsibility for their work) andelectrical contractor license. Such a situation threats the peo-ple that already resident units where electrical system wasmade by so-called contractors or are going to do this.

5. Also, please pay attention that Zoltan Kajla paid for me toWorkplace Safety an[d] Insurance Board. He might havebeen afraid of judicial claims in case of injury of the workersand therefore big charges, and tried to decline all his respon-sibility paying to Workplace Safety an[d] Insurance Board asfor the usual employees. But for the Revenue Agency he pre-sented the same workers as independent contractors, thus itwas not necessary for him to pay for them to CPP/EI. Ofcourse, all these conclusions are based only on my guesses. Ibelieve that in the Canada Revenue Agency work profession-als who can find out the truth.

21 Although the Worker had recently immigrated to Canada, I do notaccept his claim that he did not understand the difference between inde-pendent contractor status and employee status. Rather, I believe that theWorker asked the CRA for clarification of his status after he stoppedworking for the Appellant on August 4, 2010. He did so because he waswithout work and in need of employment insurance benefits. The evi-dence suggests that he did not pursue this initial enquiry because he wasrehired by the Appellant three weeks later and received full payment ofthe amounts owed to him. Not surprisingly, when the Appellant termi-nated his relationship with the Worker on September 29, 2010, theWorker reactivated his file with the CRA. This culminated in the Workerreceiving employment insurance benefits following the Minister’s deter-mination that he had held insurable employment.

22 The facts alleged in the Worker’s letter are nonetheless relevant forthe second step of the analysis, namely, whether the application of thefactors outlined in Wiebe Door Services Ltd. v. Minister of National Rev-enue, [1986] 3 F.C. 553 (Fed. C.A.), shows that the facts are consistent


with the parties’ characterization of their relationship. In TBT PersonnelServices Inc. v. Minister of National Revenue, 2011 FCA 256 (F.C.A.),Sharlow J.A. stated the following:

9. In Wolf v. Canada, 2002 FCA 96, [2002] 4 F.C. 396 (C.A.), andRoyal Winnipeg Ballet v. Canada (Minister of National Revenue —M.N.R.), 2006 FCA 87, [2007] 1 F.C.R. 35, this Court added thatwhere there is evidence that the parties had a common intention as tothe legal relationship between them, it is necessary to consider thatevidence, but it is also necessary to consider the Wiebe Door factorsto determine whether the facts are consistent with the parties’ ex-pressed intention.

[Emphasis added.]

(2) Application of the Wiebe Door Factors23 The Wiebe Door factors must be applied to determine whether the

parties’ agreement on the nature of their relationship conforms to the truenature of their relationship in light of the evidentiary findings of theCourt. Applying these tests, does the evidence show that the Worker per-formed his services in the course of a business conducted for his ownbenefit?

(3) Control24 The Minister assumed in his reply to the Notice of Appeal that the

Appellant employed a foreman who supervised the Worker in the execu-tion of his duties. As noted above, this factual assumption is wrong. Theforemen on the Windsor Hospital project were employed by JMR. Cantheir actions be imputed to the Appellant? In my opinion, the answer isyes, in much the same way that the control exercised by clients is im-puted to a personnel agency that supplied them with temporary workers.

25 The case law establishes that there is an important distinction to bemade between control over the worker and control over the end product.For example, a consumer can hire a general contractor to build a familyhome. That consumer would be well advised to inspect the work to pointout deficiencies so that they can be corrected before delivery of thehouse. This does not make the contractor the consumer’s employee. Inaddition, the general contractor will hire tradespeople as subcontractors.For example, the general contractor can hire a self-employed electricianto complete the electrical work. In that case, the general contractor will


control the work schedule in order to coordinate the work of the varioustradespeople working on the site.

26 The parties presented contradictory evidence on the level of controlexercised by JMR. The Appellant claims that the general contractor’sforemen were responsible for controlling work flow and ensuring that thework of all the electrical subcontractors complied with the standards ofthe ESA. Certification of the work was performed by inspectors whowere present on the worksite on a daily basis.

27 The Respondent alleges that the JMR foremen provided direct controlover, and supervision of, the manner in which the Worker performed histasks.

28 On balance, I find the Appellant’s evidence to be more credible. TheJMR foremen did not supervise and control the Worker’s activities for oron behalf of the Appellant.

29 With respect to the Markham worksite, there is no evidence to sug-gest that the Worker was subject to the Appellant’s direction and control.The Appellant was not present at the worksite and he did not employ aforeman or team leader. The control criterion points to an independentcontractor relationship.

(4) Ownership of Tools30 The evidence shows that the Worker owned his own hand tools and a

vehicle used to travel to and from the worksite. The evidence also showsthat the Appellant did not provide the Worker with equipment or materialon the Windsor worksite. JMR did, but not the Appellant. The Appellantadmitted that on the Markham worksite he provided the Worker withsome equipment. There is no evidence as to the relative value of thatequipment. At best, this factor is neutral in the characterization of theparties’ relationship.

(5) Chance of Profit/Risk of Loss31 The evidence shows that the Worker was paid an hourly wage for his

services, was reimbursed his gasoline and hotel accommodation costsand received a $20 per diem meal allowance while working on the Wind-sor project. He was initially paid $14 per hour and his wage was in-creased to $18 per hour over the relevant period. Apparently, no per diemand gasoline allowance was paid to the Worker when he worked on theMarkham Hotel project. The Appellant also paid a premium to the Work-


place Safety and Insurance Board to cover the Worker under that organi-zation’s plan. The Appellant acknowledged that he would also pay one-half of normal work hours for statutory holidays.

32 The form of remuneration, at first blush, points to an employer-em-ployee relationship. That being said, it is not totally inconsistent with themanner in which self-employed electricians bill their clients for services.Many electricians bill at an hourly rate for their services and are reim-bursed the cost of materials. Not all contracts are based on a fixed price.

33 The Worker did not negotiate with JMR directly. He worked for theelectrical contractor. On balance, this factor points to an employer-em-ployee relationship.

D. Conclusion34 The parties agreed to an independent contractor relationship at the

outset of their relationship. Their intention should be respected unless theapplication of the Wiebe Door factors shows that the facts are inconsis-tent with that intention. The control factor points to an independent con-tractor relationship. The chance of profit/risk of loss criterion is moreindicative of an employee-employer relationship. I place greater weighton intention and on the control factor. Apparently, the Worker did notsucceed in establishing himself in business. He tried and failed. This,however, is not a sufficient reason for the Court to ignore the parties’intention when the Wiebe Door factors support the parties’ characteriza-tion of their relationship.

35 For the reasons outlined earlier, I conclude that the Worker was notemployed in insurable and pensionable employment within the meaningof the EIA and the CPP at any time during the period from March 8,2010 to September 29, 2010.

Appeals allowed.

Rubin v. Home Depot Canada Inc. 235

[Indexed as: Rubin v. Home Depot Canada Inc.]

Eric Rubin (Plaintiff / Moving Party) and Home Depot CanadaInc. (Defendant / Responding Party


Docket: CV-11-433952

2012 ONSC 3053

Lederer J.

Heard: March 2, 2012

Judgment: May 25, 2012

Labour and employment law –––– Employment law — Termination and dis-missal — Notice — Effect of contractual terms regarding notice –––– OnJuly 28, 2011, without any prior warning, applicant employee R was fired fromhis job with respondent employer HD Inc. ,where he had been employed since1991 — Termination letter “offered” 28 weeks’ pay in lieu of notice, which wassaid to “exceed our obligations under the Employment Standards Act”, butwhich was just two more days than required by legislation — To obtain benefitof offer, R was required to sign release, which he did — R brought motion forsummary judgment — R sought damages that represented 20 months as reasona-ble notice for his dismissal — R submitted that he executed release during meet-ing because he believed HD Inc.’s offer was all that he was entitled to — Mo-tion granted — Reasonable period of notice would have been 12 months — Anypayment required to be made, pursuant to Employment Standards Act, 2000, ismade upon termination regardless of whether release is signed or employee de-termines to proceed to exercise his or her common law rights — Terminationletter advised R that he was already being offered more than he was entitled toand proposition was that, if he did not sign, he would not be paid — Implicationwas that if R did not sign by August 4, 2011, he would not be paid at all, whichwas, at best, misleading — HD Inc.’s approach, taken as whole, was set to takeadvantage of R’s vulnerability; this was arranged in expectation that it woulddirect, if not compel, R to sign release — R had not agreed to anything; he sim-ply accepted what he was misled into thinking was his only option — Releaseshould be struck and found to be unenforceable.

Contracts –––– Formation of contract — Undue influence — Factors to beconsidered — Inequality of bargaining power –––– On July 28, 2011, withoutany prior warning, applicant employee R was fired from his job with respondentemployer HD Inc. ,where he had been employed since 1991 — Termination let-ter “offered” 28 weeks’ pay in lieu of notice, which was said to “exceed our


obligations under the Employment Standards Act”, but which was just two moredays than required by legislation — To obtain benefit of offer, R was required tosign release, which he did — R brought motion for summary judgment — Rsought damages that represented 20 months as reasonable notice for his dismis-sal — R submitted that he executed release during meeting because he believedHD Inc.’s offer was all that he was entitled to — Motion granted — Reasonableperiod of notice would have been 12 months — Imbalance in bargaining powerbetween employer and employee is inherent in relationship — That power im-balance was enhanced by way in which representatives of HD Inc. dealt withsituation — Providing letter that was, at best, ambiguous and misleading, as wellas beginning substantive part of conversation with advice to R that “this is yourlast day” exacerbated rather than remediated problem — Law allows for consid-eration of imbalance of power where contract was, seemingly, agreed to; if termof contract is ambiguous, it is to be interpreted against interest of person whoinsisted it be included.

Labour and employment law –––– Employment law — Termination and dis-missal — Notice — Considerations affecting length of notice — Multiplefactors considered –––– Factors considered in determining that 12 months wasreasonable period of notice for employee terminated without cause included hisrole and responsibilities, his 19 years and eight months of continuous service,his age of 63 years and his difficulty in finding alternative employment.

Labour and employment law –––– Employment law — Termination and dis-missal — Practice and procedure — Summary proceedings –––– Motionbrought by employee dismissed without cause was treated as one where partieshad agreed to submit their dispute to resolution by way of summary judgment.

Cases considered by Lederer J.:

Bardal v. Globe & Mail Ltd. (1960), [1960] O.W.N. 253, 24 D.L.R. (2d) 140,1960 CarswellOnt 144, [1960] O.J. No. 149 (Ont. H.C.) — considered

Barr v. Pennzoil-Quaker State Canada Inc. (2007), 2007 CarswellOnt 4667,2007 C.L.L.C. 210-028, 59 C.C.E.L. (3d) 89, [2007] O.J. No. 2859 (Ont.S.C.J.) — referred to

Brito v. Canac Kitchens (2011), 87 C.C.E.L. (3d) 184, 2011 C.L.L.C. 210-032,2011 CarswellOnt 934, 2011 ONSC 1011, [2011] O.J. No. 1117 (Ont.S.C.J.) — considered

Brito v. Canac Kitchens (2012), 2012 ONCA 61, 2012 CarswellOnt 760, 2012C.L.L.C. 210-014, 287 O.A.C. 293, 345 D.L.R. (4th) 103, [2012] O.J. No.376 (Ont. C.A.) — referred to

Cain v. Clarica Life Insurance Co. (2005), 2005 CarswellAlta 1871, 2005ABCA 437, 47 C.C.E.L. (3d) 70, 263 D.L.R. (4th) 368, 384 A.R. 11, 367W.A.C. 11, [2006] 7 W.W.R. 111, 2006 C.L.L.C. 210-001, 54 Alta. L.R.(4th) 146, [2005] A.J. No. 1743 (Alta. C.A.) — referred to

Rubin v. Home Depot Canada Inc. 237

Cardenas v. Canac Kitchens (2009), 2009 CarswellOnt 2010, [2009] O.J. No.1570 (Ont. S.C.J.) — referred to

Cohen v. Edwards (2000), 2000 C.L.L.C. 210-033, 2 C.C.E.L. (3d) 116, 2000CarswellOnt 2202, 2001 C.L.L.C. 210-007, 135 O.A.C. 320, [2000] O.J. No.2380 (Ont. Div. Ct.) — referred to

Combined Air Mechanical Services Inc. v. Flesch (2011), 13 R.P.R. (5th) 167,14 C.P.C. (7th) 242, 2011 ONCA 764, 2011 CarswellOnt 13515, 10 C.L.R.(4th) 17, 344 D.L.R. (4th) 193, 108 O.R. (3d) 1, 286 O.A.C. 3, 97 C.C.E.L.(3d) 25, 93 B.L.R. (4th) 1, [2011] O.J. No. 5431 (Ont. C.A.) — referred to

Ellsworth v. Murray Canada Inc. (1997), 33 C.C.E.L. (2d) 253, 1997 Carswell-Ont 4971, 51 O.T.C. 39, [1997] O.J. No. 5088 (Ont. Gen. Div.) — referredto

Fisher v. Lakeland Mills Ltd. (2008), 2008 CarswellBC 183, 2008 BCCA 42, 77B.C.L.R. (4th) 13, 2008 C.L.L.C. 210-026, 250 B.C.A.C. 311, 416 W.A.C.311 (B.C. C.A.) — referred to

Jordison v. Caledonian Curling Co-operative Ltd. (2000), 2000 SKQB 55, 2000CarswellSask 77, [2000] 4 W.W.R. 581, 190 Sask. R. 32, [2000] S.J. No. 75(Sask. Q.B.) — referred to

Keays v. Honda Canada Inc. (2008), 2008 SCC 39, (sub nom. Honda CanadaInc. v. Keays) 2008 C.L.L.C. 230-025, 376 N.R. 196, 294 D.L.R. (4th) 577,(sub nom. Honda Canada Inc. v. Keays) [2008] 2 S.C.R. 362, 92 O.R. (3d)479 (note), (sub nom. Honda Canada Inc. v. Keays) 63 C.H.R.R. D/247, 66C.C.E.L. (3d) 159, 2008 CarswellOnt 3743, 2008 CarswellOnt 3744, 239O.A.C. 299, [2008] S.C.J. No. 40, EYB 2008-135085 (S.C.C.) — referredto

Lloyd’s Bank v. Bundy (1974), [1975] Q.B. 326, [1974] 3 All E.R. 757, [1974] 2Lloyd’s Rep. 366, [1974] 3 W.L.R. 501, 118 Sol. Jo. 714 (Eng. C.A.) —considered

Machtinger v. HOJ Industries Ltd. (1992), 40 C.C.E.L. 1, (sub nom. Lefebvre v.HOJ Industries Ltd.; Machtinger v. HOJ Industries Ltd.) 53 O.A.C. 200, 91D.L.R. (4th) 491, 7 O.R. (3d) 480n, (sub nom. Lefebvre v. HOJ IndustriesLtd.; Machtinger v. HOJ Industries Ltd.) 136 N.R. 40, 92 C.L.L.C. 14,022,[1992] 1 S.C.R. 986, 1992 CarswellOnt 892, 1992 CarswellOnt 989, [1992]S.C.J. No. 41 (S.C.C.) — considered

Slaight Communications Inc. v. Davidson (1989), 26 C.C.E.L. 85, 1989 Car-swellNat 193, [1989] 1 S.C.R. 1038, 59 D.L.R. (4th) 416, (sub nom.Davidson v. Slaight Communications Inc.) 93 N.R. 183, 89 C.L.L.C. 14,031,40 C.R.R. 100, 1989 CarswellNat 695, [1989] S.C.J. No. 1038, EYB 1989-67228 (S.C.C.) — considered

Titus v. William F. Cooke Enterprises Inc. (2007), 61 C.C.E.L. (3d) 202, 284D.L.R. (4th) 734, 2007 C.L.L.C. 210-036, 2007 ONCA 573, 2007 Carswell-Ont 5229, 228 O.A.C. 232, [2007] O.J. No. 3148 (Ont. C.A.) — followed


Turner v. Inndirect Enterprises Inc. (2009), 87 C.C.E.L. (3d) 306, 2009 Cars-wellOnt 9666, [2009] O.J. No. 6345 (Ont. S.C.J.) — referred to

Wallace v. United Grain Growers Ltd. (1997), 123 Man. R. (2d) 1, 159 W.A.C.1, 152 D.L.R. (4th) 1, 1997 CarswellMan 455, 1997 CarswellMan 456, 219N.R. 161, [1997] 3 S.C.R. 701, [1999] 4 W.W.R. 86, 36 C.C.E.L. (2d) 1, 3C.B.R. (4th) 1, [1997] L.V.I. 2889-1, 97 C.L.L.C. 210-029, [1997] S.C.J.No. 94 (S.C.C.) — referred to

Waterman v. Frisby Tire Co. (1974) Ltd. (1995), 1995 CarswellOnt 289, 13C.C.E.L. (2d) 184, [1995] O.J. No. 1877 (Ont. Gen. Div.) — referred to


Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. As. 28(1) — referred tos. 35(1) — considereds. 43(1) — referred tos. 51(1) — referred to

Courts of Justice Act, R.S.O. 1990, c. C.43Generally — referred to

Employment Standards Act, 2000, S.O. 2000, c. 41Generally — referred to

Words and phrases considered:

presumptive selling

There is a question that is asked, but the question presumes that the buyer . . .has made a decision to accept the offer.

contra proferentem

If a term of a contract is ambiguous, it is to be interpreted against the interest ofthe person who insisted it be included (“contra proferentem” which means“against the offeror”).

MOTION for summary judgment brought by plaintiff employee dismissed with-out cause.

Philip R. White for Plaintiff / Moving PartyChristian Paquette for Defendant / Responding Party

Lederer J.:

Introduction1 This is a motion for summary judgment brought by the plaintiff. On

the day he was fired from his job, Eric Rubin signed a release. It is hisview that, given the circumstances in which it was signed, the release

Rubin v. Home Depot Canada Inc. Lederer J. 239

should not be enforced. On the motion, Eric Rubin seeks damages in theamount of $72,076.36, which represents twenty months as reasonable no-tice for the dismissal.

Background2 Eric Rubin had been employed by Home Depot Canada Inc. and a

predecessor since 1991. On July 28, 2011, without any prior warning, hewas terminated. Two days earlier, he had been instructed to and, on July28, 2011, he attended a meeting. He was not advised of its purpose andassumed it was a “normal business meeting”. The meeting lasted only afew minutes. As it began, Eric Rubin was given a letter terminating hisemployment and was told that “this is your last day”. The letter advisedthat “your current position, as a Competitive Shopper, no longer existseffective today”.

3 The termination letter “offered” twenty-eight weeks pay in lieu of no-tice in the amount of $30,977.81. This was said to “exceed our obliga-tions under the Employment Standards Act” in circumstances where thelegislation required that Eric Rubin be paid twenty-seven and three-quarter weeks pay in lieu of notice. The “offer” was to continue EricRubin’s medical, dental and basic life insurance for twenty-eight weeks(until February 9, 2012) or the date that Eric Rubin obtained alternativeemployment. His Short-Term Disability (“STD”) and Long-Term Disa-bility (“LTD”) benefits were to be discontinued after eight weeks (Sep-tember 22, 2011), which was the notice period required by the Employ-ment Standards Act, 2000, S.O. 2000 c. 41 There is no reference to hisAccidental Death and Dismemberment coverage (“AD&D”) which, pur-suant to the Employment Standards Act, 2000, was required to be main-tained for eight weeks. Counsel for Eric Rubin understood this to meanthat this benefit was to be discontinued. The affidavit of Stephen Fraser,the store manager, who advised Eric Rubin that he was terminated, saysEric Rubin’s disability benefits were continued until the end of the rele-vant notice period.

4 To obtain the benefit of the offer, Eric Rubin was required to sign therelease.

5 Eric Rubin executed the release during the meeting. It was submittedthat he did this because he believed the offer he received from HomeDepot was all that he was entitled to. The termination came as a surprise.Eric Rubin was not thinking clearly and did not think he had any option.


At the time he signed the release, he was unaware of his common lawrights or his statutory rights, under the Employment Standards Act, 2000.Shortly after the meeting, Eric Rubin came to realize that he had made amistake by signing the release. He immediately contacted his accountantand his family lawyer. Eric Rubin was referred to his present counsel. OnFriday, August 5, 2011, counsel sent a demand letter to Home Depotchallenging the enforceability of the release and asking to negotiate aproper severance package.

6 For its part, Home Depot stands by the release and the offer it ac-cepted. Home Depot makes clear that Eric Rubin was, in no way, pres-sured to make a decision at the meeting on July 28, 2011. The letter af-forded him one week to consider the offer. Eric Rubin took the time tocarefully read the letter before he signed. He asked about his options re-garding the possibility of apportioning funds towards his RRSP. At theconclusion of the meeting, Eric Rubin was invited to contact the “DistrictTalent Manager” of Home Depot. He took up the suggestion and tele-phoned her, after the meeting, during the afternoon of July 28, 2011.They did not speak until the following day. It would seem that, duringthe course of the telephone conversation, Eric Rubin voiced no dissatis-faction and raised no concerns with respect to the release that he hadsigned the day before.

7 The release required that $1,540.89 of the lump sum payment be di-rected to the RRSP of Eric Rubin. This payment was not made. It wasnot until the exchange of the material leading to this motion that HomeDepot became aware of this error. On behalf of Home Depot, this wasdescribed as an oversight. The payment has now been made.

The Motion8 The motion is for summary judgment.9 In considering such a motion, the judge is required to ask whether the

full appreciation of the evidence and issues required to make dispositivefindings can be achieved on a motion for summary judgment. If not, thematter should be left to proceed to trial where, in the normal course, thisfull appreciation can be developed (see: Combined Air MechanicalServices Inc. v. Flesch, 2011 ONCA 764 (Ont. C.A.) (CanLII), at para.50). In this case, neither party has suggested that the required full appre-ciation cannot be achieved on the motion. As I have already noted, theplaintiff seeks a finding setting aside the release, a determination of the


appropriate notice period and of the damages to be awarded. For its part,the defendant submitted that the release be left to stand. It asks for sum-mary judgment dismissing the action. If the release is to be left in place,like the plaintiff, the defendant asks that the notice period be assessed. Inthe circumstances, I have treated this motion as one where the partieshave agreed to submit their dispute to resolution by way of summaryjudgment (see: Combined Air Mechanical Services Inc. v. Flesch, supra,at para. 72). I do this understanding that it does not relieve me of theresponsibility to ensure that I can have, and do have, the familiarity with“...the total body of evidence in the motion record...” required to decidethe matter (see: Combined Air Mechanical Services Inc. v. Flesch, supra,at para. 53).

Legal Context10 In Brito v. Canac Kitchens, [2011] O.J. No. 1117, 87 C.C.E.L. (3d)

184 (Ont. S.C.J.) (appeal allowed only in respect of punitive damages,[2012] O.J. No. 376 (Ont. C.A.)), Mr. Justice Echlin began his judgmentwith the observation that employment law in Canada has changed:

Although it did not occur overnight, the 20th Century witnessed sig-nificant changes in the way in which workers were treated. It maynow be fairly and generally asserted that today, in the absence of avoluntary resignation, or misconduct on the part of the employee, Ca-nadian employers must dismiss their employees with proper notice orpay in lieu thereof.

11 Brito considered the case of a long-service employee, who had beendismissed without cause, and provided only with his statutory entitle-ments, pursuant to the Employment Standards Act, 2000. During the rea-sonable notice period to which the employee was entitled, he was diag-nosed with cancer and became totally disabled. He did not have STD orLTD because they had been cancelled by the employer at the conclusionof the statutory notice period. Mr. Justice Echlin determined that the em-ployer was responsible to pay the benefits as if the coverage had not beencancelled.

12 The issue with the case I am asked to decide is whether the change towhich Mr. Justice Echlin referred can extend to circumstances where theemployee has accepted an offer and signed the release. The law pertain-ing to the enforceability of the release executed in the context of the dis-missal of an employee was set out by the Court of Appeal, in Titus v.William F. Cooke Enterprises Inc., 2007 ONCA 573 (Ont. C.A.). In that


case, the plaintiff, the employee Titus, worked as in-house counsel forthe defendant, employer. It was the third time that the plaintiff had beenengaged, in this capacity, by the defendant. After eighteen months, hewas fired. The employer offered a settlement package, provided that theemployee signed a release. Titus accepted the offer and signed the re-lease. He obtained new but less-remunerative employment within twoweeks. He brought an action against the employer claiming that the set-tlement and release were unconscionable. The trial judge found in favourof the employee. The Court of Appeal set aside that judgment. The trialjudge had failed to consider the law applicable to unconscionability. TheCourt of Appeal referred to and relied on Cain v. Clarica Life InsuranceCo. (2005), 263 D.L.R. (4th) 368 (Alta. C.A.), at para. 32, in identifyingthe four elements which are necessary to demonstrate that a release isunconscionable:

1. a grossly unfair and improvident transaction;

2. victim’s lack of independent legal advice or other suitable ad-vice; and

3. overwhelming imbalance in bargaining power caused by vic-tim’s ignorance of business, illiteracy, ignorance of the lan-guage of the bargain, blindness, deafness, illness, senility, orother disability; and

4. other party’s [sic] knowingly taking advantage of thisvulnerability.

(Titus v. William F. Cooke Enterprises Inc.

, supra, at para. 38)13 Can Eric Rubin bring himself within each of these four elements?

1. Was the transaction grossly unfair and improvident?14 It is said that this transaction was grossly unfair because the payment

offered, while said in the letter of termination to exceed the obligationsof the company, represented only one or two days more pay than thestatutory requirement. (The offer was for 28 weeks; the EmploymentStandards Act, 2000 required 27 3/4 weeks.) It was submitted that the be-nefits provided left Eric Rubin in a worse position than had he refused tosign the release. This idea is based on the fact situation as it developed inBrito v. Canac Kitchens, supra. In that case, the benefits were terminatedat the conclusion of the period imposed by the Employment StandardsAct (eight weeks). It was only after that the employee became incapaci-


tated. As a result of the determination of the judge that a longer period ofnotice was called for, the liability of the employer to provide the benefitswas extended and a finding in favour of the employee made. As counselfor Eric Rubin sees it, his client was in a worse position than he wouldhave been if he had not signed the release. If the same misfortune hadbefallen him, as occurred in Brito, he would have had no recourse, giventhe presence of the release.

15 In my view, these arguments do little assist the Eric Rubin. The ques-tion is not how much more than the statutory value the offer representsbut whether, in the circumstances, it is so unreasonable as to be grosslyunfair. This comes from the measure of the situation as a whole. In Titus,the offer that was accepted included a payment that represented threemonth’s salary in lieu of notice. The trial judge concluded that the appro-priate notice period was ten months. The Court of Appeal held that thefact of the latter does not make the former grossly unfair. It observed thatthere were other factors involved. In that case: “if the respondent ac-cepted the offer, he would receive the money immediately, he wouldhave an opportunity to mitigate his damages by seeking new employment(in fact, the respondent obtained a new position within two weeks of histermination) and, importantly, he would avoid the delay, costs and uncer-tainty of litigation” (see: Titus v. William F. Cooke Enterprises Inc.,supra, at para. 41). It should be said that not all of these considerationsapply in the present case. Any payment required to be made, pursuant tothe Employment Standards Act, 2000, is made upon termination regard-less of whether a release is signed or the employee determines to proceedto exercise his or her common law rights.

16 Insofar as the value of the benefits is concerned, it may be that hadEric Rubin become ill more than eight weeks after his termination, thesigning of the release would have foreclosed any claim he might havemade, but this is the sort of calculation made in any settlement. One maydo better to wait, but there can be advantages in accepting the paymentoffered even with the incumbent risk. The fact remains that, in Brito, theemployee had not signed a release.

17 To my mind, the question is simpler than the submissions made onbehalf of Eric Rubin suggest. Eric Rubin spent his entire working life inthe business of retail hardware. He was employed by Home Depot and itspredecessor for nineteen years and eight months (December 2, 1991 toJuly 28, 2011). From about October 22, 1994 to the day of his termina-


tion, he worked, full-time, as a Competitive Price Shopper. In this role, itwas his responsibility to visit the stores of competitors to compare prices.He would then prepare reports for management based on the informationhe had collected. Nothing much was said about this in the material thatwas filed, but it stands to reason that, while this job would not entailspecialized skill or training, the employer would benefit from EricRubin’s many years of experience in the industry and in the position. Theexplanation given for his termination was an “organizational change” be-ing undertaken by the company. Whatever this may mean, it makes clearthat Eric Rubin was not being terminated for cause and there was noevidence to suggest that this was brought on by any economic concernswithin the employer. Finally, I observe that, on the day he was fired, EricRubin was sixty-three years old. It must have been obvious that, givenhis age and the narrowness of his experience, that he could have diffi-culty finding new employment. The question is whether, in the circum-stances, the notice provided is grossly inadequate; that is to say, in thecircumstances, would this award be sufficiently divergent from commu-nity standards that it ought to be set aside? I find that it is. The idea that,in the modern day, a twenty-year employee, moving to the end of hisexpected working life, who is fired without cause, for reasons reflectedin an internal re-organization of the company, would receive only sixmonths’ notice, is far removed from what the community would accept.

18 It is not clear to me that the community response to this factor can beunderstood definitively, independent of the other three considerations re-ferred to in Titus v. William F. Cooke Enterprises Inc., supra. Certainly,it is easier to make the determination bearing those factors in mind. Aconsideration of them serves only to underscore the conclusion.

2. Victim’s lack of independent legal advice or other suitable advice19 The importance of obtaining legal advice was addressed in

Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986 (S.C.C.), at para.32, where the Court pointed out that many employees are simply una-ware of their legal rights:

...the fact that many individual employees may be a unaware of theirstatutory and common law rights in the employment context is offundamental importance. As B. Etherington suggests in ‘The En-forcement of Harsh Termination Provisions in Personal EmploymentContracts: The Rebirth of Freedom of Contract in Ontario’ (1990),35 McGill L.J. 459, at p. 468, ‘the majority of unorganized employ-


ees would not even expect reasonable notice prior to dismissal andmany would be surprised to learn they’re not employed at the em-ployer’s discretion.

20 The affidavit of Stephen Fraser, among other things, indicates that,after reading the letter of termination, Eric Rubin commented that “hewas happy that his benefits would be continued by Home Depot.” Thisunderstanding was not correct. The termination letter is, at best, ambigu-ous. It does say: “In no case will your benefits be discontinued prior tothe end of the statutory notice period.” However, this sentence is fol-lowed immediately by: “So there is no misunderstanding all other bene-fits and insurance coverage ceases on your last day of employment”. Forthese statements to be read consistently, it must be that the first sentencerefers to the listed benefits and the second to benefits the letter does notrefer to. This being so, AD&D coverage was withdrawn. As counsel forEric Rubin understands this, it was only re-instated after the demand let-ter of August 5, 2011 had been delivered. There is no suggestion thatStephen Fraser, upon hearing the comment of Eric Rubin, made any at-tempt to explain the situation or, alternatively, if Stephen Fraser was un-clear as to what was intended, to inquire, within Home Depot, as tomeaning of the letter.

21 Prior to signing the release, Eric Rubin did not have any legal or otheradvice. It is true that the letter or termination did state that the releasewas to be signed within a week of the meeting, meaning that it was opento Eric Rubin to take the offer with him and seek that advice. The affida-vit of Stephen Fraser does nothing more than point out that the termina-tion letter does contain this proviso. The affidavit recounts that EricRubin read the termination letter and the release. He asked about his op-tions regarding the possibility of apportioning funds towards his RRSP.Stephen Fraser recounts that, in response, he reiterated what was in theletter and release and that “... Mr. Rubin had two options: he could eitheraccept the package as it was, or direct a portion of the settlement moniestowards his RRSP’s”. There is no suggestion that Eric Rubin was advisedhe could take a week to think about, or obtain advice, as to which optionhe wished to select. More importantly, in indicating that the release neednot be signed until August 4, 2011, the letter attached the execution ofthe release to the payment of the money. It said:

The payment will be made to you by a lump sum (less statutory de-ductions) provided you sign the release below by August 4, 2011.


22 This says that, before he was paid, Eric Rubin would have to sign therelease. This puts the August 4, 2011 date in a different context. If hedelayed signing, the receipt of these funds by Eric Rubin would be, simi-larly, delayed. If he did not sign by August 4, 2011, the implication isthat he would not be paid at all. This was, at best, misleading. The pay-ments required by the Employment Standards Act 2000, including the 273/4 weeks salary, would have to be paid regardless of whether any re-lease was ever signed.

23 If Eric Rubin had obtained legal advice, doubtless this would havebeen explained to him. As it was, he did not. As it is, Home Depot tookadvantage of that situation.

3. Overwhelming imbalance in bargaining power caused by victim’signorance of business, illiteracy, ignorance of the language of thebargain, blindness, deafness, illness, senility, or other disability

24 In Lloyd’s Bank v. Bundy (1974), [1975] Q.B. 326 (Eng. C.A.), LordDenning addressed the general principles relating to unconscionabilityand said, in part:

Gathering altogether, I would suggest that through all these instancesthere runs a single thread. They rest on ‘inequality of bargainingpower’. By virtue of it, the English law gives relief to one who, with-out independent advice, entered into a contract upon terms which arevery unfair or transfers property for consideration which is grosslyinadequate, when his bargaining power is grievously impaired byreason of his own needs or desires, or by his own ignorance or infir-mity, coupled with undue influences or pressures brought to bear onhim by or for the benefit of the other.

(Lloyd’s Bank v. Bundy, supra, at p. 339, as quoted in Waterman v.Frisby Tire Co. (1974) Ltd., [1995] O.J. No. 1877, 13 C.C.E.L. (2d)184 (Ont. Gen. Div.), at para. 63)

25 The imbalance in bargaining power between an employer and em-ployee is inherent in the relationship:

[T]he relation between an employer and an isolated employee orworker is typically a relation between a bearer of power and one whois not a bearer of power. In its inception it is an act of submission, inits operation it is a condition of subordination.

(P. Davies and M. Freedland, Kahn-Freund’s Labour and the Law(3rd ed. 1983), at p. 18, as quoted in Slaight Communications Inc. v.Davidson, [1989] 1 S.C.R. 1038 (S.C.C.), at 1051-52 (Dickson C.J.)


and repeated in Wallace v. United Grain Growers Ltd. [1997 Car-swellMan 455 (S.C.C.)], supra, at para. 92)

26 “The unequal balance of power led the majority of the Court inSlaight Communications, supra, to describe employees as a vulnerablegroup in society (see p. 1051). The vulnerability of employees is under-scored by the level of importance which our society attaches to employ-ment”... “Thus, for most people, work is one of the defining features oftheir lives. Accordingly any change in a person’s employment status isbound to have far-reaching repercussions.” ... “The point at which theemployment relationship ruptures is the time when the employee is mostvulnerable and hence, most in need of protection (see: Wallace v. UnitedGrain Growers Ltd., supra, at paras. 93, 94 and 95).

27 The imbalance is intrinsic to the termination of an employee: There is an inherent imbalance in bargaining power between an em-ployer and an employee when the former terminates the employmentof the latter. The employer’s business will continue, the employerwill be there, and the employee will be gone.

(Titus v. William F. Cooke Enterprises Inc., supra, at para. 46)

28 The impact of the imbalance of power is demonstrated by the re-sponse of Eric Rubin to the situation he confronted upon being handedthe letter of termination and being told: “Eric, this is your last day”. Inhis affidavit, Eric Rubin deposed:

I was completely caught off guard when Mr. Fraser informed me thatHome Depot was terminating my employment. I had worked forHome Depot for almost 20 years. Prior to joining Home Depot I hadonly worked at two companies in my life and there had not been asingle day when I did not have a job. I had never been unemployedbefore. When Mr. Fraser told me I was losing my job I felt like I hadjust been hit by a truck. My mind started spinning and my heart be-gan to race.

29 The fact that, as Stephen Fraser saw it, Eric Rubin took his time toread the termination letter and release, commented that he was happy thathis benefits were being continued and had the composure to ask about hisoptions in respect of his RRSP, does not detract from the power imbal-ance between the employee and the representative of the employer. Theobservations, made by Stephen Fraser, that Eric Rubin appeared cordialthroughout the meeting and that his demeanour was not one of a personin shock cannot be interpreted to indicate the power imbalance did notexist. People respond to stress differently. To my mind, Eric Rubin


should be in no different position because he chose not to show his con-cern, confusion or surprise. It is the situation and the nature of the rela-tionship which speaks to the power imbalance, not the personality of theperson whose life is being changed.

30 In Titus v. William F. Cooke Enterprises Inc., supra, the Court of Ap-peal acknowledged that the “...generalized vulnerability of all terminatedemployees...” is not the only consideration in examining the power im-balance. In that case, it was argued that this “starting point of vulnerabil-ity at the moment of termination” was magnified by the recent death ofthe father of the employee and his high debt load. The Court found that“...these aspects of general and specific vulnerability...” did not create“an overwhelming imbalance in bargaining power in this case”. In fact,the “generalized vulnerability” was “diminished in this case by the factthat the respondent was a senior, knowledgeable lawyer particularlywell-versed in contract and employment law, including the law relatingto wrongful dismissal” (see: Titus v. William F. Cooke Enterprises Inc.,supra, at paras. 47-50).

31 In this case, the power imbalance was quite different. Eric Rubin wasnot a high-level employee with professional training. Those mitigatingfactors did not exist. The power imbalance was enhanced by the way inwhich the representatives of Home Depot dealt with the situation. InTitus, the employer told the employee to take the time he needed to dealwith the situation (see: Titus v. William F. Cooke Enterprises Inc., supra,at para. 50). No such advice was provided to Eric Rubin. Providing aletter which is, at best, ambiguous and misleading, as well as beginningthe substantive part of the conversation with the advice to the employeethat this is your last day, exacerbated rather than remediated the problem.

4. Other party knowingly taking advantage of this vulnerability32 It is impossible to look into the minds of the various officials respon-

sible for the acts of Home Depot to find proof that they set out to takeadvantage of the vulnerability of Eric Rubin. But it can be implied fromtheir actions and approach to the termination. There was no negotiationor discussion as to how best to deal with the fact that a decision had beenmade to let Eric Rubin go. He was presented with a response to this deci-sion that was prepared by, and shaped to respond to, the needs of thecompany. The offer was presented in a way that was directed to getting itsigned. Eric Rubin was not presented with a choice calling on him to


decide whether or not to accept the offer. The letter advised him that hewas already being offered more than he was entitled to. The propositionwas that, if he did not sign, he would not be paid. The letter did not saythat the offer represented less than two days’ more pay than he was enti-tled to be paid whether or not he signed. There was no suggestion that hehad common law rights that extended beyond the Employment StandardsAct, 2000 to which the letter referred. Not only did the letter explainthere were benefits that were being terminated immediately, but it alsoadvised Eric Rubin that he should replace those benefits as they lapsed.While, at first, this seems like well-intentioned advice, it also makesclear that Eric Rubin had new responsibilities that he would have to payfor. Where would the money come from to do this; presumably, from themoney received once the offer was accepted. It might be easier to acceptthis advice if the letter did not suggest that, among the benefits to bereplaced, were some (particularly AD&D) that Eric Rubin was entitled toreceive from Home Depot. The only practical choice that Eric Rubin wasoffered was whether he wished to direct any of the money he was toreceive to his RRSP. Counsel for Eric Rubin referred to this approach as“presumptive selling”. There is a question that is asked, but the questionpresumes that the buyer, in this case Eric Rubin, has made a decision toaccept the offer. The presence of “presumptive selling” is confirmed by asecond reference to the August 4, 2011 deadline found in the terminationletter. At the end of the description of what was being offered, the letterdirects: “Check appropriate box below and return by August 4, 2011”.The letter presumes the release will be signed. No other option is offered.This approach, taken as a whole, is set to take advantage of the vulnera-bility of the employee. I find this was arranged in the expectation that itwould direct, if not compel, Eric Rubin to sign the release.

33 I find that this release should be struck and found to be unenforce-able. I say this mindful of the policy considerations in favour of uphold-ing releases. This is not the same as settlement at the courtroom door(see: Barr v. Pennzoil-Quaker State Canada Inc., [2007] O.J. No. 2859,59 C.C.E.L. (3d) 89 (Ont. S.C.J.), at para. 54). That will occur after allthe steps in the process leading to trial are complete and after both sideshave had considerable opportunity to consider their positions. This hap-pened when one of the parties had no knowledge of what was about totranspire. No negotiation was offered. Stephen Fraser gave the termina-tion letter to Eric Rubin and said: “Eric this is your last day, the companyis going in a different direction. This is the package the company is giv-


ing you”. [Emphasis added]. Eric Rubin did not agree to anything. Hesimply accepted what he was misled into thinking was his only option.

34 This is not the only circumstance where the law allows for considera-tion of an imbalance of power where a contract was, seemingly, agreedto. If a term of a contract is ambiguous, it is to be interpreted against theinterest of the person who insisted it be included (“contra proferentem”which means “against the offeror”). The Consumer Protection Act, 2002S.O. Ch. 30, Sch. A provides four circumstances where various agree-ments can be terminated “without any reason ...within 10 days after re-ceiving the written copy of the agreement” (ss. 28(1), 43(1) and 51(1)) or“without any reason... within 10 days after the later of receiving the writ-ten copy of the agreement and the day all the services are available” (s.35(1)).

35 These reasons should not be taken, in any way, to detract from theright of parties to contract and be bound by their agreements. It simplyconfirms that employers cannot use their superior position to mislead anemployee into an agreement that is unconscionable. It does nothing morethan confirm the observation of Mr. Justice Echlin that Canadian em-ployers must dismiss their employees with proper notice or pay in lieuthereof.

Reasonable Notice36 Having set aside the release, I am left to determine what, in the case

of Eric Rubin, would have been a reasonable notice period.37 Counsel, on behalf of Eric Rubin, submitted that the appropriate no-

tice period should be twenty months. He referred to cases that he sayssupport that proposition (see: Turner v. Inndirect Enterprises Inc., [2009]O.J. No. 6345 (Ont. S.C.J.); Cardenas v. Canac Kitchens, [2009] O.J.No. 1570 (Ont. S.C.J.); and, Cohen v. Edwards, [2000] O.J. No. 2380(Ont. Div. Ct.)).

38 Counsel, on behalf of Home Depot, submitted that the appropriate no-tice period should fall within the range of seven to ten months. He re-ferred to cases that he says support that proposition (see: Jordison v.Caledonian Curling Co-operative Ltd., 2000 SKQB 55 (Sask. Q.B.);Ellsworth v. Murray Canada Inc., [1997] O.J. No. 5088 (Ont. Gen. Div.);and, Fisher v. Lakeland Mills Ltd., 2008 BCCA 42 (B.C. C.A.)).


39 While these cases provide guidance, in the end, each case must bedecided with reference to its particular facts:

There can be no catalogue laid down as to what is reasonable noticein particular classes of cases. The reasonableness of the notice mustbe decided with reference to each particular case, having regard tothe character of the employment, the length of service of the servant,the age of the servant and the availability of similar employment,having regard to the experience, training and qualifications of theservant.

(Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.),at para. 21, as quoted in Keays v. Honda Canada Inc., 2008 SCC 39(S.C.C.) at paras. 28and 29)

40 In this case, the following factors should be accounted for:

(a) Eric Rubin’s role and responsibilities as a competitiveshopper;

(b) Eric Rubin’s nineteen years and eight months of continuousservice;

(c) Eric Rubin’s age of sixty-three years; and,

(d) the difficulty Eric Rubin will, and has, experienced findingalternative employment.

41 Eric Rubin has worked for this employer for a considerable period oftime. On the other hand, the job did not include any supervisory of man-agement responsibilities. Eric Rubin may continue to have difficultyfinding further employment, but he does have knowledge that could be ofbenefit to a range of employers in the retail hardware business and, atsixty-three years of age, he is arriving at a time when the working life ofmany Canadians comes to an end.

42 In the circumstances, I find that a reasonable period of notice wouldbe twelve months. This, of course, includes both salary and other bene-fits. I assume that the parties will be able to work out the value of thisaward. It is to include pre-and post-judgment interest, as provided for inthe Courts of Justice Act, R.S.O. 1990, c. C.43, as amended. If not, I maybe spoken to.

Costs43 No submissions were made as to costs. If the parties are unable to

agree, I will consider written submissions on the following terms:


• on behalf of the plaintiff, no later than fifteen days after the re-lease of these reasons. Such submissions are to be no longer thanfour pages, double-spaced, exclusive of any Bill of Costs, CostsOutline or case law that may be filed;

• on behalf of the defendant, no later than ten days thereafter. Suchsubmissions are to be no longer than four pages, double-spaced,exclusive of any Bill of Costs, Costs Outline or case law that maybe filed; and,

• on behalf of the plaintiff, in reply, no later than five days thereaf-ter. Such submissions are to be no longer than two pages, double-spaced.

Motion granted.

Ontario (Human Rights Commission) v. Farris 253

[Indexed as: Ontario (Human Rights Commission) v. Farris]

Ontario Human Rights Commission (Applicant) and KatherineFarris, Staubach Ontario Inc., Harry McKeague, Michel Leonard

and the Human Rights Tribunal of Ontario (Respondents)

Ontario Superior Court of Justice (Divisional Court)

Docket: Toronto 494/11

2012 ONSC 3876

K. Swinton, H. Sachs, H. Wilton-Siegel JJ.

Heard: May 23, 2012

Judgment: June 29, 2012

Human rights –––– Practice and procedure — Judicial review —Grounds — General principles –––– Complaint arose out of employee’s em-ployment with S Inc. — HK and ML were principals and managers of S Inc. andonly shareholders of holding company that owned S Inc. — Tribunal found thatemployee had been subjected to poisoned work environment and discriminatedagainst because of her sex — Despite findings, tribunal made only S Inc., inop-erative company, liable for damages — Tribunal declined to impose any per-sonal liability on HK and ML — Tribunal dismissed Ontario Human RightsCommission (“Commission”)’s and employee’s requests for reconsideration ofdecision — Commission sought judicial review of two decisions of tribunal —Application for judicial review allowed — Tribunal’s decision was set aside andissue was remitted to tribunal for reconsideration in accordance with these rea-sons — Tribunal’s decisions did not disclose any reasonable basis for failure tofind HK and ML jointly and severally liable for any of damages that it awardedagainst S Inc. — Discrimination included not only HK’s and ML’s discrimina-tory acts, but also those of agents who spread rumour about her and called herdisparaging names — It was culmination of these acts that tribunal found cre-ated poisoned work environment that HK and ML failed to address.

Labour and employment law –––– Employment law — Termination and dis-missal — Practice and procedure — Judicial review of adjudicative deci-sions –––– Complaint arose out of employee’s employment with S Inc. — HKand ML were principals and managers of S Inc. and only shareholders of hold-ing company that owned S Inc. — Tribunal found that employee had been sub-jected to poisoned work environment and discriminated against because of hersex — Despite findings, tribunal made only S Inc., inoperative company, liablefor damages — Tribunal declined to impose any personal liability on HK andML — Tribunal dismissed Ontario Human Rights Commission (“Commis-


sion”)’s and employee’s requests for reconsideration of decision — Commissionsought judicial review of two decisions of tribunal — Application for judicialreview allowed — Tribunal’s decision was set aside and issue was remitted totribunal for reconsideration in accordance with these reasons — Tribunal’s deci-sions did not disclose any reasonable basis for failure to find HK and ML jointlyand severally liable for any of damages that it awarded against S Inc. — Dis-crimination included not only HK’s and ML’s discriminatory acts, but also thoseof agents who spread rumour about her and called her disparaging names — Itwas culmination of these acts that tribunal found created poisoned work envi-ronment that HK and ML failed to address.

Cases considered by H. Sachs J.:

Drummond v. Tempo Paint & Varnish Co. (1998), (sub nom. Drummond v.Tempo Paint & Varnish Co. (No. 4)) 33 C.H.R.R. D/175, 1998 CarswellOnt6051, [1998] O.H.R.B.I.D. No. 11 (Ont. Bd. of Inquiry) — referred to

Moffatt v. Kinark Child & Family Services (1999), 1999 CarswellOnt 5149, (subnom. Moffatt v. Kinark Child & Family Services (No. 5)) 36 C.H.R.R.D/346, [1999] O.H.R.B.I.D. No. 15 (Ont. Bd. of Inquiry) — referred to

N.L.N.U. v. Newfoundland & Labrador (Treasury Board) (2011), 2011 Car-swellNfld 414, 2011 CarswellNfld 415, 2011 SCC 62, (sub nom. Nfld. andLabrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board))2011 C.L.L.C. 220-008, (sub nom. Newfoundland & Labrador Nurses’Union v. Newfoundland & Labrador (Treasury Board)) 424 N.R. 220, 340D.L.R. (4th) 17, D.T.E. 2012T-7, (sub nom. Newfoundland & LabradorNurses’ Union v. Newfoundland & Labrador (Treasury Board)) [2011] 3S.C.R. 708, 213 L.A.C. (4th) 95, 97 C.C.E.L. (3d) 199, (sub nom.Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador(Treasury Board)) 986 A.P.R. 340, (sub nom. Newfoundland and LabradorNurses’ Union v. Newfoundland and Labrador (Treasury Board)) 317 Nfld.& P.E.I.R. 340, [2011] S.C.J. No. 62 (S.C.C.) — considered

Naraine v. Ford Motor Co. of Canada (1996), 1996 CarswellOnt 5662, (subnom. Naraine v. Ford Motor Co. of Canada (No. 4)) 27 C.H.R.R. D/230,[1996] O.H.R.B.I.D. No. 23 (Ont. Bd. of Inquiry) — referred to

Naraine v. Ford Motor Co. of Canada (1999), (sub nom. Human RightsCommission (Ont.) v. Ford Motor Co. of Canada) 124 O.A.C. 39, 1999CarswellOnt 2074, (sub nom. Ford Motor Co. of Canada v. Ontario (HumanRights Comm.) (No. 2)) 34 C.H.R.R. D/405, [1999] O.J. No. 2530 (Ont. Div.Ct.) — referred to

Naraine v. Ford Motor Co. of Canada (2001), 2001 CarswellOnt 4441, (subnom. Ford Motor Co. of Canada v. Ontario (Human Rights Commission))41 C.H.R.R. D/349, (sub nom. Ford Motor Co. of Canada v. Ontario HumanRights Commission) 2002 C.L.L.C. 230-007, 13 C.C.E.L. (3d) 208, (subnom. Ontario (Human Rights Commission) v. Ford Motor Co. of Canada)

Ontario (Human Rights Commission) v. Farris 255

158 O.A.C. 380, (sub nom. Ford Motor Co. of Canada v. Ontario (HumanRights Commission)) 209 D.L.R. (4th) 465, [2001] O.J. No. 4937 (Ont.C.A.) — referred to

Naraine v. Ford Motor Co. of Canada (2002), (sub nom. Human RightsCommission (Ont.) v. Ford Motor Co. of Canada) 172 O.A.C. 398 (note),[2002] 3 S.C.R. x, 2002 CarswellOnt 3428, 2002 CarswellOnt 3429, 302N.R. 395 (note), [2002] S.C.C.A. No. 69 (S.C.C.) — referred to

O’Malley v. Simpsons-Sears Ltd. (1985), (sub nom. Ontario Human RightsCommission v. Simpsons-Sears Ltd.) [1985] 2 S.C.R. 536, [1986] D.L.Q. 89(note), 23 D.L.R. (4th) 321, 64 N.R. 161, 12 O.A.C. 241, 17 Admin. L.R. 89,(sub nom. Ontario (Human Rights Commission) v. Simpsons-Sears Ltd.) 9C.C.E.L. 185, 86 C.L.L.C. 17,002, 7 C.H.R.R. D/3102, 52 O.R. (2d) 799(note), 1985 CarswellOnt 887, 1985 CarswellOnt 946, (sub nom. OntarioHuman Rights Commission v. Simpsons-Sears Ltd.) [1985] S.C.J. No. 74(S.C.C.) — referred to

Reyes v. Seepersaud (2010), 2010 HRTO 933 (Ont. Human Rights Trib.) — re-ferred to

Robichaud v. Brennan (1987), 8 C.H.R.R. D/4326, 1987 CarswellNat 907, 1987CarswellNat 1105, (sub nom. Robichaud v. Canada (Treasury Board)) 87C.L.L.C. 17,025, [1987] 2 S.C.R. 84, (sub nom. Robichaud v. R.) 40 D.L.R.(4th) 577, (sub nom. Brennan v. Canada) 75 N.R. 303, EYB 1987-67285,[1987] S.C.J. No. 47 (S.C.C.) — referred to

Sigrist (Litigation Guardian of) v. London District Catholic School Board(2008), 2008 HRTO 14, 2008 CarswellOnt 9352 (Ont. Human RightsTrib.) — followed

Stetler v. Ontario (Flue-Cured Tobacco Growers’ Marketing Board) (2009),2009 CarswellOnt 1335, 2009 ONCA 234, (sub nom. Stetler v. Agriculture,Food & Rural Affairs Appeal Tribunal (Ont.)) 247 O.A.C. 338, 93 Admin.L.R. (4th) 312, 311 D.L.R. (4th) 109 (Ont. C.A.) — considered

Toronto Police Services Board v. Phipps (2012), 2012 ONCA 155, 2012 Cars-wellOnt 3992, 35 Admin. L.R. (5th) 167, (sub nom. Shaw v. Phipps) 289O.A.C. 163 (Ont. C.A.) — referred to


Human Rights Code, R.S.O. 1990, c. H.19Generally — referred tos. 5(1) — considereds. 7(2) — considereds. 45.2 [en. 2006, c. 30, s. 5] — considereds. 46.3 [en. 2006, c. 30, s. 8] — considereds. 46.3(1) [en. 2006, c. 30, s. 8] — considered


Judicial Review Procedure Act, R.S.O. 1990, c. J.1s. 2(1) — considered

APPLICATION for judicial review by Human Rights Commission from deci-sions of Human Rights Tribunal.

Cathy Pike for ApplicantKatherine Farris for herselfArie Gaertner for Respondents, Harry McKeague, Michel Leonard

H. Sachs J.:

Overview1 The Ontario Human Rights Commission (the “Commission”) seeks

judicial review of two decisions of the Human Rights Tribunal of On-tario (the “Tribunal”) concerning a complaint by Katherine Farris againstHarry McKeague, Michel Leonard and Staubach Ontario Inc.(“Staubach”).

2 The complaint arises out of Ms. Farris’ employment with Staubach.Mr. McKeague and Mr. Leonard were the principals and managers ofStaubach and the only shareholders of the holding company that ownedStaubach. By the time the complaint was adjudicated, Staubach wasinoperative.

3 On May 20, 2011, the Tribunal found that Ms. Farris had been sub-jected to a poisoned work environment and discriminated against be-cause of her sex. The Tribunal also found that Mr. McKeague and Mr.Leonard failed to recognize and address this poisoned work environmentand terminated Ms. Farris’ employment contrary to the Human RightsCode, R.S.O. 1990, c. H.19 (the “Code”). Despite these findings, the Tri-bunal made only Staubach, an inoperative company, liable for damages.The Tribunal declined to impose any personal liability on Mr. McKeagueand Mr. Leonard.

4 On September 29, 2011, the Tribunal dismissed the Commission’sand Ms. Farris’ requests for a reconsideration of its May 20, 2011decision.

5 For the reasons that follow, I would allow the application for judicialreview. The Tribunal’s decisions do not disclose any reasonable basis forits failure to find Mr. McKeague and Mr. Leonard jointly and severallyliable for any of the damages that it awarded against Staubach.

Ontario (Human Rights Commission) v. Farris H. Sachs J. 257

The Tribunal’s Factual Findings6 The Tribunal made a number of factual findings that are significant

for the purpose of this application. None of these findings were contestedon the hearing before us.

7 Staubach is a company that represents commercial tenants in real es-tate transactions. Staubach hired Ms. Farris as a real estate agent in 1997.She continued to work there until her employment was terminated in2003.

8 Ms. Farris worked in the Toronto office of Staubach, which was man-aged by Mr. McKeague. Mr. Leonard managed the Montreal office.

9 The Tribunal found that during the course of her employment, Ms.Farris became aware that she was the subject of a persistent, disparagingrumour that she was having an affair with Mr. McKeague. This rumourwas discussed by most, if not all, other employees. The rumour was falseand demeaning. Further, it was directly related to Ms. Farris’ gender.

10 The Tribunal also found that other agents at Staubach referred to Ms.Farris in language that disparaged her on the basis of her sex, bothamong themselves and in front of support staff. They called her a numberof offensive terms, including “bitch”, “Farrasite” (a term that was meantto signal that Ms. Farris engaged in “parasitic behaviour”), “psycho”,“crazy” and “HSC” (an acronym for “hateful spiteful cunt”).

11 According to the Tribunal, these offensive comments, when coupledwith the false rumour that Ms. Farris was having an affair with Mr.McKeague, resulted in a poisoned work environment for Ms. Farrisbased on her gender.

12 In the middle of 2001, Ms. Farris began to raise her concerns abouther work environment with Mr. McKeague and Mr. Leonard. They re-sponded by retaining a psychologist to investigate and make recommen-dations. Based on the psychologist’s recommendations, Staubach imple-mented two “Codes of Conduct” outlining the need for respect,prohibiting any demeaning or discriminatory activity and setting out aprocess for resolving grievances.

13 In spite of this action, the harassment continued. Ms. Farris continuedto express her concerns. By December of 2001, Mr. McKeague and Mr.Leonard were aware that Ms. Farris was having a physical reaction to theharassment and that she was also feeling sexually intimidated.


14 At the beginning of 2002, Ms. Farris became aware of the rumourabout her affair with Mr. McKeague. She told Mr. McKeague, who disci-plined the agent who had spread the rumour. In the Montreal office, Mr.Leonard raised the issue in a staff meeting and cautioned that staff shouldrefrain from talking about the rumour. However, the rumour persistedand no further steps were taken.

15 The Tribunal found that the failure to respond further exacerbated thepoisoned nature of the environment in which Ms. Farris was operating,and that “starting in 2002 [...] the workplace got worse and not better forthe complainant” (Reasons of the Tribunal, May 20, 2011 at para. 184).

16 In January of 2003 Ms. Farris requested a meeting with Mr. McK-eague and Mr. Leonard. She asked that the psychologist who had previ-ously been consulted act as a mediator. The meeting proceeded, but in-stead of being directed at the behaviour of those who were causing theproblems for Ms. Farris, the focus became Ms. Farris herself and heralleged inappropriate behaviour. During the meeting, Mr. Leonard statedthat Ms. Farris was the cause of the problem and if there wasn’t a changehe was ready to “write it off,” implying that he was ready to let her go.The Tribunal found that this meeting “further exacerbated the poisonedwork environment [...]. The clear evidence about the meeting was that itwas one-sided and the complainant’s efforts to identify any different per-spective of events, including how she was treated, were disregarded”(Reasons of the Tribunal, May 20, 2011 at para. 185).

17 On June 18, 2003, Staubach terminated Ms. Farris’ employment on a“without cause” basis. According to Mr. McKeague, Staubach had con-cluded that they either had to terminate Ms. Farris or let everyone elsego. Given the choice, they opted to fire Ms. Farris.

18 In November of 2004, Staubach’s license to operate was revoked bythe American company with whom they had a licensing agreement.Since that time Staubach has not been in operation.

History of the Proceedings Before the Tribunal19 Ms. Farris’ complaint was filed with the Commission on December 1,

2003. Ms. Farris’ complaint was against Staubach, Mr. McKeague, Mr.Leonard and several colleagues who worked with her at Staubach. In hercomplaint Ms. Farris alleged that: she was the subject of a poisoned workenvironment; management was unresponsive to her concerns; she wasunfairly denied referrals (potential work opportunities); she was termi-


nated contrary to the Code; and her termination was a reprisal for the factthat she had advised her employer that she was going to make a com-plaint to the Commission.

20 The hearing on the merits of her complaint began on May 27, 2007. Itconcluded on October 6, 2009 after 58 days of evidence and extensivewritten submissions supplemented by a day of oral argument. On Febru-ary 1, 2010, the Tribunal had a further hearing in response to a requestthat certain information not be disclosed in the Tribunal’s decision.

21 The Tribunal released its decision on May 20, 2011. In its decisionthe Tribunal accepted that Ms. Farris was subjected to a poisoned workenvironment and that management had failed to take adequate steps todeal with that environment. It also accepted that Ms. Farris had been ter-minated contrary to the Code. It was not satisfied that Ms. Farris hadbeen discriminated against in the allocation of referrals or that she wasterminated as a reprisal for indicating that she was going to lay a com-plaint with the Commission.

22 The Tribunal ordered Staubach to pay Ms. Farris $30,000 as compen-sation for injury to dignity, feelings and self-respect. However, the Tri-bunal declined to order that Mr. McKeague or Mr. Leonard were jointlyand severally liable with Staubach for damages or to order any separateremedies against any individuals named by Ms. Farris in her complaint.

23 In June of 2011, the Commission and Ms. Farris filed their reconsid-eration requests, which included a request that the Tribunal reverse itsconclusion that Mr. McKeague and Mr. Leonard were not liable to payany damages. On September 29, 2011, the Tribunal dismissed the recon-sideration requests.

The Issues on the Judicial Review Application24 This judicial review application raises two issues:

(i) Was the Tribunal’s decision not to find Mr. McKeague andMr. Leonard jointly and severally liable for the damagesawarded against Staubach unreasonable?

(ii) If the answer to the first question is “yes,” should the mat-ter be remitted to the Tribunal for reconsideration or shouldthis court make the order that Mr. McKeague and Mr. Leo-nard be held jointly and severally liable for the $30,000awarded against Staubach?


25 All parties agree that the standard of review with respect to the meritsof the Tribunal’s decision is reasonableness (Toronto Police ServicesBoard v. Phipps, 2012 ONCA 155 (Ont. C.A.) at para. 10).

The Tribunal’s Decision Respecting Whether Mr. McKeague andMr. Leonard Should Be Held Jointly and Severally Liable forDamages

26 The key portions of the Tribunal’s decision on this issue are found inparagraphs 206 to 212 of its decision of May 20, 2011, which read asfollows:

Liability

206. The Commission argues that this is an appropriate case for find-ing Staubach and its two principals, Mr. Leonard and Mr. McKeague,jointly and severally liable for all findings of discrimination, harass-ment and reprisal made by the Tribunal regarding their own conductand any employees and agents of Staubach. The Commission statesthat Mr. McKeague is a principal in the corporation and Mr. Leonardis the broker of record. In addition, the Commission relies on the factthat they were the only two shareholders of the holding companywhich owns Staubach.

207. Further, the Commission asks that I find the other personal re-spondents jointly and severally liable with Staubach for any discrimi-natory acts that they are found to have done.

208. The rationale underlying the Commission’s position is that thecorporation is no longer operational and therefore, not likely in a po-sition to accept legal or financial responsibility; the respective con-duct of the individuals is central to the case; and third, given theegregious nature of the conduct, a personal remedy is warranted.

209. Given my findings in this case and the evidence before me, I amnot convinced that this is an appropriate case for making the individ-uals jointly and severally liable, nor for ordering separate remediesagainst the individuals.

210. First, I note that I have not found that Ms. Papillon breached theCode by her role in the creation of the email.

211. With respect to the remaining respondents, when I consider myfindings, what is key is that I have concluded there was a poisonedwork environment that was not recognized and addressed by Mr.McKeague and Mr. Leonard and this environment was a factor in thecomplainant’s subsequent termination. While the agents played adefinite role in the creation of that environment, the agents who par-


ticipated included agents that were not named as parties. In parsingout what occurred it becomes difficult to ascertain the role that eachagent played such that the centrality of each agent’s role can be de-termined in a manner that makes sense and would support an orderfinding the individual liable for damages. Ultimately, I find that theappropriate order is against the corporation.

212. I have considered the Commission’s submission that there is ajuridical reason for naming the individual respondents. However, Ido not understand the corporation to be bankrupt, only that it is notoperational. In these circumstances, I do not find it appropriate tomake an order against individuals on the presumption that the corpo-ration will not be able to pay.

27 In its Reconsideration Decision of September 29, 2011, the Tribunalfound that its decision not to find any of the individual respondentsnamed in the complaint jointly and severally liable for the damagesagainst Staubach did not meet the test for reconsideration — it was not inconflict with established jurisprudence and did not involve a matter ofgeneral or public importance.

28 On the issue of whether the decision was in conflict with establishedjurisprudence, the Tribunal said:

17. I do not find that the decision is in conflict with established juris-prudence. While the Commission has relied on a number of casesspanning a number of years, I do not find it necessary to review eachcase in detail. What I would observe is that in the Tribunal’s morerecent cases, when addressing whether individual respondents areproperly included as parties (for example, Sigrist and Carson v.London District Catholic School Board, 2008 HRTO 14 (CanLII),referred to in Payette, supra at paragraph 44) and/or whether indivi-dual respondents should be the subject of a remedial order (for exam-ple, Payette, supra), the Tribunal has considered a number of factors,including the ability of the corporate respondent to respond to orremedy an alleged infringement, the nature of the alleged/found con-duct and the extent to which an individual’s conduct is a central issue(see, for example, Payette, supra and the cases cited at paragraphs 43and 44 thereof).

18. It is thus not the case that applications (or complaints) will pro-ceed against individual respondents simply because they have beennamed by an applicant/complainant or that liability will be alwaysassessed against an individual respondent where a corporate respon-dent is found liable for a contravention of the Code. The Tribunal has


the discretion to remove or add individual respondents to an applica-tion and to hold individual respondents personally liable in the eventremedies are awarded. In the Decision, I concluded that this was notan appropriate case to make an order against the individuals, havingregard to the nature of my findings, the difficulty in ascertaining therole that each agent played such that the centrality of each agent’sconduct could be determined, and the presumption that the corpora-tion might not be able to pay (see paras. 209 and following).

19. Having regard to the foregoing, I am not satisfied that there isany basis for concluding that the Tribunal’s decision not to make theindividuals jointly and severally liable in this particular case is inconflict with established jurisprudence. The Tribunal has a discretionto make an order against a party that infringed a right, and in thiscase, I exercised that discretion having regard to factors set out in thecase law and the particular circumstances in the case before me.

Was the Decision Not to Find Mr. McKeague and Mr. LeonardJointly and Severally Liable for the Damages Awarded AgainstStaubach Unreasonable?

The Legal Framework29 Section 5(1) of the Code provides that every person has the right not

to be discriminated against in the workplace. It reads: 5(1) Every person has a right to equal treatment with respect to em-ployment without discrimination because of race, ancestry, place oforigin, colour, ethnic origin, creed, sex, sexual orientation, age, re-cord of offences, marital status, family status or disability.

30 Section 7(2) states that every person has the right to be free fromharassment because of sex in the workplace

7(2) Every person who is an employee has a right to freedom fromharassment in the workplace because of sex by his or her employer oragent of the employer or by another employee.

31 Section 46.3(1) of the Code provides for the vicarious liability of cor-porations for the acts of their officers, employees or agents. That sectionreads:

46.3(1) For the purposes of this Act, except subsection 2 (2), subsec-tion 5 (2), section 7 and subsection 46.2 (1), any act or thing done oromitted to be done in the course of his or her employment by anofficer, official, employee or agent of a corporation, trade union,trade or occupational association, unincorporated association or em-


ployers’ organization shall be deemed to be an act or thing done oromitted to be done by the corporation, trade union, trade or occupa-tional association, unincorporated association or employers’organization.

[Emphasis added.]

32 Thus, under the Code, a corporation cannot be held vicariously liablefor the acts of its employees, agents or officers when it comes to sexualharassment. Those complaints are to be brought against the individualwho actually committed the harassment.

33 Management employees who fail to take appropriate action to preventdiscriminatory harassment in the workplace once they know of the of-fending conduct may be found personally liable for infringing an em-ployee’s right to a workplace free from sex discrimination under s. 5(1).Failing to deal with the harassment, thereby creating a poisoned workenvironment is a violation under s. 5(1) of the Code, a violation forwhich the corporation can be held vicariously liable. Furthermore, if theindividual responsible for the harassment is a directing mind of the cor-poration, then the corporation can also be held liable for the individualact of harassment (see Moffatt v. Kinark Child & Family Services, 36C.H.R.R. D/346 (Ont. Bd. of Inquiry); Naraine v. Ford Motor Co. ofCanada, 27 C.H.R.R. D/230 (Ont. Bd. of Inquiry), aff’d (1999), 124O.A.C. 39 (Ont. Div. Ct.), rev’d on other grounds (2001), 209 D.L.R.(4th) 465 (Ont. C.A.), leave to appeal ref’d [2002] S.C.C.A. No. 69(S.C.C.)).

34 The fact that a corporate respondent may also be jointly and severallyliable for the conduct of employees is not a basis to insulate the employ-ees from personal liability (Drummond v. Tempo Paint & Varnish Co.,33 C.H.R.R. D/175 (Ont. Bd. of Inquiry). The purpose of s. 46.3 of theCode is to confirm the parallel statutory liability of corporations for theactions of their employees, not to replace it (Reyes v. Seepersaud, 2010HRTO 933 (Ont. Human Rights Trib.) at para. 7).

35 Section 45.2 of the Code governs the grant of remedies. It providesthat “the Tribunal may make one or more of [emphasis added]” a numberof orders against a party to the application, including the payment ofmonetary compensation. The section is clearly discretionary.

36 The aim of the Code is the removal of discrimination. The Code’smain approach is not to punish the discriminator, but rather to providerelief to the victims of discrimination. Remedies must be effective and


consistent with the “almost constitutional” nature of the rights protected(O’Malley v. Simpsons-Sears Ltd., [1985] 2 S.C.R. 536 (S.C.C.);Robichaud v. Brennan, [1987] 2 S.C.R. 84 (S.C.C.)).

Analysis37 On the application before us, Ms. Farris asserts that the Tribunal’s

decision is unreasonable because, after a complaint that took over sevenyears to process and a hearing that lasted over 58 days, she was left withno effective remedy even though she was found to be the victim of dis-crimination. Staubach, the only party against whom damages wereawarded, has been non-operational since 2004. Furthermore, the Tribu-nal’s reasons provide no reasonable explanation for not awarding dam-ages against Mr. McKeague and Mr. Leonard. They owned the holdingcompany that owns Staubach, they were found not to have recognizedand addressed the poisoned work environment that factored into Ms. Far-ris’ termination, and they were the ones who terminated her employment.

38 The Commission also argues that, having found that Mr. McKeagueand Mr. Leonard breached the Code, it was unreasonable and inconsis-tent with established human rights principles of personal and corporateliability not to hold them liable for the damages that flowed from thosebreaches. Imposing only corporate liability, when the corporation wasknown to be inactive, provided no meaningful remedy to Ms. Farris. Thisresult is inconsistent with the fundamental purpose of the Code. Accord-ing to the Commission, the Tribunal failed to give adequate reasons toexplain its decision not to make Mr. McKeague and Mr. Leonard jointlyand severally liable with the corporation for Ms. Farris’ damages.

39 Mr. McKeague and Mr. Leonard submit that a reasonable basis forthe Tribunal’s decision on this issue can be inferred from reading thedecision as a whole. First, the Tribunal considered that the role of each ofMr. McKeague and Mr. Leonard was not central enough to support afinding of individual liability. Second, the Tribunal was not satisfied thatthe corporation would not be able to pay, even though it was inactive.Both these considerations were valid considerations under human rightslaw. The Tribunal’s decision was a discretionary one and, as such, is en-titled to the highest degree of deference from this court.

40 The Tribunal assists the court with respect to the standard of reviewand the case law on the adequacy of reasons. In doing so, it argues thatits decision is entitled to the highest degree of deference and that, as a


reviewing court, we should be cautious about substituting our own viewof the proper outcome by designating an omission as “fateful”. Under areasonableness analysis, a decision is not required to deal with every is-sue and every argument raised by the parties, nor is perfection the stan-dard. The reasons must adequately explain the bases of the decision.However, the reasons must be read in light of the evidence, the submis-sions of the parties and the nature of the decision maker’s statutory task(N.L.N.U. v. Newfoundland & Labrador (Treasury Board), 2011 SCC62, [2011] 3 S.C.R. 708 (S.C.C.)).

41 In this case, when it came to dealing with the personal liability of theindividuals against whom Ms. Farris had complained, the Tribunal foundthat one of these individuals (Ms. Papillon) had not breached the Code.While the Tribunal does not go on to expressly state this, it is clear that,given this finding, there would be no remedy ordered against Ms.Papillon.

42 With respect to the other individual respondents, the Tribunal pointedout its “key” conclusion “that there was a poisoned work environmentthat was not recognized and addressed by Mr. McKeague and Mr. Leo-nard and this environment was a factor in the complainant’s subsequenttermination.” However, instead of then dealing with the implications ofthis finding when it came to Mr. McKeague’s and Mr. Leonard’s liabilityfor damages (as managers and owners), the Tribunal moved to discussthe role of the agents who had been named in the complaint.

43 With respect to the agents, the Tribunal, as indicated earlier, found asfollows:

While the agents played a definite role in the creation of the environ-ment, the agents who participated included agents who were notnamed as parties. In parsing out what occurred it becomes difficult toascertain the role that each agent played such that the centrality ofeach agent’s role can be determined in a manner that makes senseand would support an order finding the individual liable for damages.

44 Thus, it is clear that the Tribunal was not prepared to make any of theagents liable for damages because of the difficulty in determining thecentrality of each agent’s role in what occurred. After articulating thisreason for not making the agents liable, instead of returning to deal withthe liability of the managers, Mr. McKeague and Mr. Leonard, the Tribu-nal stated, “Ultimately, I find that the appropriate order is against thecorporation.”


45 This failure to expressly articulate a reason why the managers shouldnot be found personally liable for damages constitutes a gap in the Tribu-nal’s reasons. We agree that the mere existence of such a gap does not inand of itself render the decision an unreasonable one. As Newfoundlandand Labrador Nurses’ UnionN.L.N.U., supra, makes clear, the reasonsare not to be reviewed in a vacuum, instead “the result is to be looked atin the context of the evidence, the parties’ submissions and the process”(para. 18).

46 A decision-maker is not required to make an explicit finding on eachelement of his or her decision. As put by Abella J. in Newfoundland andLabrador Nurses’ UnionN.L.N.U. at paragraph 16:

In other words, if the reasons allow the reviewing court to understandwhy the tribunal made its decision and permit it to determine whetherthe conclusion is within the range of acceptable outcomes, the Dun-smuir criteria are met.

47 In this case, however, the reasons do not allow a reviewing court tounderstand why the Tribunal made the decision it did on the issue beforeus. Nor do they allow the court to determine whether the conclusion thatMr. McKeague or Mr. Leonard should not be found jointly and severallyliable for any portion of the damages awarded against the corporation iswithin the range of acceptable outcomes.

48 If, as Mr. McKeague and Mr. Leonard submit, the Tribunal implicitlydecided not to find them personally liable for damages because, as withthe agents, it could not determine how central their conduct was in creat-ing the situation that led to Ms. Farris’ termination, this reasoning flies inthe face of what the Tribunal identified as its “key” finding; namely thatMr. McKeague and Mr. Leonard did not recognize and address thepoisoned work environment, an environment that was a factor in her sub-sequent termination.

49 As already mentioned, not recognizing and addressing a poisonedwork environment is in and of itself a violation of s. 5(1) of the Code.Furthermore, it was Mr. McKeague and Mr. Leonard who decided to ter-minate Ms. Farris’ employment rather than address the poisoned workenvironment, a termination that the Tribunal expressly found to be con-trary to the Code. Given their distinct and separate duties as managers toaddress the poisoned work environment and the fact that it was their de-cision to terminate Ms. Farris, any finding that their role was not “cen-tral” in what occurred would be unreasonable.


50 Another reason that was suggested for why the Tribunal chose not tofind Mr. McKeague and Mr. Leonard jointly and severally liable for anyof the damages awarded against Staubach is that there was no need to doso — awarding damages against the corporation was sufficient. This ra-tionale was articulated by the Tribunal at paragraph 212 of its reasons:

I have considered the Commission’s submission that there is a juridi-cal reason for naming the individual respondents. However, I do notunderstand the corporation to be bankrupt, only that it is not opera-tional. In these circumstances, I do not find it appropriate to make anorder against the individuals on the assumption that the corporationwill not be able to pay.

51 In assessing whether this reasoning would provide a rational basis forthe outcome that is in dispute, it is important to keep in mind two of thefundamental principles of human rights law that were outlined earlier inthese reasons. First, a finding of corporate liability is not meant to act asa shield against a finding of individual liability where the acts of the indi-vidual constitute a violation of the Code. Second, the focus of humanrights legislation is to provide an effective remedy to the complainant.One measure of effectiveness is the degree to which the damages can becollected.

52 Staubach had been inoperative for seven years when the Tribunal ren-dered its decision. For this reason there should be concern as to whetherStaubach could pay any remedy in the form of damages. It is true thatinoperative corporations may still have assets. However, after sevenyears, they often do not and if they do not their assets have likely beendistributed to their owners. In this case those owners are Mr. McKeagueand Mr. Leonard.

53 Given the overriding purpose of human rights legislation, to provide aremedy to the complainant, it is on its face unreasonable for the Tribunalto have limited its remedial relief to an award of damages against aninoperative corporation without providing a reason that specifically ad-dresses its finding regarding Mr. McKeague and Mr. Leonard. The riskwas clear. Ms. Farris, after proceedings that lasted almost eight years anda hearing that stretched over more than 58 days, could find herself withnothing by way of a remedy in spite of the fact that the managers andowners of the company for which she worked were found to have per-sonally violated the Code. Furthermore, in its submissions to the Tribu-nal, the Commission pointed out to the Tribunal that it was partly be-cause of this risk that the Commission was asking that the individual


respondents be found jointly and severally liable for damages withStaubach for the discriminatory acts that they committed.

54 In its decision of May 20, 2011 and in its Reconsideration Decision ofSeptember 29, 2011, the Tribunal’s reasoning on this point appears to bedriven by the case law on whether individual respondents should be“named” in a human rights proceeding when a corporation is also named.

55 However, this case law was developed in the context of complain-ants’ motions to add respondent parties to a proceeding that had alreadybeen commenced. On such motions there is a two-part test to be applied,as noted in Sigrist (Litigation Guardian of) v. London District CatholicSchool Board, 2008 HRTO 14 (Ont. Human Rights Trib.) at paragraph 7:

The first part of the test is whether there are facts alleged that, ifproven, could support a finding that the proposed respondent violatedthe complainant’s rights. The second part of the test is whether theaddition of the proposed respondent would cause substantialprejudice to that party’s ability to make full answer and defence tothe allegations that cannot be alleviated by procedural orders of theTribunal. [Citations omitted.]

56 Generally, where there is no issue about a corporation’s ability to payor about its vicarious liability, human rights tribunals have displayed areluctance to add personal respondents, for fear of unnecessarily aug-menting the complexity of the proceedings and decreasing the prospectsthat the complaint will be resolved (Sigrist (Litigation Guardian of),supra at para. 42).

57 It is difficult to see why this case law would be relevant to a situationwhere the issue is not whether the personal respondents should benamed, but whether they should be found jointly and severally liable fordamages. Once a proceeding is being adjudicated there is no longer aconcern about increased complexity or about barriers to resolution. Fur-thermore, even if this case law were apposite to the situation at bar, inthis case there is a real concern about the corporation’s ability to pay.

58 Thus, the Tribunal’s reasons, considered as a whole and in light of theevidence, the parties’ submissions and the nature of its statutory task, donot disclose a rational basis for failing to find Mr. McKeague and Mr.Leonard jointly and severally liable for some or all of the damagesawarded against Staubach.


59 In view of this finding, the Tribunal’s decision not to find Mr. McK-eague and Mr. Leonard jointly and severally liable for the damagesawarded against Staubach must be set aside.

Should the Matter be Remitted to the Tribunal or Should This CourtMake its Own Remedial Order Against Mr. McKeague and Mr.Leonard?

60 The Commission and Ms. Farris urge us to make our own remedialorder rather than remit the matter for reconsideration to the Tribunal.First, they argue that “enough is enough.” Ms. Farris waited long enoughfor her first decision. To make her wait some more would be unfair andcontrary to the interests of justice. Second, they submit that the result ofremittance is “inevitable.” Code breaches and quantum of damages havebeen established and are not challenged. Given this, there is only onereasonable result that could come from remitting the matter to the Tribu-nal — namely, that Mr. McKeague and Mr. Leonard would be foundjointly and severally liable for the full amount of damages awardedagainst Staubach.

61 Subsection 2(1) of the Judicial Review Procedure Act, R.S.O. 1990,c. J.1, gives this court jurisdiction to substitute our own remedy.

62 In Stetler v. Ontario (Flue-Cured Tobacco Growers’ MarketingBoard), 2009 ONCA 234 (Ont. C.A.) at para. 42, (2009), 93 Admin. L.R.(4th) 312 (Ont. C.A.) the Court of Appeal states:

While “[a] court may not substitute its decision for that of an admin-istrative decision-maker lightly or arbitrarily”, exceptional circum-stances may warrant the court rendering a final decision on the mer-its. Such circumstances include situations where remitting the casewould be “pointless”, where the tribunal is no longer “fit to act”, andcases where, “in light of the circumstances and the evidence in therecord, only one interpretation or solution is possible, that is, whereany other interpretation or solution would be unreasonable”: Giguerev. Chambre des notaires du Quebec, [2004] 1 S.C.R. 3, at para. 66.

63 This is not a case where only one solution is possible or reasonable.The Tribunal awarded Ms. Farris $30,000 for injury to dignity, feelingsand self-respect arising out of the discrimination she experienced. Thisdiscrimination included not only Mr. McKeague’s and Mr. Leonard’sdiscriminatory acts, but also those of the agents who spread the rumourabout her and called her disparaging names. It was the culmination of


these acts that the Tribunal found created the poisoned work environmentthat Mr. McKeague and Mr. Leonard failed to address.

64 Given these findings, it is possible that the Tribunal could reasonablychoose to find Mr. McKeague and Mr. Leonard jointly and severally lia-ble for only a portion of the damages that it awarded against Staubach.

65 Therefore, deference to the administrative decision-making processrequires that the matter of apportionment of joint and several liability ofMr. McKeague and Mr. Leonard be remitted to the Tribunal forreconsideration.

Conclusion66 For these reasons the Tribunal’s decision not to find Mr. McKeague

and Mr. Leonard jointly and severally liable for any portion of the dam-ages awarded against Staubach is set aside and this issue is remitted tothe Tribunal for reconsideration in accordance with these reasons.

67 The Commission requested nominal costs to compensate it for its dis-bursements. Ms. Farris did not request costs.

68 Costs in the amount of $1,000.00 are fixed and payable to the Com-mission by the Respondents, Harry McKeague and Michel Leonard.

Application allowed.

Steinberg v. Ellis Entertainment Corp. 271

[Indexed as: Steinberg v. Ellis Entertainment Corp.]

Michael Steinberg (Plaintiff / Respondent) and EllisEntertainment Corp. and Stephen Ellis (Defendants / Appellant)

Stephen Ellis (Plaintiff by Counterclaim / Appellant) andMichael Steinberg (Defendant by Counterclaim / Respondent)

Ontario Court of Appeal

Docket: CA C54767

2012 ONCA 362

J.C. MacPherson, E.E. Gillese, J. MacFarland JJ.A.

Heard: May 10, 2012


Civil practice and procedure –––– Pleadings — Amendment — Applicationto amend — Miscellaneous –––– E Corp. and ES jointly defended wrongful dis-missal action — E Corp. also counterclaimed — It became insolvent and assetswere acquired by first-ranking secured creditor — Creditor assigned counter-claim to ES — ES obtained order to continue counterclaim — E Corp.’s defencewas then struck out — ES successfully moved to amend pleadings to make themconsistent with counterclaim — Plaintiff successfully appealed — ES ap-pealed — Appeal dismissed — ES stood in shoes of E Corp. and could not havebetter claim than it did — Because E Corp. could not factually or legally estab-lish claims in counterclaim, it would be abuse of process to allow ES to amendpleadings so that he could assert claims in counterclaim.

Business associations –––– Legal proceedings involving business associa-tions — Practice and procedure in proceedings involving corporations —Pleadings — Amendment –––– E Corp. and ES jointly defended wrongful dis-missal action — E Corp. also counterclaimed — It became insolvent and assetswere acquired by first-ranking secured creditor — Creditor assigned counter-claim to ES — ES obtained order to continue counterclaim — E Corp.’s defencewas then struck out — ES successfully moved to amend pleadings to make themconsistent with counterclaim — Plaintiff successfully appealed — ES ap-pealed — Appeal dismissed — ES stood in shoes of E Corp. and could not havebetter claim than it did — Because E Corp. could not factually or legally estab-lish claims in counterclaim, it would be abuse of process to allow ES to amendpleadings so that he could assert claims in counterclaim.

Labour and employment law –––– Employment law — Termination and dis-missal — Practice and procedure — Pleadings –––– E Corp. and ES jointly


defended wrongful dismissal action — E Corp. also counterclaimed — It be-came insolvent and assets were acquired by first-ranking secured creditor —Creditor assigned counterclaim to ES — ES obtained order to continue counter-claim — E Corp.’s defence was then struck out — ES successfully moved toamend pleadings to make them consistent with counterclaim — Plaintiff suc-cessfully appealed — ES appealed — Appeal dismissed — ES stood in shoes ofE Corp. and could not have better claim than it did — Because E Corp. couldnot factually or legally establish claims in counterclaim, it would be abuse ofprocess to allow ES to amend pleadings so that he could assert claims incounterclaim.

Cases considered by E.E. Gillese J.A.:

Essa v. Panontin (2010), 2010 ONSC 691, 2010 CarswellOnt 1164 (Ont.S.C.J.) — referred to

Old Willoughby Realty Ltd. v. Mathews Southwest Developments Ltd. (2009),2009 CarswellOnt 6047 (Ont. S.C.J.) — referred to

R. v. Wilson (1983), 1983 CarswellMan 154, 1983 CarswellMan 189, [1983] 2S.C.R. 594, 4 D.L.R. (4th) 577, 51 N.R. 321, [1984] 1 W.W.R. 481, 26 Man.R. (2d) 194, 9 C.C.C. (3d) 97, 37 C.R. (3d) 97, [1983] S.C.J. No. 88(S.C.C.) — referred to



Rules considered:

Rules of Civil Procedure, R.R.O. 1990, Reg. 194R. 19.02 — considered

APPEAL by defendant from judgment reported at Steinberg v. EllisEntertainment Corp. (2011), 2011 CarswellOnt 15848 (Ont. S.C.J.), which al-lowed plaintiff’s appeal of defendant’s motion to amend pleadings.

Paul D. Guy, Faren H. Bogach for Appellant, Stephen EllisKevin D. Sherkin, Robert A. Gold for Respondent

E.E. Gillese J.A.:

1 This appeal raises a significant pleadings issue. A corporation and anindividual jointly defended an action. The corporation also counter-claimed. It became insolvent and its assets were acquired by its first-ranking secured creditor. The creditor assigned the counterclaim to theindividual. The individual obtained an order to continue the counter-

Steinberg v. Ellis Entertainment Corp. E.E. Gillese J.A. 273

claim. The corporation’s defence was then struck out. Is the individualpermitted to amend his pleadings to make them consistent with the coun-terclaim? In the circumstances of this case, it is my view that he cannot.

The Facts in Brief2 Michael Steinberg (“Steinberg”) was the former Chief Operating Of-

ficer and General Counsel of Ellis Entertainment Corp. (the “Corpora-tion”). He began a wrongful dismissal lawsuit against the Corporationand Stephen Ellis (“Ellis”) personally. At the time, Ellis controlled theCorporation. He was its President and Chief Executive Officer, as well asa director and officer.

3 In the action, Steinberg sought damages of $250,000 for wrongfuldismissal, back wages, vacation pay, and oppression. He sought reliefagainst Ellis personally for vacation pay and back wages, pursuant to theprovisions of the Employment Standards Act, 2000, S.O. 2000, c. 41.

4 The Corporation and Ellis defended the claim in a joint pleading, con-sisting of a statement of defence (the “joint statement of defence”) and acounterclaim (the “Counterclaim”). In the joint statement of defence, theCorporation and Ellis alleged that Steinberg voluntarily resigned fromhis employment with the Corporation or, alternatively, that Steinberg hadengaged in serious misconduct that justified termination of his employ-ment for cause. Paragraph 20 of the joint statement of defence set outSteinberg’s alleged misconduct, the essence of which is that he secretlyattempted to compete against the Corporation while employed by it. Inthe joint statement of defence, the Corporation and Ellis also alleged thatSteinberg had received all vacation pay and compensation to which hewas entitled.

5 The Counterclaim was brought only by the Corporation. In it, theCorporation sought damages of approximately $1 million for the wrong-doing alleged in the joint statement of defence. The Counterclaim itselfcontained no additional allegations against Steinberg. Ellis personally didnot claim anything by means of counterclaim.

6 The Corporation became insolvent.7 On January 13, 2011, all of the Corporation’s assets, including the

Counterclaim, were acquired by the first-ranking secured creditor,Knightscove Media Corp. (“Knightscove”).

8 On March 18, 2011, Knightscove assigned the Counterclaim to Ellis.


9 On March 31, 2011, based on the Corporation’s failure to attend dis-covery, Steinberg successfully moved to strike out the Corporation’sstatement of defence. The Counterclaim was not struck out. Ellis,through his counsel, participated in the motion.

10 In accordance with rule 19.02 of the Rules of Civil Procedure, R.R.O.1990, Reg. 194 (the “Rules”), as a consequence of the Corporation’s de-fence being struck out and it being noted in default, the Corporation wasdeemed to admit the truth of the allegations of fact contained in the state-ment of claim.

11 On May 20, 2011, Ellis obtained an order that allowed him to con-tinue the Counterclaim in his name (the “order to continue”).

12 Steinberg did not challenge the assignment of the Counterclaim to El-lis nor did he appeal the order to continue.

13 Ellis moved for leave to amend his statement of defence and counter-claim to make it consistent with the order to continue. The amendmentswould permit him to make the same allegations of fact as those that hadbeen advanced in the joint statement of defence and which had beenstruck out as against the Corporation.

14 Steinberg resisted the motion.

The First Order15 By order dated September 15, 2011, Master Sproat granted the mo-

tion and allowed the amendments to be made (the “first order”).16 In brief reasons, the Master explained as follows. The Corporation’s

defence was struck as a result of its failure to attend discovery. The mer-its of its defence and proof of the underlying facts were not adjudicated.Ellis has a continued right to defend. Ellis’s continued denial of the claimis unaffected by the striking of the Corporation’s defence or deemed ad-missions of the facts upon the noting in default.

17 As there was no order striking the Counterclaim, it was properlybefore the court. Ellis has obtained an order to continue and no issue hasbeen taken with that order. The Rules are clear that amendments shall begranted unless there is prejudice that cannot be compensated for by costsand Steinberg had not advanced prejudice. Therefore, Ellis should bepermitted to make the amendments.

18 Steinberg appealed.


The Order Under Appeal19 By order dated November 24, 2011 (the “order under appeal”),

Hainey J. allowed Steinberg’s appeal and dismissed Ellis’s motion toamend. He reasoned as follows.

20 Because the Corporation’s statement of defence was struck out, it isdeemed to have admitted the allegations in the statement of claim, in-cluding that Steinberg’s employment was wrongfully terminated. TheCounterclaim contained no allegations specific to it but, rather, adoptedparagraph 20 of the joint statement of defence which recites a number ofallegations of misconduct by Steinberg during his employment with theCorporation. The serious allegations are inconsistent with, and contraryto, the Corporation’s deemed admissions.

21 Against this background, it would be an abuse of process to allowEllis to continue to assert the serious allegations in the Counterclaim.

22 The court should review a proposed pleading to determine whether itis legally tenable and should refuse an amendment as legally untenable ifit is clearly impossible of success.

23 Given the deemed admissions by the Corporation, the allegations inthe Counterclaim are not legally tenable and are impossible of success.Hence, it was an error for the Master to have permitted Ellis to amend hispleadings.

The Issues24 On appeal to this court, Ellis asks that the order under appeal be set

aside and the first order be restored. He submits that Hainey J. erred by:

1. failing to take into account that he (Ellis) acquired theCounterclaim before the deemed admissions were made bythe Corporation; and

2. allowing a collateral attack to be made against the order tocontinue.

Acquisition of the Counterclaim before The Deemed Admissions25 For the purposes of this submission, Ellis asks that three dates be kept

in mind:

- January 13, 2011: Knightscove acquired the Counterclaim- March 18, 2011: Knightsbridge assigned the Counterclaim to

Ellis


- March 31, 2011: The Corporation’s statement of defence isstruck out.

26 On this issue, Ellis argues as follows. The Corporation lost all of itsrights and interests in the Counterclaim on January 13, 2011, whenKnightscove acquired the Corporation’s assets. Ellis acquired the right topursue the Counterclaim on March 18, 2011, when it was assigned tohim. By the time the Corporation’s statement of defence was orderedstruck out on March 31, 2011, and the deemed admissions were made bythe Corporation, the Corporation no longer had the right to advance theCounterclaim: he had that right. Accordingly, Ellis contends, the deemedadmissions of the Corporation had no impact on the legal viability of theCounterclaim and Hainey J. erred in failing to recognize the significanceof the timing of the relevant events.

27 I do not accept this submission. In my view, although Hainey J. didnot expressly advert to the timing of events, there is no error in hisreasoning.

28 The effect of the assignment was to give Ellis the right to pursue theCounterclaim on behalf of the Corporation. He stood in the Corpora-tion’s shoes for the purpose of pursuing the Counterclaim. He could nothave a better claim than the Corporation. Therefore, as I will explain,when the Corporation’s statement of defence was struck out, there wasan effect on Ellis’s ability to continue the Counterclaim.

29 The Counterclaim seeks relief for allegations set out in the joint state-ment of defence and is supported by no other allegations. As a conse-quence of the Corporation’s defence being struck out and it being notedin default, the Corporation was deemed to admit the truth of the allega-tions of fact contained in the statement of claim: see rule 19.02 of theRules. Accordingly, the Corporation was deemed to admit that it hadwrongfully terminated Steinberg’s employment. It could no longer assertthat Steinberg had wrongfully attempted to compete against it during hisemployment with the Corporation because those allegations are inconsis-tent with, and contrary to, the Corporation’s deemed admission that ithad wrongfully terminated Steinberg’s employment.

30 Thus, given the deemed admissions by the Corporation, it was notpossible for the Corporation to factually establish the allegations ofwrongdoing that underpinned its claims in the Counterclaim. As itcouldn’t factually establish the allegations, it would be impossible for theCorporation to legally make out the claims in the Counterclaim. In short,


the claims in the Counterclaim are clearly impossible of success on thepart of the Corporation. As Hainey J. observed, the court should refusean amendment if it is not tenable at law: see Old Willoughby Realty Ltd.v. Mathews Southwest Developments Ltd. [2009 CarswellOnt 6047 (Ont.S.C.J.)], 2009 CanLII 55352, at para. 19; and Essa v. Panontin, 2010ONSC 691 (Ont. S.C.J.).

31 As I have already noted, Ellis stands in the shoes of the Corporationand cannot have a better claim than it does. Because the Corporationcould not factually or legally establish the claims in the Counterclaim, itwould be an abuse of process to allow Ellis to amend his pleadings sothat he could assert the claims in the Counterclaim.

The Collateral Attack Argument32 A collateral attack is an attack made against a court order or judgment

in proceedings other than ones whose specific object is the reversal, vari-ation or nullification of the order or judgment: see R. v. Wilson, [1983] 2S.C.R. 594 (S.C.C.), at p. 599.

33 Ellis submits that the order under appeal is a collateral attack on theorder to continue. This submission runs as follows.

34 Through the assignment, Ellis acquired the Counterclaim. The orderto continue gave Ellis the right to continue the Counterclaim againstSteinberg in his own name. The order under appeal effectively invali-dates the order to continue because it prevents Ellis from continuing theCounterclaim. Had Steinberg wished to prevent the Counterclaim frombeing continued, Steinberg had to appeal the order to continue. He didnot. The order to continue was not in issue before Hainey J. Therefore, itwas not open to Hainey J. to make the order under appeal because itamounted to a collateral attack on the order to continue.

35 Again, I reject this submission.36 As I have already explained, the effect of the striking out of the Cor-

poration’s statement of defence and the deemed admissions means itwould be impossible for the Corporation to succeed in establishing theclaims in the Counterclaim. In those circumstances, the amendments thatEllis sought to make were not tenable at law. It was for that reason thatHainey J. concluded that it would be an abuse of process to permit theamendments to be made. Accordingly, the order under appeal does notamount to a collateral attack on the order to continue.


Disposition37 Accordingly, I would dismiss the appeal with costs to the respondent

fixed, on consent, at $2,500, inclusive of disbursements and all applica-ble taxes.

J.C. MacPherson J.A.:

I agree.

J. MacFarland J.A.:

I agree.

Appeal dismissed.

Hussain v. Suzuki Canada Ltd. 279

[Indexed as: Hussain v. Suzuki Canada Ltd.]

Hussain v. Suzuki Canada Ltd.


Docket: CV-11-421472

Roberts J.

Judgment: November 4, 2011

Labour and employment law –––– Employment law — Termination and dis-missal — Notice — Considerations affecting length of notice — Multiplefactors considered –––– At time of his termination for employment withoutcause, 65-year-old plaintiff H had been working for defendant employer S Ltd.for almost 36 years — H’s job with S Ltd. had been his only full-time job inCanada; while some of his skills may have been transferable, their entire appli-cation had been in automotive industry — H had no inkling that his employmentwas about to be terminated; it occurred because of S Ltd.’s restructuring due toeconomic issues — H brought action for damages for wrongful dismissal — Ac-tion allowed — While there is no cap on amount of reasonable notice of em-ployment termination to which employee may be entitled, and each case must beconsidered on its own particular circumstances, 24 months is usually higher endof range unless generally there are exceptional circumstances — While each fac-tor on its own might not have been exceptional, combination of aforementionedfactors amounted to kind of exceptional circumstances that warranted 26-monthnotice period — There was clear evidence of difficulties in finding re-employ-ment that H had faced and would continue to encounter over length of his noticeperiod — At 65 years of age, it could not be seriously debated that H was intwilight if not at end of his working years — However, applying contingencywas preferable to bringing parties back in future if H found employment beforeend of notice period or requiring H to submit proof of mitigation efforts forpayment out of trust — Court found one per cent chance that H would be re-employed and accordingly reduced 26-month notice period by two weeks to25.5 months.

Labour and employment law –––– Employment law — Termination and dis-missal — Remedies — Damages — Bonuses –––– At time of his terminationfor employment without cause on February 15, 2011, 65-year-old plaintiff H hadbeen working for defendant employer S Ltd. for almost 36 years — While bo-nuses were discretionary, S Ltd.’s vice-president of finance operations explainedthat results of S Ltd. determined whether bonuses were paid and each employeewas assessed based on rating system — H estimated that he received bonuses 30out of 36 years of his employment — Out of seven years of data provided by H,


he received bonus in last five years, including fiscal year ending March 2010 —H brought action for damages for wrongful dismissal — Action allowed —While not enormous part of H’s compensation, given regularity with which bo-nuses were paid, they formed integral part of H’s compensation — S Ltd.’s as-sertion that H would not have received bonus because of his poor performancewas belied by results of H’s 2010 performance review in which H received ac-ceptable and competent ratings — As result, H was entitled to be paid bonus thathe would have received if he had been employed on March 31, 2011, as well asduring period of reasonable notice.

Labour and employment law –––– Employment law — Termination and dis-missal — Remedies — Damages — Fringe benefits –––– If benefits cannot becontinued by defendant employer’s group carrier, then value of benefits must beassessed for remainder of period of reasonable notice and paid to plaintiff, eitherat employer’s cost or cost to plaintiff of replacing them in marketplace, less anyamounts plaintiff would have contributed to them during his or her employment,and less any amounts that were paid by employer for disability benefits.

Labour and employment law –––– Employment law — Termination and dis-missal — Remedies — Damages — Reduction for failure to mitigate ––––Defendant employer’s complaint that following his employment termination,plaintiff employee should have immediately started to apply for work ignoredeffect of plaintiff’s shock in having been terminated from employment after somany years of service and at his age without notice, cause, nor single penny intermination and severance pay; damages were not reduced for failure tomitigate.

Labour and employment law –––– Employment law — Termination and dis-missal — Notice — Mitigation by employee — Onus of proof –––– Defendantemployer did not meet its burden of proving that plaintiff employee failed tomitigate his damages; therefore, there was no reduction of 26-month notice pe-riod, aside from application of contingency.

Labour and employment law –––– Employment law — Termination and dis-missal — Practice and procedure — Costs — Entitlement to costs –––– Par-ties agreed that in event that plaintiff employee was successful on all issues, heshould have his partial indemnity costs of $19,287.37; plaintiff was materiallysuccessful on all issues and was entitled to his costs.

Labour and employment law –––– Employment law — Termination and dis-missal — Remedies — Damages — Prejudgment interest –––– Plaintiff em-ployee was entitled to prejudgment interest of 1.3 per cent on all amounts paya-ble to him for pension, health and other benefits that were not continued or paidfrom date that they ceased.

Hussain v. Suzuki Canada Ltd. 281

Civil practice and procedure –––– Judgments and orders — Interest onjudgments — Postjudgment interest — Rate of –––– Plaintiff employee wasentitled to postjudgment interest of three per cent on all net amounts payableunder judgment, including costs, from date of this judgment.

Cases considered by Roberts J.:

Bardal v. Globe & Mail Ltd. (1960), [1960] O.W.N. 253, 24 D.L.R. (2d) 140,1960 CarswellOnt 144, [1960] O.J. No. 149 (Ont. H.C.) — followed

Benayon v. Total Credit Recovery Ltd. (1996), 1996 CarswellOnt 767, [1996]O.J. No. 739 (Ont. Gen. Div.) — referred to

Benayon v. Total Credit Recovery Ltd. (1998), 1998 CarswellOnt 4199, [1998]O.J. No. 4414 (Ont. C.A.) — referred to

Davidson v. Allelix Inc. (1991), 39 C.C.E.L. 184, 86 D.L.R. (4th) 542, 7 O.R.(3d) 581, 54 O.A.C. 241, 1991 CarswellOnt 933, [1991] O.J. No. 2230 (Ont.C.A.) — referred to

Di Tomaso v. Crown Metal Packaging Canada LP (2011), 2011 C.L.L.C. 210-038, 337 D.L.R. (4th) 679, 2011 CarswellOnt 5356, 2011 ONCA 469, 282O.A.C. 134, [2011] O.J. No. 2900 (Ont. C.A.) — referred to

Suttie v. Metro Transit Operating Co. (1983), 42 B.C.L.R. 234, 1 C.C.E.L. 123,1983 CarswellBC 9, [1983] 3 W.W.R. 71, [1983] B.C.J. No. 1657 (B.C.S.C.) — referred to

Suttie v. Metro Transit Operating Co. (1985), 2 B.C.L.R. (2d) 145, 1985 Car-swellBC 9, [1986] 3 W.W.R. 289, 28 D.L.R. (4th) 36, 9 C.C.E.L. 19, [1985]B.C.J. No. 1749 (B.C. C.A.) — referred to

Systad v. Ray-Mont Logistics Canada Inc. (2011), 2011 CarswellBC 2370, 2011BCSC 1202, 94 C.C.E.L. (3d) 175 (B.C. S.C.) — referred to

Thorne v. Hudson’s Bay Co. (2011), 2011 CarswellOnt 11419, 2011 ONSC6010 (Ont. S.C.J.) — referred to


Courts of Justice Act, R.S.O. 1990, c. C.43Generally — referred to

ACTION by employee for damages for wrongful dismissal.

Daniel Lublin for PlaintiffLaurie Jessome, Jessica Zagar for Defence


Roberts J.:

1 The parties agree that there are no genuine issues requiring a trial.They have submitted an Agreed Statement of Facts. I therefore disposeof the plaintiff’s action as follows:

I Reasonable Notice Period:2 The plaintiff submits that he was entitled to 30 months’ notice of the

termination of his employment; the defendant submits a range of 12 to 18months as the appropriate period of reasonable notice.

3 The plaintiff is entitled to 26 months’ notice of the termination of hisemployment, or payment in lieu of, based on the case law provided bythe parties and, in particular, applying all the well known factors takenfrom Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont.H.C.):

i. At the time of his termination for employment withoutcause on February 15, 2011, the plaintiff was almost 65years old.

ii. He had worked continuously for the defendant since April7, 1975. With almost 36 years’ service, he was the defen-dant’s most tenured employee in Canada. He had no noticeor inkling that his employment would be terminated.

iii. His last position held with the defendant was AssistantWarehouse Supervisor, a supervisory position, of which theduties are set out in paragraph 6 of the Agreed Statement ofFact. He was responsible for supervising 11 people. Defen-dant’s counsel submitted that the plaintiff’s job was a veryimportant and valuable job.

iv. The plaintiff immigrated to Canada from India in Septem-ber 1974. His job with the defendant has been his only fulltime job in Canada. He has worked for the defendant forthe majority of his working life. While there is no evidencethat he is to retire imminently, it is a reasonable inferencethat the plaintiff is now closer to the end of his workingyears.

v. While some of his skills may be transferable, their entireapplication has been in the automotive industry. Althoughhe has had many years of warehouse and supervisory expe-

Hussain v. Suzuki Canada Ltd. Roberts J. 283

rience, they are general skills obtained on the job and arenot the product of a definable trade, and are therefore lessmarketable.

vi. The plaintiff lost his job as a result of the defendant’s re-structuring due to its economic issues.

4 While there is no cap on the amount of reasonable notice of employ-ment termination to which an employee may be entitled, and each casemust be considered on its own particular circumstances, 24 months isusually the higher end of the range unless generally there are exceptionalcircumstances: Di Tomaso v. Crown Metal Packaging Canada LP, 2011ONCA 469 (Ont. C.A.), at para. 11.

5 In my view, while each factor on its own may not be exceptional, thecombination of all of the above factors amount to the kind of exceptionalcircumstances that warrant a 26-month notice period.

II Mitigation:6 The plaintiff has a duty to mitigate his damages for wrongful dismis-

sal by taking all reasonable steps to obtain alternate employment that issuitable to his employment experience and abilities. The plaintiff’s ef-forts need not be perfect but they must be reasonable. The defendant hasthe onus of proving that the plaintiff has failed to mitigate his damages.(See: Thorne v. Hudson’s Bay Co., 2011 ONSC 6010 (Ont. S.C.J.), atpara. 26)

7 The plaintiff’s evidence of his efforts until July 2011 satisfy his dutyto mitigate: he began his applications for employment within 3 weeks ofhis termination; as of July 2011, he had made 27 applications for posi-tions that appear to be suitable to his employment experience and abili-ties; and, in addition to searching and registering on appropriate worksites, he has made inquiries of co-workers, community resources, andfriends. Except for 1 telephone interview, his efforts have provenfruitless.

8 The defendant has not met its burden to prove that the plaintiff failedto mitigate his damages. The defendant has not submitted any evidenceto demonstrate that there were other appropriate work opportunities forwhich the plaintiff should have applied or which he ought to have pur-sued. The cross-examination of the plaintiff did not serve to discredit theplaintiff’s mitigation efforts. The defendant’s criticism that the evidenceof the plaintiff’s mitigation efforts stops at July is unfounded: all affida-


vit evidence had to be filed before the cross-examinations which wereheld in July; and the plaintiff could not file further affidavit evidencewithout leave of the court. The plaintiff was prepared to file additionalevidence of his efforts if required. I shall return to this point later in theseReasons.

9 The defendant complains that following his employment termination,the plaintiff should have immediately started to apply for work. This as-sertion ignores the effect of the plaintiff’s shock in having been termi-nated from employment after so many years of service and at his agewithout notice, cause, nor a penny in termination and severance pay (inbreach of the defendant’s statutory obligations).

10 The plaintiff is allowed a reasonable period of time to get over thisshock, to organize his thoughts about obtaining new employment, and toundertake the necessary research and preparation of his resumes so thathe is in a position to apply and compete for available positions: Systad v.Ray-Mont Logistics Canada Inc., 2011 CarswellBC 2370 (B.C. S.C.), atpara. 31. It is frankly remarkable that, in his circumstances, the plaintiffwas able to organize himself so quickly.

11 In consequence, I make no reduction of the 26-month notice periodthat I have determined is reasonable in the specific and exceptional cir-cumstances of this case.

12 The plaintiff’s motion for judgment has reached the court before theend of the period of reasonable notice, so that the plaintiff still has theduty to mitigate his damages by seeking alternate, comparable employ-ment. This situation gives rise to the issue of whether the plaintiff’s dam-ages should be reduced by any contingency for re-employment, whetherpartial summary judgment should be awarded and the plaintiff’s motionreturned some months hence, and whether the damages should be held intrust or other vehicle to be paid out to the plaintiff upon further proof ofhis reasonable and/or successful mitigation efforts.

13 I agree with the plaintiff’s position that it is preferable to apply a con-tingency so that this matter may be determined at this time rather thanbringing the parties back in the future or requiring the plaintiff to submitproof of mitigation efforts for payment out of a trust. The latter routesmay simply set the stage for further disagreement and protracted litiga-tion and expense.

14 What is the appropriate contingency factor? Based on the uncontro-verted evidence before me, I draw the reasonable inference that it is


highly unlikely that the plaintiff will become re-employed in a positioncomparable to that held with the defendant. The plaintiff is now 65 yearsold and, while not at all denigrating the importance of his position withthe defendant and his experience and skills, he is undoubtedly facing ex-tremely stiff competition with much younger applicants for the samekind of employment.

15 The facts are that his 27 applications have resulted in only 1 unsuc-cessful telephone interview and that the plaintiff remains unemployed al-most 9 months after his dismissal; this is clear evidence of the difficultiesthat the plaintiff is facing and will continue to encounter over the lengthof his notice period. The plaintiff is significantly disadvantaged becauseof his age when competing with younger employees: Benayon v. TotalCredit Recovery Ltd., [1996] O.J. No. 739 (Ont. Gen. Div.), at para. 44,aff’d [1998] O.J. No. 4414 (Ont. C.A.).

16 Finally, at 65 years of age, it cannot be seriously debated that theplaintiff is in the twilight if not at the end of his working years and that,because of his age, his chances of employment in a similar or even arelated industry are remote: Suttie v. Metro Transit Operating Co.,[1983] B.C.J. No. 1657 (B.C. S.C.), at para. 22, and [1985] B.C.J. No.1749 (B.C. C.A.), at para. 21.

17 Taking all of these circumstances into account, I see about a 1%chance of re-employment for the plaintiff and reduce the 26-month no-tice period by 2 weeks to 25.5 months.

III Damages:18 The parties agree that at the time of his employment termination, the

plaintiff’s compensation was: a base salary of $48,790; annualRRSP/Pension contributions by the defendant of 3.5% of the plaintiff’sbase salary which equals $1,708; and health, dental, life insurance, disa-bility and other benefits. The plaintiff also was eligible to receive a dis-cretionary bonus to which I return below.

19 The defendant does not dispute that the plaintiff’s base salary andpension benefit should be included in the calculation of the plaintiff’sdamages during the period of reasonable notice but argues that noamount should be allowed for the following:

i. Disability benefits: The plaintiff paid for them and there was nocost to the defendant during the plaintiff’s employment. After ter-mination of the plaintiff’s employment, the defendant paid the


premiums and continued the coverage until the benefits carrier ter-minated them in August 2011 after the plaintiff’s 65th birthday.

ii. Health, dental and other benefits: The defendant has continued topay the premiums for health, dental and other benefits and the be-nefits carrier will continue these benefits until February 15, 2012.

iii. Discretionary bonus: The bonus was entirely discretionary, theplaintiff did not receive it each and every year of his employment,and, based on the plaintiff’s last performance review, the defen-dant argues that it is doubtful that he would have received it dur-ing the fiscal year ending March 31, 2011.

20 The defendant’s position regarding the benefits is untenable. It is awell established principle that a wrongfully dismissed employee is enti-tled to the value of the lost salary and benefits flowing from the dismissal(see, for example: Davidson v. Allelix Inc., [1991] O.J. No. 2230 (Ont.C.A.), at para. 21).

21 The cost to the plaintiff of replacing the benefits provided under agroup insurance policy is far more than the plaintiff’s contribution whilehe was employed. If the benefits cannot be continued by the defendant’sgroup carrier(s), then the value of the benefits must be assessed for theremainder of the period of reasonable notice and paid to the plaintiff,either at the employer’s cost or the cost to the plaintiff of replacing themin the marketplace, less any amounts the plaintiff would have contributedto them during his employment, and less any amounts which were paidby the defendant for the disability benefits.

22 If the parties cannot agree on this amount, or if there is evidence thatno carrier will provide the benefits in issue, they may submit to methrough Judges’ Administration further affidavit evidence and submis-sions concerning these matters within 10 days of the date of theseReasons.

23 There are two aspects to the question of the discretionary bonus: thepayment of the bonus for the defendant’s fiscal year ending on March 31,2011; and the inclusion of an amount for the discretionary bonus in thecalculation of the plaintiff’s damages for the period of reasonable notice.

24 The evidence establishes the following:

i. While bonuses were discretionary, Piero Caleca, the affiant forand the Vice-President, Finance Operations, of the defendant, alsoexplained that the results of the defendant determined whether bo-


nuses were paid and each employee is assessed based on a ratingsystem.

ii. On his cross-examination, the plaintiff estimated that he receivedbonuses 30 out of the 36 years of his employment. Out of the 7years of data provided by the plaintiff, the plaintiff received a bo-nus in the last 5 of them including the fiscal year ending March2010. The defendant did not rebut the plaintiff’s evidence.

iii. Employees in comparable positions to the plaintiff, such as thedefendant’s Warehouse Supervisor who took over the plaintiff’sduties after his employment dismissal, received bonuses for thedefendant’s fiscal year ending on March 31, 2011. On his cross-examination, Mr. Caleca testified that the bonus amounts paidwere less than in previous years. He also confirmed that the defen-dant’s results were such that bonuses were paid.

25 While not an enormous part of his compensation, given the regularitywith which bonuses were paid, I find that they formed an integral part ofthe plaintiff’s compensation.

26 The defendant’s assertion that the plaintiff would not have been paida bonus because of his poor performance is belied by the results of theplaintiff’s 2010 performance review in which the plaintiff received ac-ceptable and competent ratings.

27 As a result, the plaintiff is entitled to be paid the bonus that he wouldhave received if he had been employed on March 31, 2011, as well asduring the period of reasonable notice.

28 The defendant has not provided the amount of the bonuses paid tocomparable employees or the percentage by which the bonus amountsdropped because of the defendant’s economic issues. The data for theplaintiff’s bonuses confirm that the bonuses were dropping over the lastfew years.

29 As such, rather than averaging the bonuses, which would produce anartificially high amount, I fix the amount of the plaintiff’s bonus for theyear ending March 31, 2011 in the amount of $2,248 (the same as for theprevious fiscal year end) and hold that the amount of $2,248 should beused as the bonus component in the calculation of the plaintiff’s damagesduring the period of reasonable notice.


IV Interest:30 As already noted, in breach of its statutory obligations, the defendant

failed to pay to the plaintiff his termination and severance pay entitle-ments until the end of June 2011, and only after the action had been com-menced and this motion for summary judgment instigated. The plaintiffis therefore entitled to be paid prejudgment interest under the Courts ofJustice Act of 1.3% from February 22, 2011 (the date by which the statu-tory amounts should have been paid to the plaintiff) to June 30, 2011 (orwhatever earlier specific date on which the payment was made).

31 The plaintiff’s statutory termination and severance pay amounts to 34weeks’ pay, which amount the defendant is entitled to deduct from thedamages payable to the plaintiff under this Judgment. The 34-week pe-riod ended on October 11, 2011. The plaintiff is entitled to prejudgmentinterest at 1.3% from October 11, 2011 to the date of this Judgment onthe few weeks of damages that should have been paid to him from Octo-ber 11th onwards for the balance of the 25.5 months of the notice period.

32 The plaintiff is entitled to prejudgment interest of 1.3% on allamounts payable to the plaintiff for pension, health and other benefitsthat were not continued or paid from the date that they ceased.

33 The plaintiff is entitled to postjudgment interest of 3% on all netamounts payable under this Judgment, including costs, from the date ofthis Judgment.

V Costs:34 The parties have agreed that in the event that the plaintiff is success-

ful on all issues, the plaintiff should have his partial indemnity costs of$19,287.37. The plaintiff was materially successful on all issues and isentitled to his costs.

35 For these reasons, I order that the plaintiff’s costs be fixed in theamount of $19,287.37 and payable by the defendant within 30 days.

Action allowed.

A-1 Lumpers Inc. v. Minister of National Revenue 289

[Indexed as: A-1 Lumpers Inc. v. Minister of NationalRevenue]

A-1 Lumpers Inc. (Appellant) and The Minister of NationalRevenue (Respondent)


Docket: 2008-4212(EI), 2009-14(CPP)

2012 TCC 243

Valerie A. Miller J.

Heard: June 13-14, 2012


Public law –––– Social programs — Employment insurance — Entitlementto benefits — Insurable employment — Employment contracts — Contractof service –––– Worker worked as “lumper”, which was someone who loadedand unloaded goods from trucks into warehouses or from warehouses ontotrucks — President and sole shareholder of taxpayer claimed that taxpayer’s pri-mary business was to offer brokerage services to lumpers — Minister deter-mined that worker was engaged in insurable and pensionable employment whileengaged by taxpayer for period January 7, 2007 to July 21, 2007 in accordancewith s. 5(1)(d) of Employment Insurance Act and s. 6(g) of Employment Insur-ance Regulations (EI Regulations) and paragraph 6(1)(a) of Canada PensionPlan (CPP) and subsections 34(1) and (2) of Canada Pension Plan Regulations(CPP Regulations) — Taxpayer appealed — Appeals dismissed — Taxpayerfailed to rebut assumptions set out in Minister’s replies to notices of appeals, andassumptions were assumed to be true — Taxpayer acted as placement or em-ployment agency with respect to worker — All of worker’s lumpering jobs wereobtained through taxpayer — Worker did not negotiate his hourly rate, butrather was told hourly or per load rate he would receive from taxpayer — Evi-dence supported Minister’s assumption that taxpayer advertised services of pro-viding lumpers to carriers and warehouses — Taxpayer’s clients were ware-houses and carriers which requested lumping services — Worker wasremunerated by taxpayer.

Public law –––– Social programs — Federal pension plans — Old age secur-ity pension –––– Worker worked as “lumper”, which was someone who loadedand unloaded goods from trucks into warehouses or from warehouses ontotrucks — President and sole shareholder of taxpayer claimed that taxpayer’s pri-mary business was to offer brokerage services to lumpers — Minister deter-mined that worker was engaged in insurable and pensionable employment while


engaged by taxpayer for period January 7, 2007 to July 21, 2007 in accordancewith s. 5(1)(d) of Employment Insurance Act and s. 6(g) of Employment Insur-ance Regulations (EI Regulations) and s. 6(1)(a) of Canada Pension Plan (CPP)and s. 34(1) and (2) of Canada Pension Plan Regulations (CPP Regulations) —Taxpayer appealed — Appeals dismissed — Taxpayer failed to rebut assump-tions set out in Minister’s replies to notices of appeals, and assumptions wereassumed to be true — Taxpayer acted as placement or employment agency withrespect to worker — All of worker’s lumpering jobs were obtained through tax-payer — Worker did not negotiate his hourly rate, but rather was told hourly orper load rate he would receive from taxpayer — Evidence supported Minister’sassumption that taxpayer advertised services of providing lumpers to carriersand warehouses — Taxpayer’s clients were warehouses and carriers which re-quested lumping services — Worker was remunerated by taxpayer.

Tax –––– Income tax — Employment income — Employee or independentcontractor –––– Worker worked as “lumper”, which was someone who loadedand unloaded goods from trucks into warehouses or from warehouses ontotrucks — President and sole shareholder of taxpayer claimed that taxpayer’s pri-mary business was to offer brokerage services to lumpers — Minister deter-mined that worker was engaged in insurable and pensionable employment whileengaged by taxpayer for period January 7, 2007 to July 21, 2007 in accordancewith s. 5(1)(d) of Employment Insurance Act and paragraph 6(g) of Employ-ment Insurance Regulations (EI Regulations) and paragraph 6(1)(a) of CanadaPension Plan (CPP) and subsections 34(1) and (2) of Canada Pension Plan Reg-ulations (CPP Regulations) — Taxpayer appealed — Appeals dismissed — Tax-payer failed to rebut assumptions set out in Minister’s replies to notices of ap-peals, and assumptions were assumed to be true — Taxpayer acted as placementor employment agency with respect to worker — All of worker’s lumpering jobswere obtained through taxpayer — Worker did not negotiate his hourly rate, butrather was told hourly or per load rate he would receive from taxpayer — Evi-dence supported Minister’s assumption that taxpayer advertised services of pro-viding lumpers to carriers and warehouses — Taxpayer’s clients were ware-houses and carriers which requested lumping services — Worker wasremunerated by taxpayer.

Cases considered by Valerie A. Miller J.:

Graphic Assistants Inc./Assistance Graphique Inc. v. Minister of National Reve-nue (2008), 2008 CarswellNat 5290, 2008 CCI 673, 2008 CarswellNat 4757,2008 TCC 673 (T.C.C. [Employment Insurance]) — considered

Lebov v. Minister of National Revenue (2011), 2011 TCC 216, 2011 Car-swellNat 1214, 2011 CarswellNat 1902, 2011 CCI 216 (T.C.C. [Employ-ment Insurance]) — followed

A-1 Lumpers Inc. v. Minister of National Revenue Valerie A. Miller J. 291

OLTCPI Inc. v. Minister of National Revenue (2008), 2008 CarswellNat 2998,2008 TCC 470, 2008 CarswellNat 3942, 2008 CCI 470 (T.C.C. [Employ-ment Insurance]) — considered

Sheridan v. Minister of National Revenue (1985), 57 N.R. 69, 85 C.L.L.C.14,048, 1985 CarswellNat 95, [1985] F.C.J. No. 230 (Fed. C.A.) —followed

Wiebe Door Services Ltd. v. Minister of National Revenue (1986), [1986] 2C.T.C. 200, [1986] 3 C.S. 553, 1986 CarswellNat 366, 1986 CarswellNat699, 46 Alta. L.R. (2d) 83, [1986] 5 W.W.R. 450, 1986 C.E.B. & P.G.R.8023, 86 C.L.L.C. 14,062, 87 D.T.C. 5025, [1986] 3 F.C. 553, 70 N.R. 214,[1986] F.C.J. No. 1052 (Fed. C.A.) — referred to

671122 Ontario Ltd. v. Sagaz Industries Canada Inc. (2001), 2001 SCC 59, 204D.L.R. (4th) 542, 274 N.R. 366, 55 O.R. (3d) 782 (headnote only), [2001] 4C.T.C. 139, 17 B.L.R. (3d) 1, 2001 CarswellOnt 3357, 2001 CarswellOnt3358, 11 C.C.E.L. (3d) 1, 12 C.P.C. (5th) 1, 150 O.A.C. 12, 8 C.C.L.T. (3d)60, [2001] 2 S.C.R. 983, (sub nom. Sagaz Industries Canada Inc. v. 671122Ontario Ltd.) 2002 C.L.L.C. 210-013, [2001] S.C.J. No. 61, REJB 2001-25875 (S.C.C.) — referred to


Canada Pension Plan, R.S.C. 1985, c. C-8Generally — referred to

Regulations considered:

Canada Pension Plan, R.S.C. 1985, c. C-8Canada Pension Plan Regulations, C.R.C. 1978, c. 385

s. 34(1) — considereds. 34(2) “placement or employment agency” — considered

Employment Insurance Act, S.C. 1996, c. 23Employment Insurance Regulations, SOR/96-332

Generally — referred tos. 6(g) — considered

APPEALS by taxpayer from determination by Minister that worker was engagedin insurable and pensionable employment while engaged by taxpayer.

J. Paul M. Harquail, Misty Watson for AppellantGregory B. King for Respondent

Valerie A. Miller J.:

1 A-1 Lumpers appeals the decision made by the Minister of NationalRevenue (the “Minister”) that Michael R. Trueman (the “Worker”) was


employed by it in insurable and pensionable employment during the pe-riod January 7, 2007 to July 21, 2007.

2 In making his decision, the Minister decided that the Appellant wasacting as a placement agency with respect to the Worker in accordancewith paragraph 6(g) of the Employment Insurance Regulations (the “EIRegulations”) and subsections 34(1) and 34(2) of the Canada PensionPlan Regulations (the “Plan”).

3 The Appellant denied that it was a placement or employment agency.According to Mae LeBlanc, president and sole shareholder of the Appel-lant, the Appellant’s primary business was to offer brokerage services tolumpers. (A “lumper” is a person who is hired to load and unload goodsfrom trucks into warehouses or from warehouses onto trucks.)

4 It was Mae LeBlanc’s evidence that the Appellant considered its cli-ents to be the lumpers. The description she gave of the brokerage serviceoffered by the Appellant to lumpers was basically the same as that givenin paragraph 10 of the Notice of Appeal. That paragraph reads:

10. The primary service provided by the Appellant is to offer lumpersa method of expedited and regulated payment. After the completionof a lumpering task or several lumpering tasks, a lumper may bringconfirmation of the completed task(s) to the Appellant. The lumperthen receives from the Appellant an expedited, lump sum paymentfor the work done. The Appellant withholds a percentage of thelumper’s pay as a commission for this expedited payment service. Bywithholding a percentage of the wage, the Appellant buys / thelumper assigns the lumper’s claim for payment which the Appellantlater enforces against the relevant carrier, warehouse receiver, ortruck driver to recover the money fronted to the lumper. In this way,the Appellant acts, inter alia, as a broker and conduit of monies forthe lumpers.

5 To support the evidence given by Mae LeBlanc, the Appellant alsoled evidence through two witnesses who are lumpers. Darrel Carruthersstated that he worked at different warehouses; he knew the warehousereceivers and he obtained his own lumpering jobs. He only used the Ap-pellant to do his administrative tasks; to invoice the carriers for whom heunloaded goods; and, to pay him his wages on an expedited basis. How-ever, it was Shawn Carter’s evidence that all of his lumpering work wasobtained through the Appellant. Although he has never discussed withthe carriers whether they would pay him directly, he assumed that he


could bill them directly or sell his information to another company whichoffered lumping services.

6 In the Notice of Appeal, the Appellant also described a rate negotia-tion service which it offered to the lumpers:

12. In addition to its primary brokerage services, the Appellant alsooffers a rate negotiation service to lumpers. The Appellant deter-mines where merchandise will be delivered and when lumpering ser-vices will be required. The Appellant then negotiates the lumperingrate, in advance, with the relevant carrier, warehouse receiver, bro-ker, or truck driver. The Appellant only negotiates the rate; the Ap-pellant does not contract with the carrier, warehouse receiver, ortruck driver to provide lumpering personnel.

7 The Respondent called three witnesses: Michael Trueman, theWorker; Jeff Pearson, a terminal manager with Day & Ross Transporta-tion (“Day & Ross”); and, Robert Brittain, a rulings officer from theCanada Revenue Agency (“CRA”).

8 The regulations at issue in this appeal read as follows: EI Regulations

6. Employment in any of the following employments, unless it is ex-cluded from insurable employment by any provision of these Regula-tions, is included in insurable employment:

(g) employment of a person who is placed in that employ-ment by a placement or employment agency to performservices for and under the direction and control of a clientof the agency, where that person is remunerated by theagency for the performance of those services.

Plan

34. (1) Where any individual is placed by a placement or employ-ment agency in employment with or for performance of services for aclient of the agency and the terms or conditions on which the em-ployment or services are performed and the remuneration thereof ispaid constitute a contract of service or are analogous to a contract ofservice, the employment or performance of services is included inpensionable employment and the agency or the client, whicheverpays the remuneration to the individual, shall, for the purposes ofmaintaining records and filing returns and paying, deducting and re-mitting contributions payable by and in respect of the individualunder the Act and these Regulations, be deemed to be the employerof the individual.


(2) For the purposes of subsection (1), “placement or employmentagency” includes any person or organization that is engaged in thebusiness of placing individuals in employment or for performance ofservices or of securing employment for individuals for a fee, rewardor other remuneration.

9 The term “placement or employment agency” is not defined in the EIRegulations; but, it is my view, that the definition of that term in the Planis applicable to the EI Regulations1 . In its Pre-Hearing Brief, the Appel-lant agreed with this conclusion.

10 The regulations are satisfied if:

a) The Worker was placed in his employment by theAppellant;

b) The Worker performed services for the Appellant’s client;

c) The Worker was remunerated by the Appellant;

d) In respect of the Employment Regulations, the Worker wasunder the direction and control of the Appellant’s client;and

e) In respect of the Plan, the Worker performed services forthe Appellant’s client under terms or conditions that consti-tute a contract of service or that are analogous to a contractof service.

Placement Agency11 Although the Appellant may have offered the various services which

it described in its pleadings, it is my view that it also acted as a place-ment or employment agency with respect to the Worker whose evidencewas unequivocal that all of his lumpering jobs were obtained through theAppellant. Either he called the Appellant or the Appellant’s dispatchercalled him to advise him when, where and on which carrier his serviceswere needed. At the time that he was called by the Appellant’s dis-patcher, he was also told the hourly or per load rate he would receivefrom the Appellant. The Worker did not negotiate his rate nor do I be-lieve that he was asked what his costs would be as was indicated by MaeLeBlanc. The Worker’s evidence was not shaken on cross-examination.

1OLTCPI Inc. v. Minister of National Revenue (2008), 2008 TCC 470 (T.C.C.[Employment Insurance]) at paragraph 12


12 The Appellant advertised with Service Canada for lumpers. It was theWorker’s evidence that he learned about the Appellant from its advertise-ment with Service Canada.

13 The Appellant advertised its lumpering services on its website whereit asserted that “A1 Lumpers serves the greater Moncton area with un-touchable lumper services” and “only the best and most experiencedlumpers have lumper contracts with A1 Lumpers” and that it provided“an excellent and efficient crew with over a decade of proven dependa-bility”. Clearly, the Appellant marketed its services to the carriers andthe warehouses.

14 Although Mae LeBlanc tried to distance herself from the statementson the website by saying that she had no input into the phraseology usedin the website and that it was designed by her daughter, I note that theAppellant’s new website made the exact same declarations.

15 The Minister assumed that the Appellant advertised the services ofproviding lumpers to carriers and warehouses. That assumption was notdemolished by the Appellant and in fact the evidence supported the as-sumption. I find that one of the services offered by the Appellant wasthat of a placement agency and that it placed the Worker in employmentduring the relevant period.

Placed with the Appellant’s Clients16 Mae LeBlanc was adamant that it was the lumpers, not the carriers or

the warehouses, which were the Appellant’s clients. I found her evidenceto be self-serving.

17 It was Jeff Pearson’s evidence that Day & Ross contracted with theAppellant to supply lumpers to unload its carriers. Likewise, it was Rob-ert Brittain’s evidence that he spoke to Don Depuis, the general managerfor the Appellant, who informed him that the Appellant contracted withthe carriers and the warehouses to supply lumpers to unload trucks. TheAppellant maintained a list of active lumpers to provide these services.

18 I do not know if the Appellant had a written contract with those whoused its lumpering services but the lack of formality does not negate theevidence that they were the Appellant’s clients. The carriers and ware-houses complained to the Appellant when there were insufficient lump-ers on site. They were invoiced by the Appellant and they paid the Ap-pellant’s bill. In fact, Jeff Pearson stated that Day & Ross would not pay


an invoice from an individual lumper when the arrangements to providethe lumping services had been made with the Appellant.

19 As further evidence of my finding that the warehouses and carrierswere the Appellant’s clients, Mae LeBlanc testified that when SourceMedical contacted the Appellant to do work, they specifically asked forthe Worker to be sent to do the job.

20 Based on the evidence, I conclude that the Appellant’s clients werethe various warehouses and carriers (the clients) which requested thelumping services.

Under the Direction or Control of the Appellant’s Client21 All witnesses, including Mae LeBlanc, testified that when the lump-

ers were performing all of their tasks, such as unloading or loading acarrier, or wrapping goods in plastic, they were under the direction andcontrol of the truck drivers or the warehouse personnel.

Remuneration22 I do not believe that the Appellant negotiated a rate with the carriers

and warehouses for the benefit of the lumpers. The Appellant’s motiveswere not altruistic. It negotiated a rate with those who used its lumperingservices and then told the lumpers what they would be paid for each job.According to Mae LeBlanc, if the Appellant negotiated a rate of $60 or$65 per load with the carrier, it would pay the lumper anywhere from$30 to $45 per load.

23 I found that Mae LeBlanc’s evidence was not very forthcoming whenshe was questioned about the particulars of the rate negotiation serviceswhich the Appellant allegedly offered.

24 The Worker was told by the Appellant’s dispatcher what his rate ofpay would be when he was called to do a job. I conclude that the Appel-lant determined the Worker’s rate of pay.

25 The Worker was paid by the Appellant by way of direct deposit in hisbank account after a two week holdback. The Appellant invoiced the cli-ents and was paid by cheque made payable to it alone. According to MaeLeBlanc, the Appellant was paid within 30 to 100 days of the invoicebeing sent.


26 In Graphic Assistants Inc./Assistance Graphique Inc. v. Minister ofNational Revenue2, Weisman D.J. concluded that in the context of para-graph 6(g) of the EI Regulations, prima facie, the person who actuallypays the worker, remunerates the worker. In Lebov v. Minister ofNational Revenue3 , Justice Campbell Miller agreed with this conclusionand he added that evidence was needed to displace this prima facie con-clusion. I agree with both of these conclusions.

27 Based on the evidence, it is clear that the Worker was remunerated bythe Appellant and that the Appellant was not a mere conduit of the fundsbetween its clients and the Worker as it alleged4

Contract of Service or Terms Analogous to a Contract of Service28 Paragraph 34(1) of the Plan requires that the terms or conditions

under which the Worker’s services are performed for the Appellant’s cli-ent constitute a contract of service or are analogous to a contract of ser-vice. This necessitates that I review the relationship using the criteriaidentified in Wiebe Door Services Ltd. v. Minister of National Revenue5

while being cognizant of the question posed by the Supreme Court ofCanada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc..6 at par-agraph 47 of its reasons:

47 Although there is no universal test to determine whether a personis an employee or an independent contractor, I agree with MacGui-gan J.A. that a persuasive approach to the issue is that taken byCooke J. in Market Investigations, supra. The central question iswhether the person who has been engaged to perform the ser-vices is performing them as a person in business on his ownaccount.

(emphasis added)29 The evidence supported that both the Appellant and the Worker in-

tended that the Worker be engaged as an independent contractor. How-

2(2008), 2008 TCC 673 (T.C.C. [Employment Insurance]) at paragraph 432011 TCC 216 (T.C.C. [Employment Insurance])4Sheridan v. Minister of National Revenue (1985), [1985] F.C.J. No. 230 (Fed.C.A.)5[1986] 3 F.C. 553 (Fed. C.A.)62001 SCC 59 (S.C.C.) at paragraph 47


ever, that does not end the discussion. It is necessary to ascertain whetherthe terms of the relationship between the Worker and the client supportthis intention.

30 I have already concluded that the Worker was directed and controlledin his employment by the Appellant’s clients. This factor indicates that acontract of service existed between the Worker and the Appellant’sclients.

Tools31 In order to have access to the warehouses, the Worker required steel

toed boots, a hard hat and a vest. These were supplied by the Worker.Equipment such as pallet jacks, wire snippers and box cutters were pro-vided by the warehouses. I find that this factor is neutral.

Risk of Loss/Chance of Profit32 It was Mae LeBlanc’s evidence that the Worker was liable for any

goods damaged by him in the performance of his duties and that she dis-cussed this with all lumpers when they were first engaged. However, theWorker stated that no such conversation ever took place and he did nothave to pay for goods he damaged.

33 In the case of Day & Ross, if there was damage on one of its loads, itscustomer made a claim against Day & Ross. Jeff Pearson confirmed thatDay & Ross never tried to recover the cost of damaged goods from theindividual lumpers.

34 I cannot extrapolate from Mr. Pearson’s evidence that all carrier com-panies operated in a like manner; but, I do conclude from the Worker’sevidence that he was not liable for any goods which he may havedamaged.

35 The Worker held several part time jobs while he was engaged by theAppellant. Although this usually indicates that the Worker is an indepen-dent contractor, I note that in today’s market many people have to workat several jobs just to make ends meet. In the appeal before me, theWorker was paid either an hourly rate or a rate per load, both of whichwere set by the Appellant. He did not negotiate his rate of pay. I realizethat Mae LeBlanc testified that the lumpers could negotiate their rate ofpay; but, I found her evidence to be self serving.


36 The Worker could not hire a replacement to perform his duties for theAppellant if he was unavailable when called by the Appellant. He did nothave a chance of profit.

37 The Appellant paid the Workplace Health and Safety CompensationCommission premiums for the Worker.

38 It is my view that the Worker had neither a risk of loss nor a chanceof profit. These criteria indicate that the Worker was an employee duringthe period.

39 It is my view that the Worker had neither a risk of loss nor a chanceof profit. These criteria indicate that the Worker was an employee duringthe period.

40 Although the common intention of both the Appellant and the Workerwas that the Worker be an independent contractor, the terms or condi-tions of the Worker’s working relationship with the Appellant’s clients,when analyzed against the Wiebe Door factors, do not support this inten-tion. The terms or conditions under which the Worker performed his ser-vices and was paid remuneration were analogous to a contract of service.

41 On a review of all the evidence, I conclude that the Appellant hasfailed to demolish the assumptions set out in the Minister’s replies to thenotices of appeals and those assumptions are assumed to be true.

42 The appeals are dismissed and the Minister’s decisions are confirmed.

Appeals dismissed.


[Indexed as: Cristiano v. Grand National Apparel Inc.]

Sandra Cristiano (Applicant) and Grand National Apparel Inc.(Respondent)

Ontario Human Rights Tribunal

Docket: 2011-08005-I

2012 HRTO 991

David Muir V-Chair


Human rights –––– What constitutes discrimination — Harassment –––– Ap-plicant was employed by employer — Applicant took medical leave of ab-sence — Employer requested more information and applicant characterized re-quests as harassment — When applicant returned to work she was dismissed forwillful misconduct — Applicant alleged she suffered discrimination due to herdisability and that her dismissal was reprisal — Applicant brought applicationhuman rights violation — Application dismissed and it was determined that em-ployee was not wrongfully dismissed — Issue remained as to whether em-ployer’s conduct was harassment — Employer’s conduct was found to not beharassment — Employer was entitled to request information and only repeatedrequests as applicant never provided it — Requests for further information werenot unreasonable and could not reasonably have been seen as unwelcome —There was no harassment by employer — There was no evidence of reprisal byemployer.

Cases considered by David Muir V-Chair:

Baber v. York Region District School Board (2011), 71 C.H.R.R. D/293, 2011HRTO 213 (Ont. Human Rights Trib.) — referred to

Cristiano v. Grand National Apparel Inc. (2012), 2012 HRTO 627 (Ont. HumanRights Trib.) — referred to

Jeffrey v. Dofasco Inc. (2004), 2004 CarswellOnt 8015, (sub nom. Jeffrey v.Dofasco Inc. (No. 4)) 49 C.H.R.R. D/277, 2004 HRTO 5, [2004] O.H.R.T.D.No. 5 (Ont. Human Rights Trib.) — referred to



Human Rights Code, R.S.O. 1990, c. H.19Generally — referred tos. 5 — considered

Cristiano v. Grand National Apparel Inc. David Muir V-Chair 301

s. 8 — considereds. 9 — considereds. 10(1) “harassment” — considereds. 34 — pursuant tos. 45.1 [en. 2006, c. 30, s. 5] — considered

APPLICATION for ruling on allegation of infringement of human rights.

Sandra Cristiano, Applicant for herselfKatherine Ford for Respondent, Grand National Apparel Inc.

David Muir V-Chair:

1 This is an Application made under s. 34 of the Human Rights Code,R.S.O. 1990, c. H.19, as amended (“the Code”), dated February 2, 2011.The applicant alleges that she experienced discrimination in employmentbecause of disability and reprisal contrary to ss. 5, 8 and 9 of the Code,arising out of her employment and the termination of her employmentwith the respondent company.

2 In this case, the applicant was terminated from her employment withthe respondent employer following or during a medical leave of absencefrom work. The dispute between the parties centred on the request of therespondent employer for additional information related to the medicalleave of absence. The respondent characterizes their request as bona fideand necessary so that it could plan for the leave of absence. Whereas, theapplicant characterised the repeated requests made by the employer asharassment as defined in the Code. Upon her return from the medicalleave of absence the applicant was terminated for reasons found in an-other proceeding to be unrelated to her medical issues (see discussionbelow).

3 In an Interim Decision, 2012 HRTO 627 (Ont. Human Rights Trib.)[Cristiano v. Grand National Apparel Inc.], the Tribunal directed that theparties address as a preliminary issue whether the Application should bedismissed, in whole or in part, because its substance was appropriatelydealt with in another proceeding, specifically, a claim for termination andseverance pay under the Employment Standards Act, 2000, S.O. 2000,c.41 (“ESA”). At a hearing on April 2, 2012, the parties made submis-sions on this point. Having considered these submissions, I concluded


that the Application ought to be dismissed, in part, at the hearing. Myreasons, delivered orally at the hearing, are set out below:

In my view, the question of why the applicant was dismissed fromher employment was at the heart of what the claim was about. Theemployment standards officer (“ESO”) heard from the parties anddetermined this issue. The ESO determined in a lengthy decision,which set out the basis for her decision, that the reason for the termi-nation was that the applicant had engaged in wilful misconduct andfor no other reason. In doing so the ESO also commented that theapplicant had been treated fairly throughout.

The applicant states that the ESA complaint process was not a pro-ceeding within the meaning of section 45.1. The applicant’s positionis that she did not have an opportunity to review the documents thatthe respondent alleged that she had deleted from her computer andthat apparently the ESO did not have them either. The applicant alsostates that it was not a proceeding like the one that would take placebefore the Tribunal.

It is well established that a claim and a determination by an ESO is a“proceeding” within the meaning of section 45.1 of the Code. See forexample Pinheiro v. Maritz Canada, 2012 HRTO 540, Okoduwa v.Husky Injection Molding Systems Ltd., 2012 HRTO 443, andRampersaud v. Primary Response Inc., 2011 HRTO 2172It is alsoclear that the question before the ESO was the same or substantiallythe same question as one of the issues before me — what were thereasons for the applicant’s termination. It also appears, based on areview of the ESO’s decision that the same arguments were madebefore her as will be made in this proceeding.

In my view these factors taken together are sufficient to meet therequirements of section 45.1 as now interpreted by the SupremeCourt of Canada in its recent decision in Figliola.

Having concluded that the ESO had dealt with the reasons for thetermination of the applicant’s employment it remains to determinewhether there are any further issues raised in the Application thatwere not dealt with in the other proceeding. I find that there is one.

In my view the Application contains two broad allegations. One, thatthe applicant was terminated because the employer was unhappywith her having taken a leave of absence allegedly for medical rea-sons. That aspect of the claim has been dealt with for the reasons setout above.


However the applicant also alleges that the respondent “continuallycalled and couriered letters” to her requiring further medical “details”or he would fire her. These allegations if proved are capable of sup-porting a finding that the Code has been violated by the respondent. Iappreciate the fact that the ESO stated in her findings of fact that therespondent had treated the applicant fairly throughout her employ-ment and her leave, however the ESO had no jurisdiction to deter-mine whether or not the applicant had been treated fairly or in accor-dance with the requirements of the Code while on her leave ofabsence. In the language of the law, her comments in this regardwould be considered obiter. In my view section 45.1 does not applyto this aspect of the Application because there was no other proceed-ing which could have dealt with it, appropriately or otherwise.

4 Given my ruling that one aspect of the Application could proceed, Ithen heard the evidence of the applicant on this remaining issue. Therespondent elected to call no evidence and relied on the evidence of theapplicant as well as the documents exchanged between the parties duringthe applicant’s leave.

5 The respondent takes two positions. First, it states that there is insuffi-cient evidence to establish that the applicant was a person with a disabil-ity at the material times. Indeed, the respondent states that the reason itrepeatedly requested information from the applicant was because she hadfailed to provide it with adequate information. Second, the respondentstates that the correspondence with the applicant during her leave wasentirely reasonable. It was intended to elicit information to which it wasentitled. The respondent states, that it did not ask for a medical diagnosis,but only asked for information related to the extent of her incapacity, therestrictions, if any, on the applicant’s ability to perform the essential du-ties of her employment and a prognosis.

6 The applicant stated that she was concentrating on getting better andfound the repeated requests for medical information harassing. The appli-cant stated that she had worked for the respondent for 10 years and hadnever taken a leave of any kind. The applicant also stated that no onecalled her to ask her how she was feeling while on her leave.

Decision7 The Application is dismissed. While the applicant evidently feels that

she was treated unfairly by the respondent while on her leave, the Tribu-nal does not have any power to remedy general allegations of unfair


treatment. The issue before me is whether the requests for informationfrom the respondent constituted “harassment”, as defined under theCode.

8 “Harassment” is defined in the Code as a course of vexatious conductor conduct that is known or ought reasonably have been known to beunwelcome. I have concluded that the respondent’s conduct in this casewas not harassment as defined in the Code.

9 The applicant was absent from her work on October 5 and 6, 2010.The applicant may have reported for work on October 7, but appears tohave left for the day. The applicant returned to work on October 12 and13, 2010. On October 14, 2010, the applicant attended at the workplacesolely for the purpose of dropping off a medical note from her familydoctor which indicated that the applicant was “off work until further no-tice” and that she was “totally incapacitated”.

10 The respondent sent a letter to the applicant on October 14, 2010,requesting further information from her. The material text of this letter isreproduced below:

1) whether it is your physician’s opinion that you are totally dis-abled from performing the duties of your occupation;

2) if you are not totally disabled, what limitations, if any, arethere on your ability to perform your duties;

3) the date your disability (if any) commenced; and

4) your prognosis for recovery and, particularly, your estimateof the date on which you will be able to return to work on aregular basis, both with and without limitations.

Please note that this information is needed so that we can make ar-rangements for your replacement during your period of leave, and sothat we may fulfill our legal obligation of accommodating your disa-bility, if one is present, to the extent possible. We will be placinggreat emphasis upon your physician’s opinion.

11 The respondent requested this information by October 22, 2010.12 The applicant wrote to the respondent on October 22, 2010. The text

of the letter is as follows: In reference to your letter dated October 14th, 2010, regarding myleave of absence from Grand National Apparel Inc.

I have been referred to a Specialist which I will be seeing on Novem-ber 15th, to further evaluate my medical condition.


At that time the Specialist will be able to provide details of my con-dition and my return to work date.

Take note all expenses incurred for your requests for doctor’s noteswill be charged to Grand National Apparel Inc, including any legalfees that arise from not being able to respond personally to yourletters.

As of today, I have not received the Record of Employment for myleave and require this document immediately as advised by Employ-ment Standards, The Labour Board of Canada and The HumanRights Commission.

13 On October 25, 2010, the respondent wrote to the applicant acknowl-edging receipt of the letter above and indicating that the respondentwould await the receipt of the information from the applicant’s medicalspecialist. The respondent asked that the information be provided imme-diately after the appointment with the specialist. The respondent agreedto pay any costs associated with the specialist’s report.

14 On November 17, 2010, the respondent wrote to the applicant re-questing the medical information from the medical specialist that the ap-plicant had indicated would be forthcoming. On the same date, the appli-cant wrote back and indicated that the information requested was“personal and private” and would not be provided until after her familydoctor further evaluated her. At the same time, the applicant provided abrief medical note from her family doctor which indicated again that theapplicant was “completely incapacitated” and “off work for medical rea-sons” and would be reassessed on December 20, 2010.

15 In response, the respondent wrote to the applicant on November 22,2010, reminding the applicant that she had an obligation to provide theinformation requested in the October 14, 2010 letter. The letter did stateas well that if the information was not provided by December 22, 2010,the applicant would be considered to be on an unauthorized leave ofabsence.

16 The applicant did not respond to this latest letter by the deadline pro-vided by the respondent. On December 22, 2010, the respondent wrote tothe applicant again advising her that if she did not provide the medicalinformation requested, she would be deemed to have abandoned herposition.

17 On January 4, 2011, the applicant provided a brief medical note fromher family doctor which indicated only that the applicant would be re-


turning to work on January 31, 2011. The applicant returned to the work-place on January 31, 2011, but her employment was terminated at thatstage for the reasons found by the ESO to be issues of misconduct unre-lated to the medical leave.

18 The respondent states that it was entitled to the information requestedon October 14, 2010, and never in fact received it. Repeating this requestseveral times, given the respondent was entitled to the information, can-not be considered vexations or reasonably perceived as being unwel-come. I agree with this submission.

19 Assuming, without deciding, that the applicant was a person with adisability at the time, I find that the respondent was entitled to the infor-mation requested in the letter of October 14, 2011. This is particularly sogiven the very limited information that was provided by the applicant atthat time. I would note that the information provided by the applicantwas not particularly helpful, and indeed, seemingly contradictory, giventhe manner in which it was delivered to the respondent. While the briefmedical note she provided indicated that the applicant was “totally inca-pacitated”, the applicant was nonetheless capable of delivering the noteto the respondent, at work, by hand. In any event, the information pro-vided to the respondent was inadequate. It provided no detail at all. Italso provided no indication of how long the applicant would be absentfrom the workplace.

20 The applicant stated both to the respondent at the time and at thehearing that her particular medical condition was personal and privateand would not be disclosed. There are limits on what a respondent canrequire of its employees claiming a need for a medical leave. For exam-ple, in most instances, an employer is not entitled to a diagnosis. But anemployer is entitled to know enough to make some assessment of thebona fides of the leave request and sufficient information to determinewhat if any accommodations might be made to return their employee tothe workplace, and if that is not possible, some estimate of how long theemployee is expected to be absent. See, Baber v. York Region DistrictSchool Board (2011), 2011 HRTO 213 (Ont. Human Rights Trib.), andJeffrey v. Dofasco Inc. (2004), 2004 HRTO 5 (Ont. Human Rights Trib.).The medical information provided by the applicant in this case providednone of this required information.


21 I find that the requests of the respondent were reasonable. The re-spondent was entitled to the information requested and only repeated therequests as the applicant never provided the information it was seeking.

22 For all of these reasons, I find that the requests made of the applicantto provide further information were not unreasonable and accordinglycould not reasonably have been seen as unwelcome. The respondent wasnot harassing the applicant.

23 Neither party expressly addressed the reprisal issue in their submis-sions. I find that that there is no evidence that the respondent engaged inany conduct that could reasonably be understood to be a reprisal. Theapplicant does allege that the respondent threatened to terminate her em-ployment if she did not provide it with the information it was requesting.It follows from my conclusions on the section 45. 1 issue above that thereasons for the applicant’s dismissal are not matters that I can deal with.As regards the threat of dismissal, for the same reasons that I have con-cluded that the respondent was not harassing the applicant, I cannot con-clude that the respondent warning the applicant of the potential conse-quences of her failure to provide reasonably required medicalinformation does not in these circumstances constitute a reprisal undersection 8 of the Code.

24 For all of these reasons the Application is dismissed.

Application dismissed.


[Indexed as: Brito v. Canac Kitchens]

Frank Brito, Rene Figueroa, Bruno Lago, Albino Melo, LuisRomero Olguin, Eduardo Sturla-Hortal, Kim Ly Tien, Souheil(Sam) Wahab (Plaintiffs / Respondent) and Canac Kitchens, a

division of Kohler Canada Co., Compagnie Kohler Canada(Defendant / Appellant)

Ontario Court of Appeal

Docket: CA C53462

2012 ONCA 61

E.A. Cronk, R.A. Blair JJ.A., G.R. Strathy J. (ad hoc)

Heard: January 26, 2012

Judgment: January 31, 2012

Labour and employment law –––– Employment law — Termination and dis-missal — Notice — Mitigation by employee — Acceptance of other employ-ment –––– Employee worked as cabinet maker — Employee dismissed withoutcause at age 55 after 15 years of work — Employee found other work at lowerrate, and 16 months after dismissal underwent surgery for cancer — Employee’saction for wrongful dismissal was allowed — Employee entitled to 22 months’notice — Trial judge found failure to purchase replacement disability insurancepolicy was not failure to mitigate — Trial judge found employer did not showthat comparable coverage was available — Trial judge found employer chosenot to provide employee with replacement disability coverage — Trial judgefound employee was entitled to short-term disability benefits, as well as long-term benefits — Trial judge found employee showed he was disabled — Trialjudge found insurance policy did not contractually prohibit recovery — Em-ployer appealed — Appeal dismissed except regarding punitive damages — Evi-dence existed that employee was unable to work due to restrictions imposed byhis treating physicians, his continuing condition, and his skills set — There canbe no obligation to mitigate damages by finding alternate employment whereemployee is totally incapable of working — No evidence that employee was re-quested and refused to submit to any examination, evaluation or vocationaltraining requested by employer.

Labour and employment law –––– Employment law — Termination and dis-missal — Remedies — Damages — Nature and scope of damages –––– Em-ployee worked as cabinet maker — Employee dismissed without cause at age 55after 15 years of work — Employee found other work at lower rate, and 16months after dismissal underwent surgery for cancer — Employee’s action for

Brito v. Canac Kitchens E.A. Cronk J.A. 309

wrongful dismissal was allowed — Employee entitled to 22 months’ notice —Trial judge found failure to purchase replacement disability insurance policywas not failure to mitigate — Trial judge found employer did not show thatcomparable coverage was available — Trial judge found employer chose not toprovide employee with replacement disability coverage — Trial judge foundemployee was entitled to short-term disability benefits, as well as long-term be-nefits — Trial judge found employee showed he was disabled — Employer ap-pealed — Appeal dismissed except for regarding punitive damages — Firm evi-dentiary foundation for conclusion that employee met burden to establish totaldisability — Trial judge accepted, as he was entitled to do, evidence led byemployee.

Labour and employment law –––– Employment law — Termination and dis-missal — Remedies — Damages — Miscellaneous –––– Employee worked ascabinet maker — Employee dismissed without cause at age 55 after 15 years ofwork — Employee found other work at lower rate, and 16 months after dismis-sal underwent surgery for cancer — Employee brought action for wrongful dis-missal — Action allowed — Employee entitled to 22 months’ notice — Em-ployee awarded $15,000 due to extraordinary circumstances for cavalier, harsh,malicious, reckless, outrageous and high-handed treatment of employee —Moral damages not awarded — Employer appealed — Appeal allowed regard-ing punitive damages alone — Employee had not pleaded punitive damages andmatter was not at issue in trial — Not open for trial judge to award punitivedamages — Award of $15,000 set aside.

APPEAL by employer from judgment reported at Brito v. Canac Kitchens(2011), 87 C.C.E.L. (3d) 184, 2011 C.L.L.C. 210-032, 2011 CarswellOnt 934,2011 ONSC 1011 (Ont. S.C.J.), allowing employee’s action for wrongfuldismissal.

Dave J.G. McKechnie for AppellantPeter A. Grunwald, Peter Israel for Respondent

E.A. Cronk J.A.:

(1) Introduction1 In July 2003, the appellant terminated the employment of the respon-

dent, a 24-year long employee, from his job as a kitchen cabinet and doormaker and wood workshop production lead-hand, without cause. The re-spondent was 55 years of age. To that point, he had spent his entireworking career in Canada in the appellant’s employ. His job responsibili-


ties included preparing, sanding and assembling cabinets and doors, col-lecting reports and supervising production in the wood shop.

2 On dismissal, the appellant paid the respondent an amount equal tothe minimum statutory requirement for pay in lieu of notice and sever-ance (32 weeks salary), plus associated benefits for a period of eightweeks. The respondent found alternate employment with a start-upkitchen cabinet company within about two weeks. However, his compen-sation with his new employer was at a significantly lower rate than hehad received with the appellant and no disability benefits were provided.In contrast, the appellant had provided both short-term disability (STD)and long-term disability (LTD) benefits to its employees under a com-pany sponsored disability benefits plan (the “Plan”).

3 About one and one-half years after the respondent commenced hisnew employment, he was diagnosed with cancer of the larynx (left vocalcord). In early November 2004, he underwent surgery for the removal ofhis cancer. A course of post-surgical treatment, including chemoradiationand the insertion of a tracheostomy tube in the respondent’s throat,followed.

4 The respondent eventually sued the appellant for damages for wrong-ful dismissal and associated benefits, including STD and LTD disabilitybenefits to which the respondent claimed he would have been entitledunder the Plan but for the wrongful termination of his employment. Thetrial judge held that the termination of the respondent’s employment waswrongful and that the appropriate notice period was 22 months. Heawarded the respondent damages for lost employment income for 22months, STD benefits for 17 weeks, and LTD benefits thereafter, to age65. He also awarded “ancillary” damages in the amount of $15,000 onaccount of what he viewed as the appellant’s wrongful conduct in respectof the respondent’s termination and the litigation.

5 The appellant appeals from the award of damages for lost LTD bene-fits and the award of ancillary damages.

(2) The Plan6 The Plan provided that an employee met the definition of “total disa-

bility” for the purpose of LTD benefits if the employee was prevented,


by restriction or lack of ability due to illness or injury, from performing“the essential duties” of:

a) his own occupation, during the Qualifying Period and thetwo years immediately following the Qualified Period; and

b) any occupation for which the Employee is qualified, ormay reasonably become qualified, by training, education orexperience, after the two years specified in part a) of thisprovision. [Emphasis added.]

7 The Plan also required an employee to submit to medical, psychiatric,psychological, functional, educational and/or vocational examinations orevaluations by an examiner selected by the Plan administrator and, fur-ther, to participate in a vocational rehabilitation plan.

(3) Damages Award for Lost LTD Benefits8 The trial judge found that the respondent became disabled on Novem-

ber 6, 2004. The appellant accepts that by reason of that disability, therespondent was entitled to damages for STD benefits during the periodfrom November 5, 2004 to March 4, 2005. However, the appellant as-serts that the respondent was never “totally disabled” within the meaningof the Plan so as to qualify for disability benefits after November 1,2005. Further, and in the alternative, the appellant says that there was noevidence at trial that the respondent will remain disabled until his 65thbirthday, the date when LTD benefits would terminate in accordancewith the provisions of the Plan.

9 The trial judge rejected these arguments, concluding that the respon-dent had “discharged his evidentiary burden that he is, “totally disabled”by both viva voce evidence and medical evidence.” Contrary to the ap-pellant’s submission, the trial judge’s reasons, read as a whole, indicatethat this finding reflected his conclusion concerning the respondent’soverall evidentiary burden, both with respect to the respondent’s STDbenefits claim and his LTD benefits claim in its entirety. In my view, forthe reasons that follow, this finding was open to the trial judge on therecord before him.

10 The first criterion for total disability under the Plan required that therespondent be unable to perform the essential duties of his own occupa-tion during the “Qualifying Period” and the two years immediately there-after. In the respondent’s case, after the exhaustion of his STD benefits,this period ran from March 4, 2005 to March 4, 2007.


11 As applicable to the respondent, the second criterion for total disabil-ity under the Plan required that the respondent be unable to perform theessential duties of any occupation for which he was or might reasonablybecome qualified — by training, education or experience — after March4, 2007.

12 There was evidence before the trial judge which, if accepted, sup-ported the conclusion that the respondent was totally disabled within themeaning of the Plan from and after March 4, 2005 to the date of trial andwas likely to remain so to age 65. This included evidence:

(1) of the respondent himself that, following the removal of histracheostomy tube in June 2005, he continued to be short ofbreath, his breathing never returned to normal, his strength wasreduced, he tired easily, and he could not return to work due to:(a) exposure to work environment dust; (b) continued shortness ofbreath; (c) intermittent loss of his voice; and (d) continuingstrength reduction;

(2) of the respondent’s treating radiation oncologist, Dr. BernardCummings, that after 2005, the respondent developed a chroniccondition of abnormal tissue growth on his voice box that im-paired his breathing. This required three further surgeries to thedate of trial (November 2008, May 2009 and October 2009) toremove the inflammatory tissue, with the expectation of similarsurgeries in the future. Further abnormal tissue below the respon-dent’s vocal cord was detected in February 2010;

(3) of Dr. Cummings, that following the respondent’s cancer surgery:(a) his voice box never returned completely to normal; (b) henever recovered to his pre-illness state of health; (c) he com-plained persistently of hoarseness, of variable quality or strengthof voice and dryness in his throat; (d) he was required to avoidwork in dusty and noisy environments where he would be requiredto communicate; (e) he had episodes of coughing tissue or dis-coloured secretions from his throat; and (f) he would not recoverto the point where he could work in a dusty or noisy environment;

(4) of the respondent’s treating surgical oncologist, Dr. Patrick Gul-lane, that although the respondent’s initial therapy cured his can-cer, the respondent was left with some deficits, including edemaor swelling in his voice box and damage to his cartilage. Further,


Dr. Gullane opined that he “would never recommend that [the re-spondent] work in a dusty or noisy industrial environment”; and

(5) of a vocational evaluation specialist, David Antflick, who offeredhis opinion that, given his limited education, training and experi-ence and his inability to work in noisy, dusty industrial environ-ments, the respondent, although qualified for such jobs as packag-ing, was not capable of any work after November 2004.

13 The appellant called no medical or other expert evidence to counterthis evidence electing, instead, to confine its defence to cross-examina-tion of the respondent and his witnesses.

14 In these circumstances, in my view, there was a firm evidentiaryfoundation for the trial judge’s conclusion that the respondent met hisburden to establish his total disability within the meaning of the Plan.This conclusion indicates that the trial judge accepted, as he was entitledto do, the evidence led by the respondent, in part described above, re-garding his total disability.

(4) Alleged Mitigation Failure15 The appellant also argues that, contrary to the requirements of the

Plan, the respondent failed to engage in job re-training efforts and to seekalternative employment following March 2005. As a result, the appellantsays, the respondent failed to discharge his obligation to mitigate his lossof disability benefits.

16 I disagree. As I have indicated, there was evidence at trial that therespondent was unable to work after March 2005 due to the restrictionsimposed by his treating physicians on suitable work environments, hiscontinuing condition, and his skills set. There can be no obligation tomitigate damages by finding alternate employment where the employeeis totally incapable of working.

17 Moreover, there was no evidence at trial that the respondent was re-quested and refused to submit to any examination or evaluation requiredor specified by the appellant or the Plan administrator. Nor was there anyevidence that the respondent was ever requested and refused to partici-pate in any vocational rehabilitation plan or that appropriate rehabilita-tive or vocational training courses were even available to, let alone re-jected or ignored, by the respondent.


18 In these circumstances, I agree with the respondent that it does not liein the appellant’s mouth to assert mitigation failure. I would not giveeffect to this ground of appeal.

(5) Punitive Damages Award19 In contrast, I agree with the appellant that the trial judge’s “ancilli-

ary” damages award cannot stand.20 The trial judge’s reasons indicate that this award was based on what

he characterized as “cavalier, harsh, malicious, reckless, outrageous andhighhanded” conduct by the appellant in its treatment of the respondenton termination and during the litigation. The impugned award, therefore,was in the nature of punitive damages.

21 However, the respondent did not claim punitive damages in his state-ment of claim and there is no suggestion that any related pleadingsamendment was obtained to advance such a claim. It is also concededthat the respondent did not seek or put this relief in issue at trial.

22 As a result, in my opinion, whatever view one might hold of the ap-pellant’s conduct, it was not open to the trial judge to award punitivedamages.

(6) Disposition23 Accordingly, for the reasons given, I would allow the appeal in part

and set aside the trial judge’s $15,000 award of punitive damages. In allother respects, I would not interfere with the trial judgment. The respon-dent has been substantially successful on this appeal. I would thereforeaward him some of the costs of the appeal, fixed in the total amount of$20,000, inclusive of disbursements and all applicable taxes.

R.A. Blair J.A.:

I agree

G.R. Strathy J., (ad hoc):

I agree

Appeal allowed in part.

Bennett v. Sears Canada Inc. 315

[Indexed as: Bennett v. Sears Canada Inc.]

Audrey Darlene Bennett (Applicant) and Sears Canada Inc.(Respondent)


Docket: CV-10-15271

2011 ONSC 6900

Richard C. Gates J.

Heard: November 21, 2011

Judgment: November 30, 2011

Labour and employment law –––– Employment law — Wages and bene-fits — Benefits –––– Plaintiff employee B worked for defendant retail companyS Inc. for 22 years on part-time basis, then assumed full-time status — Contractrequired that employee must retire with 20 years of continuous full-time servicein order to be eligible for health and welfare benefits — B had been informed byS Inc. that she would be given credit for 11 years of full-time service, in lieu ofher 22 years of part-time employment — In 2005, representative of S Inc.’sHuman Resources (HR) department advised B that her eligibility for pension-related retiree benefits, including group life, health and dental, required 20 yearsor more service in all and that B needed to work for three more years to qualifyfor 20 years’ service requirement — In 2009, B was terminated owing to corpo-rate restructuring and was told she would receive full benefits — B was latertold that 2005 correspondence confirming her entitlement was in error in that itonly related to her entitlement to vacation, and not benefits — B brought ac-tion — Action allowed — B relied upon original representation from S Inc.’sHR office in 2005 and reliance had been to her detriment — Ambiguity over“continuous” service had to be resolved in B’s favour — In view of conclusionthat B was otherwise entitled to enjoy full retiree benefits, she was thereforeentitled to reimbursement for those expenses incurred that fell within coverageparameters of health care administrator or provider of S Inc.

Pensions –––– Payment of pension — Entitlement –––– Plaintiff employee Bworked for defendant retail company S Inc. for 22 years on part-time basis, thenassumed full-time status — Contract required that employee must retire with 20years of continuous full-time service in order to be eligible for health and wel-fare benefits — B had been informed by S Inc. that she would be given creditfor 11 years of full-time service, in lieu of her 22 years of part-time employ-ment — In 2005, representative of S Inc.’s Human Resources (HR) departmentadvised B that her eligibility for pension-related retiree benefits, including group


life, health and dental, required 20 years or more service in all and that B neededto work for three more years to qualify for 20 years’ service requirement — In2009, B was terminated owing to corporate restructuring and was told she wouldreceive full benefits — B was later told that 2005 correspondence confirmingher entitlement was in error in that it only related to her entitlement to vacation,and not benefits — B brought action — Action allowed — B relied upon origi-nal representation from S Inc.’s HR office in 2005 and reliance had been to herdetriment — Ambiguity over “continuous” service had to be resolved in B’s fa-vour — In view of conclusion that B was otherwise entitled to enjoy full retireebenefits, she was therefore entitled to reimbursement for those expenses in-curred that fell within coverage parameters of health care administrator or pro-vider of S Inc.

Torts –––– Fraud and misrepresentation — Negligent misrepresentation(Hedley Byrne principle) — Detrimental reliance –––– Plaintiff employee Bworked for defendant retail company S Inc. for 22 years on part-time basis, thenassumed full-time status — Contract required that employee must retire with 20years of continuous full-time service in order to be eligible for health and wel-fare benefits — B had been informed by S Inc. that she would be given creditfor 11 years of full-time service, in lieu of her 22 years of part-time employ-ment — In 2005, representative of S Inc.’s Human Resources (HR) departmentadvised B that her eligibility for pension-related retiree benefits, including grouplife, health and dental, required 20 years or more service in all and that B neededto work for three more years to qualify for 20 years’ service requirement — In2009, B was terminated owing to corporate restructuring and was told she shewould receive full benefits — B was later told that 2005 correspondence con-firming her entitlement was in error in that it only related to her entitlement tovacation, and not benefits — B brought action — Action allowed — B reliedupon original representation from S Inc.’s HR office in 2005 and reliance hadbeen to her detriment — In attempting to define “continuous” service in mannerthat would not take into account conversion of part-time to full-time service, SInc. ignored its own original negligent misrepresentation to B.

Labour and employment law –––– Employment law — Interpretation of em-ployment contract — Contra proferentem –––– Plaintiff employee B workedfor defendant retail company S Inc. for 22 years on part-time basis, then as-sumed full-time status — Contract required that employee must retire with 20years of continuous full-time service in order to be eligible for health and wel-fare benefits — B had been informed by S Inc. that she would be given creditfor 11 years of full-time service, in lieu of her 22 years of part-time employ-ment — In 2005, representative of S Inc.’s Human Resources (HR) departmentadvised B that her eligibility for pension-related retiree benefits, including grouplife, health and dental, required 20 years or more service in all and that B needed

Bennett v. Sears Canada Inc. Richard C. Gates J. 317

to work for three more years to qualify for 20 years’ service requirement — In2009, B was terminated owing to corporate restructuring and was told she shewould receive full benefits — B was later told that 2005 correspondence con-firming her entitlement was in error in that it only related to her entitlement tovacation, and not benefits — B brought action — Action allowed — In attempt-ing to define “continuous” service in manner that would not take into accountconversion of part-time to full-time service, S Inc. ignored its own original neg-ligent misrepresentation to B — Result was ambiguity that had to be resolved inB’s favour.

Civil practice and procedure –––– Costs — Effect of success of proceed-ings — General principles –––– Successful plaintiff was awarded partial in-demnity in sum of $14,000, which approximated two-thirds of her substantialindemnity costs; this was not case of extraordinary complexity that would havejustified substantial indemnity costs.

Cases considered by Richard C. Gates J.:

Conley Holdings Ltd. v. Canadian Metal & Supply Co. (1986), 1986 Carswell-Sask 292, 47 Sask. R. 299, 19 C.L.R. 274, [1986] S.J. No. 207 (Sask.Q.B.) — considered

Greenley v. Xerox Canada Ltd. (1997), 14 C.C.P.B. 173, 1997 CarswellAlta199, 199 A.R. 248, [1997] A.J. No. 342 (Alta. Q.B.) — distinguished

Leading Investments Ltd. v. New Forest Investments Ltd. (1981), 34 O.R. (2d)175, 20 R.P.R. 6, 126 D.L.R. (3d) 75, 1981 CarswellOnt 521, 18 O.A.C. 80(Ont. C.A.) — referred to

Queen v. Cognos Inc. (1993), 1993 CarswellOnt 801, 1993 CarswellOnt 972,D.T.E. 93T-198, 45 C.C.E.L. 153, 93 C.L.L.C. 14,019, 99 D.L.R. (4th) 626,60 O.A.C. 1, 14 C.C.L.T. (2d) 113, [1993] 1 S.C.R. 87, 147 N.R. 169, EYB1993-67486, [1993] S.C.J. No. 3 (S.C.C.) — followed

ACTION brought by employee for benefits.

Peter K. Hrastovec for ApplicantAida Gatfield for Respondent

Richard C. Gates J.:

1 The plaintiff worked at Sears from October 17, 1977 on a part-timebasis until May 16, 1999, when she assumed the status of a full-timeemployee.

2 She had been informed by Sears that she would be given credit for 11years of full-time service, in lieu of the 22 years of part-time employ-


ment she had accumulated. Therefore October 17, 1988 was the date of-ficially adopted as the commencement of her full-time employmentservice.

3 Subsequently on June 7, 2005, in a conversation with an employee ofthe Human Resources (HR) department at the Sears store in Windsor, sheinquired about her eligibility for pension-related retiree benefits, includ-ing group life, health and dental, as well as an employee discount card.

4 In response, the local HR employee communicated with Sears HRdepartment at Corporate Head Office and she was advised that in order tobecome eligible for the pension benefits referred to the plaintiff wouldrequire 20 years or more service. At that time, bearing in mind that shewas going from part-time to full-time, when her 22 years of part-timeemployment were commuted to the full-time employment equivalent onthe basis 2:1, she received 11 years full-time service credit. This meantthat in all, her total employment service was 17.153 years. On this basis,therefore, it was stated by the HR representative that she would need towork for an additional three years in order to qualify for the 20 yearsservice requirement.

5 Based on this representation from the HR department, she wouldqualify for full retiree benefits by the year 2008.

6 On February 19, 2009, the plaintiff as well as several other employeeswere terminated owing to a corporate restructuring.

7 As a consequence of that restructuring the plaintiff testified in heraffidavit that she met with Ana Davies, Sears HR Director for OntarioWest to discuss the terms of her termination package. In that conversa-tion Ms. Bennett raised the issue of her eligibility for retiree benefits.Ms. Davies confirmed that she would receive full retirement benefits.

8 Accordingly she continued to work for the next eight weeks, the no-tice period provided to her by Sears, and was granted retiree status withpension to commence on May 1, 2009. She was also given a lifetimediscount card.

9 Her last day of work was April 16, 2009, at which time her benefitscame to an end.

10 It appears she made several attempts to speak with a Ms. Belina-Czechowski of HR Services for Sears Canada, without success until May19, 2009, at which time Ms. Belina-Czechowski advised the plaintiff thatfollowing a review of her case, a decision was made not to honour her


with any post-retirement benefits. Ms. Belina-Czechowski also told herthat the 2005 correspondence that had been originally sent to her on thissubject confirming her entitlement was an error in that it only related toher entitlement to vacation, and not benefits.

11 In support of their positions, both sides refer to the Health Guidebookwhich provides that in order to be eligible for retirement benefits, thefollowing eligibility criteria have to be met:

i. The associate must have been hired prior to January 1,2001.

ii. The associate must have been between the ages of 55 and65 at the date of retirement.

iii. The associate must retire from active employment with 20years or more continuous full-time service.

12 As between the parties there is no dispute with respect to the first twocriteria. Therefore most of their submissions were directed to the inter-pretation to be placed upon the qualification of “continuous full-time ser-vice for 20 years”.

13 There is no disagreement that on May 19, 2001, when the plaintiffspoke with Elvira Bartelli, she admitted that responsibility for the mis-take insofar as her pension entitlement was concerned, was Sears’.

14 From the perspective of the plaintiff, these are the issues:

i. Whether she was entitled to the full retirement benefits.

ii. Whether the misrepresentation by the Sears HR representa-tives was negligent as defined in Queen v. Cognos Inc.,[1993] 1 S.C.R. 87 (S.C.C.) at para. 33.

15 Cognos Inc. identified the elements necessary to sustain the plaintiff’sclaim for negligent misrepresentation:

i. There must be a duty of care based upon a “special rela-tionship” between Sears and Ms. Bennett.

ii. The representation in question must be untrue, inaccurate,or misleading.

iii. Sears must have acted negligently in making it.

iv. Ms. Bennett must have relied, in a reasonable manner, onthat misrepresentation.

v. Her reliance on it was detrimental in the sense that she suf-fered damages.


16 From the submissions of counsel, only factors (iv) and (v) are inissue.

17 In support of her position the plaintiff says that nowhere in the docu-mentation provided by Sears, is the term “continuous years of full-timeservice” defined. During the course of her cross-examination on June 14,2001, Ms. Maria Belina-Czechowski, a pension analyst employed bySears whose duties include management of pensions, confirmed that shetoo was not aware of any document which defines that term or specifi-cally excludes a part-time person who becomes full-time from full pen-sion benefits where the combined part-time and full-time service exceeds20 years.

18 In response to the affidavit of Ms. Belina-Czechowski of February 7,2011, the plaintiff produced two pages from a document, Change of Em-ployment Classification (Cont’d), which she refers to in her supplemen-tary affidavit of March 22, 2011.

19 The material part of the document states:

i. In paragraph 2 — Part-time Hourly to Full-time Hourly,under the heading Vacation it states that an employeewould be credited with 50 percent of his/her part-time ser-vices which, when combined with their full-time servicewould be the basis to establish vacation entitlement.

ii. Under the heading Retirement Benefits is the notation “mayqualify” for:

1. Discount

2. Health and Dental

3. Group Life

iii. On the second of the two pages produced is a statement ofSears’ policy that when an associate requests a change intheir classification, for example, full-time to part-time orpart-time to full-time, they may do so without a break inservice.

iv. A chart headed Retirement Benefits sets out the variouschanges which would occur when moving from full-timehourly to part-time hourly;

• Discount card for life may be impacted based onyears of service.


• No provision for health and dental.20 The plaintiff says that when the two pages are read together, it is ob-

vious and understandable that when an employee moves from full-timeto part-time status he/she would lose their health and dental coverage.However, when moving from part-time to full-time, the employee “mayqualify” for health and dental coverage inferentially validates her claimfor the full retirement benefits. By using the term “may” she says thatSears has left open the door to entitlement; otherwise why would thatphrase be there? It suggests that entitlement exists on a case by casebasis.

21 Because of this statement and the Health Booklet reference to “con-tinuous full-time employment” in the absence of any documentary orother explanatory evidence to interpret what was intended to be meant,an ambiguity or in the least, an uncertainty has been created.

22 Therefore because of this ambiguity or uncertainty she is entitled torely upon the contra proferentem rule such that in interpreting the clause,the meaning which is least favourable to the author (Sears) will prevail.Accordingly the continuous service requirement, by necessary implica-tion, includes the part-time service record converted to full-timeequivalency and the reference to “continuous” is continued or ongoingemployment of any kind without distinction so long as the mathematicalminimum of 20 years is established.

23 If any contrary intention or limitation was intended by Sears to beplaced on this clause, then it should have stated so.

24 She refers to Conley Holdings Ltd. v. Canadian Metal & Supply Co.,[1986] S.J. No. 207 (Sask. Q.B.), a decision of the Saskatchewan Courtof Queen’s Bench, as authority for the proposition that the paramountprincipal of contract interpretation to which effect must be given, is theintention of the parties. This may be modified where an ambiguity existsin which case the interpretive approach to give the contract its literalmeaning with each word being assigned to its original plain and ordinarymeaning, would be displaced.

25 Where a stipulation is capable of two meanings which are equallyconsistent with the language employed, the one to be taken is that onewhich is most against the stipulator and in favour of the other party (see:G.H.L. Fridman Q.C., Law of Contract, 4th edition).


26 When a contract is in issue, the court should look for and be guidedby the reasonable expectation of the parties, so long as it is compatiblewith their written contract (see: Leading Investments Ltd. v. New ForestInvestments Ltd. (1981), 34 O.R. (2d) 175 (Ont. C.A.)).

27 The plaintiff says that in attempting to determine her reasonable ex-pectation the record is replete with communication both written and oral,between the plaintiff and Sears throughout the time period in question,the thrust of which, based upon the initial representation made in 2005, isto confirm and crystallize her retirement benefits.

28 However, Sears says that the “continuous” service phrase should betaken at its literal meaning (unless this would lead to an absurd result), asbeing service without interruption or gaps and that this interpretationwould not take into account the conversion of part-time to full-time ser-vice. It acknowledges there is no documentary evidence in its possessionto support such a definition or at least clarify a reasonable expectation.

29 The mistake, admitted to by Sears as being its sole responsibility, wasonly discovered several years later following the plaintiff’s terminationas a result of a corporate reorganization.

30 It says therefore that this definition crystallizes the criteria of full-time service as the pension entitlement criteria.

31 In support of its position, the defence relies upon Greenley v. XeroxCanada Ltd., [1997] A.J. No. 342 (Alta. Q.B.), a decision of the AlbertaQueen’s Bench, an action by the plaintiff for the alleged breach of hisseverance agreement which provided, through a mathematical error, thata pension payout of $439,291.17 would be made to him. Howevershortly after this was communicated to the plaintiff the error was discov-ered. The actual value of his pension was $238,007.68. In dismissing theaction the court found that there was a common mistake as to the pensiontransfer amount. By the agreement between the parties the actual value ofthe plaintiff’s pension would be transferred to him; however both weremistaken as to the actual amount because of the calculation error referredto. Furthermore the court held that the defendant would not have enteredthe agreement if it knew of the error; furthermore the size of the commonmistake warranted relief granted to the defendant.

32 In my view the point of distinction between that case and the onebefore me is that both parties in Greenley were in agreement that theplaintiff’s employment was at an end and that he was entitled to his pen-


sion and the only difference in their positions was the mathematical cleri-cal error referred to.

33 In the case at hand however the plaintiff says that agreement reachedin the formative discussion stages between the plaintiff and the HR officeat Sears was plainly that commutation of her part-time services wouldentitle her to full pension benefits, upon her working for an additionalapproximate three years, which she did.

34 However in attempting to define the term as it does, Sears ignores itsown original negligent misrepresentation to the plaintiff which was notuncovered by it for approximately four years after the commencement ofher full-time service. The recently discovered document on EmploymentClassification appended to the plaintiff’s supplementary affidavit swornMarch 22, 2011, provides a contextual interpretation of the clause inquestion.

35 The result in my view is an ambiguity which must be resolved mfavour of the plaintiff.

36 Furthermore, I am satisfied that the plaintiff has established the fourthand fifth criteria in Queen v. Cognos Inc. in that the plaintiff on the facts,in my view, relied upon the original representation from Sears HR officein 2005 and that the reliance has been to her detriment.

37 While the defence argued that some or all of the medical and relatedhealth care expenses incurred by the plaintiff would have been so, in anyevent, in view of my conclusion that she is otherwise entitled to enjoy thefull retiree benefits she will therefore be entitled to reimbursement forthose expenses incurred which fall within the coverage parameters of thehealth care administrator or provider of Sears.

Decision38 Therefore the plaintiff shall be entitled to:

1. The full retirement benefits otherwise payable by Sears,post-retirement and on a go forward basis.

2. She shall be entitled to indemnification for all of the out ofpocket medical expenses incurred since April 16, 2009,subject to them being otherwise within the coverage param-eter of Sears’ health care provider.

39 With respect to the question of costs, I canvassed both counsel at theconclusion of submissions as to what their costs would be in the event of


success and alternatively in the event that they did not succeed. Aftersome discussion, they advised me that they both agree that on a substan-tial indemnity basis, costs for the successful party should be $20,000.00plus assessable disbursements.

40 I requested the calculation at the close of the hearing, in order to savecounsel and more particularly, their clients the time and expense of for-mal costs submissions either in writing or verbally.

41 Having viewed the nature of the application from both sides, and theissues involved, in my view this is not a case of extraordinary complexitywhich would justify substantial indemnity costs. Therefore in the circum-stances and observing that partial indemnity approximates two-thirds ofsubstantial indemnity costs, I would fix the plaintiffs costs in the sum of$14,000.00 plus assessable disbursements.

42 In closing, I must say that I am indebted to both counsel for the prep-aration of their material and the quality of their advocacy, during thecourse of the argument of this rather novel point.

Action allowed.

Grewal v. Khalsa Credit Union 325

[Indexed as: Grewal v. Khalsa Credit Union]

Sukhwinder K. Grewal (Appellant / Plaintiff) and Khalsa CreditUnion (Respondent / Defendant)

British Columbia Court of Appeal

Docket: Vancouver CA039121

2012 BCCA 56

Newbury, Saunders, Kirkpatrick JJ.A.

Heard: January 26, 2012

Judgment: January 31, 2012

Labour and employment law –––– Employment law — Termination and dis-missal — Termination of employment by employer — What constitutingjust cause — Misconduct — Miscellaneous –––– Employee’s 27-year employ-ment as branch manager at employer credit union ended after employee’s coun-sel sent letter to employee’s superior, board of directors and credit union regula-tor, as result of investigation into employee’s conduct — Employeeunsuccessfully brought action for damages for wrongful dismissal — Trial judgefound that employer had just cause to terminate employee — Trial judge foundthat language of letter was disrespectful and inflammatory, and that letter wasculmination of litany of ongoing difficulties in employment relationship — Trialjudge held that, while prior matters alone might not have justified termination,employer was entitled to consider employee’s past misconduct in determiningwhether it had just cause for dismissal — Trial judge found that letter perma-nently undermined employment relationship — Trial judge held that, in totalityof circumstances, letter constituted just cause — Employee appealed — Appealdismissed — Dismissal of employee’s action was appropriate result — Therewas ample evidence in record upon which trial judge could make alleged errone-ous findings of fact as to whether letter constituted just cause for dismissal, evenin context of what happened in employment relationship — It was open to trialjudge to reach conclusions he did on evidence presented to him.

Cases considered by Saunders J.A.:

Housen v. Nikolaisen (2002), 10 C.C.L.T. (3d) 157, 211 D.L.R. (4th) 577, 286N.R. 1, [2002] 7 W.W.R. 1, 2002 CarswellSask 178, 2002 CarswellSask179, 2002 SCC 33, 30 M.P.L.R. (3d) 1, 219 Sask. R. 1, 272 W.A.C. 1,


[2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, REJB 2002-29758 (S.C.C.) —followed

APPEAL by plaintiff employee from judgment reported at Grewal v. KhalsaCredit Union (2011), 90 C.C.E.L. (3d) 293, 2011 BCSC 648, 2011 CarswellBC1214, 2011 C.L.L.C. 210-048 (B.C. S.C.), dismissing employee’s claim fordamages for wrongful dismissal.

G.A. Cutler, D.M. Steinbach for AppellantS.M. Mitchell for Respondent

Saunders J.A.:

1 Ms. Grewal appeals from the order of Mr. Justice Goepel dismissingher claim for damages for wrongful dismissal. She contends that thelearned judge made several palpable and overriding errors of fact. Shecontends these errors led the judge to the erroneous conclusion that heremployer had just cause to dismiss her.

2 The action arose from the dismissal in 2006 by Khalsa Credit Unionof Ms. Grewal from her position as a branch manager. It was not dis-puted that her employment of some duration ended badly. The issues attrial were whether she resigned or was terminated, and if terminated,whether the dismissal was for just cause. Before us the Credit Union didnot contend for resignation, leaving only the finding of wrongful dismis-sal in contest.

3 Ms. Grewal commenced employment with the Credit Union in De-cember 1989, and moved up the ranks until, in 1999, she became man-ager of the Vancouver branch. Shortly after, in May 2000, an employeeof that branch brought to the attention of the then interim Chief Execu-tive Officer certain issues concerning her work. These concerns led tocommunications from the Credit Union, and a warning as to her need tocomply with policies and procedures and the possibility of negative con-sequences if she did not. Ms. Grewal was reassigned to the Abbotsfordbranch, a move that was considered a demotion. She was subsequentlyappointed manager of the Surrey branch, and then was reassigned to theAbbotsford branch in 2003, where she remained until her employment asmanager with the Credit Union came to an end. Some time during thisperiod a Chief Executive Officer was appointed, and it was he who hadthe reins of authority at the relevant times.

Grewal v. Khalsa Credit Union Saunders J.A. 327

4 In his reasons for judgment the judge related the development of anunhappy work relationship between Ms. Grewal and the Chief ExecutiveOfficer. The sorry history is related fully in the reasons for judgment ofthe trial judge. The judge found there was discontent on both sides. Forexample, the Chief Executive Officer on numerous occasions criticizedMs. Grewal for insubordination and for behaving in an unprofessionalmanner. In turn, Ms. Grewal complained that the Chief Executive Officerinvaded her privacy, for example by reviewing phone bills and by askingemployees to monitor her and to collect information on her in an allegedeffort to build a case for removing her from her position. The judgefound that “most if not all of the criticisms of Ms. Grewal had somesubstance to them”. Conversely he found that the allegations of invasionof privacy had not been proved.

5 In June 2005, an issue arose concerning a home mortgage obtained byMs. Grewal from the Credit Union. Along the way the Chief ExecutiveOfficer was concerned and in a memorandum using the word “scandal”brought it to the attention of his Board of Directors. He also sought legaladvice. His superiors at the Credit Union advised him to meet with Ms.Grewal, advice that was echoed in the legal opinion when it was eventu-ally received in September, 2005. At trial and before us much was madeof the referral of the matter to the Board of Directors, and of the eventsthat then ensued. The judge found that the word “scandal” was inappro-priate at that stage, but it was a matter that required investigation. I amnot going to recite the detail of the summer events; they are summarizedin the judge’s reasons. The judge found that after receiving the legal ad-vice in late September 2005 and before he could meet with her, Ms.Grewal, on October 7, 2005, went on disability leave. She remained onleave until August 28, 2006.

6 Upon Ms. Grewal’s return to work in August of 2006 she was askedto attend a meeting to discuss issues raised in the mortgage renewal mat-ter and other ongoing concerns. Ms. Grewal asked for and was givensome time to review documents and generally to prepare for the meeting.The meeting was held August 31, 2006. Some questions she was askedshe answered, but as to others she said she did not know or had nothingto say.

7 The day after the meeting a letter from Ms. Grewal’s counsel washand delivered to the Credit Union. The letter alleged serious unwar-ranted invasions of Ms. Grewal’s privacy, complained of statements in


relation to the mortgage matter and demanded a wide ranging retractionand apology. The letter threatened action in the event an apology was notprovided. Ms. Grewal’s lawyer sent another letter in a similar vein datedSeptember 6, 2006. On September 19, the Credit Union responded, say-ing, in part,

“Ms. Grewal’s insubordination, refusal to follow policies and proce-dures and other improper conduct, demonstrates she has acted in amanner that is incompatible with continued employment with thecredit union”.

8 Ms. Grewal did not return to work at the credit union and commencedher action for damages for wrongful dismissal.

9 Addressing the issues before him, the judge found that the letter ofSeptember 1 demanding an apology was not a resignation, and, Ms.Grewal had been dismissed by the letter of September 19, 2006.

10 The judge then addressed the issue of cause. He said: [105] Taken by themselves, and without regard for the September 1Letter, I find that Ms. Grewal’s conduct had not yet reached the pointwhere KCU had cause to dismiss her. As of September 1, [the ChiefExecutive Officer] had not completed his investigation into the mort-gage. Whether that investigation would have uncovered sufficient ev-idence to justify her dismissal is not something I need determine.

[106] However, the September 1 Letter tips the balance. The lan-guage of the letter was disrespectful and inflammatory. The accusa-tions were serious and covered most aspects of her working relation-ship. ...

[107] The September 1 Letter was not substantiated by the facts. ...

[108] ... The letter says that [the Chief Executive Officer] intention-ally set out to destroy her reputation by making false allegations. Ifind as a fact that he did not.

[109] The September 1 Letter was sent not only to [the Chief Execu-tive Officer], but also to the board of directors and the credit unionregulator. The letter was obviously intended to do serious damage to[him]. The criticism ... was disrespectful in tone and language andwas irreconcilable with Ms. Grewal’s continued employment.

[110] As noted in McKinley v. BC Tel, [2001] 2 S.C.R. 161, Ms.Grewal’s conduct must be assessed within a contextual approach.The September 1 Letter cannot be considered in a vacuum. It was theculmination of a litany of ongoing difficulties in the employment re-lationship. While the prior matters in themselves may not have justi-

Grewal v. Khalsa Credit Union Saunders J.A. 329

fied termination, KCU was entitled to consider her past misconductin determining whether it had just cause for dismissal: Nossal v.Better Business Bureau of Metropolitan Toronto Inc. (1985), 19D.L.R. (4th) 547 (Ont. C.A.).

[111] Ms. Grewal was the branch manager of the credit union. Shewas in a position of trust and responsibility. In order for her to per-form her duties, it was essential she retain the confidence of hersuperiors. The September 1 Letter permanently undermined the em-ployment relationship and made it impossible for Ms. Grewal and[the Chief Executive Officer] to continue working together. In thetotality of the circumstances, the September 1 Letter constituted justcause for dismissal: Van Der Meij v. Victoria Immigrant and RefugeeCentre Society, 2008 BCSC 954at para. 60. I find that KCU had justcause to terminate Ms. Grewal.

11 Ms. Grewal appeals the order dismissing her action. She does notcontest the principles of law applied by the judge. The appeal is basedentirely upon her submission that the judge, in dismissing the action,made palpable and overriding errors of fact, which led him to errone-ously conclude that the September 1 letter constituted just cause fordismissal.

12 Ms. Grewal makes several criticisms of the factual findings: the find-ing that before the Chief Executive Officer could meet with Ms. Grewalconcerning the mortgage she went on disability leave; a finding he “didnot act” on his personal conclusion of July 2005 that her conduct war-ranted termination; a finding that the investigation into Ms. Grewal’smortgage was not a sham; and a finding that the Chief Executive Officergave Ms. Grewal an opportunity to explain the circumstances surround-ing the mortgage.

13 It is well known that this court may not embark upon what is, in ef-fect, a retrial of a case. Where there is a sound evidentiary foundation fora finding of fact made by a trial judge, this court may not interfere withit: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 (S.C.C.)

14 At the hearing of the appeal Ms. Grewal relied strongly on what shesaid was a poisoned work environment by the time the September 1,2006 letter was written. However, the point was not taken that the eventsup to that time amounted to constructive dismissal, indeed they could notas that position was incompatible with her position at trial. Instead thedescription of a poisoned work environment was advanced to explainMs. Grewal’s response as reflected in the letter. I do not consider I need


to reach any conclusion on this aspect, as it is one particularly for thetrial process. The judge held the letter, even in the context of all that hadhappened, permanently undermined the employment relationship andtipped the balance. In other words, it was a culminating incident justify-ing termination for cause. Only if Ms. Grewal can dislodge some of thefindings of fact upon which that conclusion was based can we interferewith the order appealed.

15 I have had the opportunity to review the record in some detail, bothbefore the hearing and since. Notwithstanding the submissions of counselfor Ms. Grewal, there is, in my view, ample evidence in the record uponwhich the judge could make the findings of fact that are said to be inerror. That evidence is largely referred to in the respondent’s factum. Aswith all such cases in which the findings of fact are challenged on appealbut there is a foundation for the findings in the evidence, this is a casewhich, if it were to be won, was to be won at trial. Although Ms. Grewalcontended for a different result on these factual matters, I consider it wasopen to the trial judge to reach the conclusions he did on the evidencethat was presented to him. On those findings, dismissal of the action wasthe appropriate result.

16 I would dismiss the appeal.

Newbury J.A.:

17 I agree.

Kirkpatrick J.A.:

18 I agree.

Newbury J.A.:

19 The appeal is dismissed.

Appeal dismissed.

Steam Whistle Brewing Inc. v. M.N.R. 331

[Indexed as: Steam Whistle Brewing Inc. v. Minister ofNational Revenue]

Steam Whistle Brewing Inc. (Appellant) and The Minister ofNational Revenue (Respondent)


Docket: 2011-4037(CPP), 2011-4039(EI)

Pizzitelli J.

Heard: June 26, 2012

Oral reasons: June 26, 2012

Public law –––– Social programs — Federal pension plans — Liability forcontributions –––– Employer was beer manufacturer who regularly providedemployees with tickets entitling them to free cases of beer from manufacturingpremises — Minister of National Revenue reassessed employer on basis thatfree beer was taxable benefit to employees such that its retail value had to beincluded for purposes of employer’s Canada Pension Plan remittances — Em-ployer appealed — Appeals dismissed — Value of beer would be subject to em-ployee contribution and employer remittance if it was taxable benefit under s.6(1)(a) of Income Tax Act — To fall into common law exception, free beermust have been provided primarily for benefit of employer and any personalenjoyment by employee must have been merely incidental to employer’s busi-ness purposes — Employer undoubtedly derived some benefit from both qualitycontrol and marketing perspective from its staff beer policy encouraging em-ployees to report any problems with quality and to share free beer with non-employees — Employees had no legal obligation to cash in ticket, sample prod-uct, share it with others or report any quality control problems, and employerreceived few quality reports and did not even monitor employees’ use of tick-ets — Employer did not rebut Minister’s assumption that it was employees whoprimarily benefited from distribution of beer tickets, and employer who receivedincidental benefit — It was established law that employee benefits should bevalued at fair market value, which in this case was retail value of beer ratherthan cost to employer of manufacturing it.

Tax –––– Income tax — Employment income — Benefits — Miscellane-ous –––– Employer was beer manufacturer who regularly provided employeeswith tickets entitling them to free cases of beer from manufacturing premises —Minister of National Revenue reassessed employer on basis that free beer wastaxable benefit to employees such that its retail value had to be included forpurposes of employer’s Canada Pension Plan remittances — Employer ap-


pealed — Appeals dismissed — Value of beer would be subject to employeecontribution and employer remittance if it was taxable benefit under s. 6(1)(a) ofIncome Tax Act — To fall into common law exception, free beer must havebeen provided primarily for benefit of employer and any personal enjoyment byemployee must have been merely incidental to employer’s business purposes —Employer undoubtedly derived some benefit from both quality control and mar-keting perspective from its staff beer policy encouraging employees to reportany problems with quality and to share free beer with non-employees — Em-ployees had no legal obligation to cash in ticket, sample product, share it withothers or report any quality control problems, and employer received few qualityreports and did not even monitor employees’ use of tickets — Employer did notrebut Minister’s assumption that it was employees who primarily benefited fromdistribution of beer tickets, and employer who received incidental benefit — Itwas established law that employee benefits should be valued at fair marketvalue, which in this case was retail value of beer rather than cost to employer ofmanufacturing it.

Cases considered by Pizzitelli J.:

Detchon v. R. (1995), 1995 CarswellNat 958, 11 C.C.P.B. 291, [1996] 1 C.T.C.2475, [1995] T.C.J. No. 1342 (T.C.C.) — considered

McGoldrick v. R. (2004), 2004 FCA 189, 2004 CarswellNat 1395, 2004 Car-swellNat 2844, 2004 CAF 189, [2004] 3 C.T.C. 264, 2004 D.T.C. 6407, (subnom. McGoldrick v. Minister of National Revenue) 323 N.R. 353(F.C.A.) — considered

R. v. Savage (1983), [1983] C.T.C. 393, [1983] 2 S.C.R. 428, (sub nom. Savagev. Revenue Canada) 50 N.R. 321, (sub nom. Savage v. Revenue Canada) 83D.T.C. 5409, 1983 CarswellNat 527, 1983 CarswellNat 183 (S.C.C.) —followed

Rachfalowski v. R. (2008), 70 C.C.P.B. 76, 2008 D.T.C. 3626 (Eng.), [2009] 1C.T.C. 2073, 2008 CarswellNat 1504, 2008 TCC 258, 2008 CarswellNat2354, 2008 CCI 258 (T.C.C. [Informal Procedure]) — considered

Schroter v. R. (2010), 2010 CarswellNat 3171, (sub nom. Schroter v. Canada)319 D.L.R. (4th) 450, 2010 CAF 98, 2010 CarswellNat 908, 2010 FCA 98,[2010] 4 C.T.C. 143, 2010 D.T.C. 5062 (Eng.), (sub nom. Schroter v.Minister of National Revenue) 403 N.R. 83, 81 C.C.P.B. 159 (F.C.A.) —considered

Spence v. R. (2011), 2011 FCA 200, 2011 CarswellNat 2040, (sub nom. R. v.Spence) 2011 D.T.C. 5111 (Eng.), 2011 CAF 200, 2011 CarswellNat 3268,[2011] 5 C.T.C. 188, 89 C.C.P.B. 192, (sub nom. Minister of NationalRevenue v. Spence) 420 N.R. 389 (F.C.A.) — considered

Steam Whistle Brewing Inc. v. M.N.R. Pizzitelli J. 333


Employment Insurance Act, S.C. 1996, c. 23Generally — referred to

Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.)s. 6(1)(a) — considereds. 12 — referred tos. 21(1) — referred tos. 21(3) — referred to

Regulations considered:

Employment Insurance Act, S.C. 1996, c. 23Insurable Earnings and Collection of Premiums Regulations, SOR/97-33

s. 2(3)(a) — referred to

APPEALS by employer from reassessments by Minister of National Revenue onbasis that free beer provided to employees was taxable benefit for purposes ofCanada Pension Plan remittances.

Mr. Cameron Heaps for AppellantMs Alisa Apostle for Respondent

Pizzitelli J.:

1 THE REGISTRAR: Order, please. Court is now open.

JUSTICE PIZZITELLI: Good morning, everyone.

MR. HEAPS: Good morning, Your Honour.

MS. APOSTLE: Good morning.

THE REGISTRAR: The Court calls for judgment file 2011-4037(CPP)and 2011-4039(EI) between Steam Whistle Brewing Inc. and theMinister of National Revenue. Mr. Cam Heaps for the Appellantand Alisa Apostle for the Respondent.

JUSTICE PIZZITELLI: Good morning. This is my oral decision in thematter of Steam Whistle Brewing Inc. v. the Minister of NationalRevenue, file numbers 2011-4037(CPP) and 2011-4039(EI).

2 The Appellant is a manufacturer of beer in Toronto and provides itsemployees with beer tickets entitling them to a twelve-bottle case of beerfree of charge per ticket only redeemable at its manufacturing premisesduring the 2006, 2007, and 2008 calendar years. The only issues to bedecided in these matters is whether the provision of such free beer was a


taxable benefit to the employees and if so whether the value thereof wasthe fair market value of the beer tickets or the cost of manufacturing thebeer for the purposes of employee CPP remittances required to be madeby the employer.

3 It should be noted that it is conceded, both in the Reply of the Min-ister and at trial, that there is no benefit that is “insurable” for the pur-poses of Employment Insurance Act since, pursuant to paragraph 2(3)(a)of the Insurable Earnings and Collections of Premiums Regulations, anon cash benefit would not be included in insurable earnings. Accord-ingly, the appeal with respect to the EI matter above is dismissed as anyreassessment by the Minister in that regard was vacated as per theRespondent.

4 With respect to the CPP matter above, there is no dispute that if theprovision of free beer is considered a taxable benefit under subsection6(1)(a) of the Income Tax Act that the Canada Pension Plan would in-clude such amount in the person’s income for the year under section 12thereof that the value of such income would be subject to employee con-tribution under subsection 21(1) thereof and that an employer would beliable to remit such amounts under subsection 21(3) thereof to the Re-ceiver General.

5 Most of the facts are generally not in dispute in this matter. The Ap-pellant has agreed with the assumptions of the Minister found in para-graph 7 of the Respondent’s Reply that in 2006, 2007 and 2008, the Ap-pellant provided its employees with beer tickets entitling them to onefree twelve-pack of its beer per ticket, having distributed 3,846 of suchtickets in 2006, 4,011 in 2007, and 4,626 in 2008 and that such beerpacks had a retail value of $22.45 in 2006, $22.95 in 2007, $23.45 in2008 (with the 2006 price corrected from $22.43 in the Reply to $22.45as per the Appellant’s testimony). The Appellant provided its employeeswith beer tickets on the basis that full-time employees were entitled toone ticket per week and with part-time employees entitled to one-halfticket per week, hence since tickets were distributed every two weeks,full-time employees got two tickets and part-time employees got oneticket each bi-weekly distribution. Furthermore, the Appellant agreedthat it did not track which employees had redeemed beer tickets for thefree beer and which employees had not although the Appellant testifiedabout 99 percent of the employees did so. Individual employees receivedanywhere from 1 to 104 tickets per year, with an average per employee


of 20 tickets per year having an average value of $440 per year. TheAppellant also acknowledged the Respondent’s assumption that the Ap-pellant had a brew master on staff that completed quality control tests onthe beer.

6 The Respondent takes the position that the provision of free beer tick-ets is a taxable benefit to the employees at their retail value while theAppellant takes the position it was the primary beneficiary of such freeticket plan; namely as an economical and essential way to enhance itsquality control and promote its product via consumption by the em-ployee, its family and friends, and hence any benefits realized by its em-ployees were incidental and subordinate to its business objectives ofquality control and marketing. The facts relied upon by each of the par-ties to support their position are of course in dispute and will be dis-cussed in further detail during the analyses of the evidence after discuss-ing the applicable law first.

7 Paragraph 6(1)(a) of the Income Tax Act is a wide provision that in-cludes into income any taxable benefits received by an employee subjectto the statutory exceptions there enlisted, none of which apply to the Ap-pellant here. As the Respondent pointed out, the Supreme Court of Can-ada made it clear in R. v. Savage (1983), 83 D.T.C. 5409 (S.C.C.) at page5414 that as a general rule, any material acquisition in respect of employ-ment which confers an economic benefit on a taxpayer and does not con-stitute an exemption falls within paragraph 6(1)(a).

8 As the Respondent acknowledged however, and as pleaded by theAppellant, there is an exception under common law generally describedas the “merely incidental” exception as more particularly enumerated byJustice Malone in paragraph 9 of McGoldrick v. R., 2004 FCA 189, 2004D.T.C. 6407 (F.C.A.) and I quote:

... Where something is provided to an employee primarily for thebenefit of the employer, it will not be a taxable benefit if any per-sonal enjoyment is merely incidental to the business purpose (seeLowe v. R (1996), 96 D.T.C. 6226 (Fed. C.A.) at 6230. ...

9 As the Respondent has pointed out in their argument there are tworequirements to this “merely incidental” exception; namely that the mate-rial is provided primarily for the benefit of the employer and secondlythat any personal enjoyment by an employee is merely incidental to theemployer’s business purposes. It is these requirements that form the basisof most of the dispute between the parties here.


10 The Appellant argues that as a small business with its reason for exis-tence being to make only one product; a European style Pilsner beer ofthe highest standard to compete with such brands as Heineken and StellaArtois, that quality of product is the most important element of its busi-ness and hence its quality control plan includes relying on employees toprovide feedback of its product, packaging and operations in general. Infact, the Appellant’s logo is: “Do one thing really, really well.”

11 The Appellant also argues that, as a small business, it relies on itsemployees to consume its product and share it with family and friends asan economic means to market its product and build its brand awareness.The Respondent argues there is no mandatory requirement for employeesto submit any documents or reports either in their employment contractsor in the employee handbook distributed to all employees and thatmerely encouraging them to do so does not make it a requirement, nor isthere any requirement to cash in the ticket for beer and the Appellant didnot even track which employees did so.

12 Although the Appellant agrees that it is not a condition of the em-ployees written employment contract that employees are required to re-port any problems with the product and that the language in the em-ployee handbook only “encourages” employees to report and market itsproduct, the Appellant argues that the handbook was designed as a gen-eral guide and that employees are told that they must in fact report anyproblems both at employee meetings held on a regular basis as well as atthe time of their hiring by the Human Resources Manager who testifiedin this matter, and hence suggests is more than a voluntary or good faithact on the part of the employee and may be subject to discipline if theAppellant finds out an employee was aware of a problem and did notreport it.

13 The Appellant stressed that notwithstanding the informal proceduresat the brewery, employees love to work there, consider themselves a partof the family and take their reporting requirements seriously as it impactstheir livelihood. Moreover, the Appellant argues that it is far more eco-nomical to use their employees as an additional quality control mecha-nism than to hire an independent organization to utilize over 100 people,the same number as employees, to taste and comment on the quality ofbeer and its packaging which would cost the Appellant in excess of$300,000 per year or roughly $3,000 per employee; hence giving an av-erage benefit of $440 to each employee in beer tickets, saves the com-


pany about $2,600 per year in quality control costs, and hence on a costbasis the benefit primarily benefits the Appellant.

14 While the Appellant no doubt derives some benefit from both a qual-ity control and marketing perspective of its Staff Beer Policy, the com-mon law exemption requires that I find that both the Appellant received aprimary benefit from the distribution of the beer tickets and that any ben-efit received by the employees was merely incidental to the Appellant’sbusiness purposes; namely quality control and marketing. With all duerespect to the Appellant I cannot, on the evidence before me, agree withits position for several reasons: Firstly, as the Respondent points out, theStaff Beer Policy is not mandatory. The employee handbook at page 11under the heading of “Staff Beer” states, and I quote:

Staff are allocated weekly beer — one ticket per week worked. Thesetickets are redeemable only at our Retail Store for one 12 pack ofbottles. You are encouraged to objectively taste the product and re-port any inconsistencies or issues regarding taste or packaging. Toensure we monitor and follow up, please complete a quality controlform and hand in to the Quality Assurance department.

Staff are also encouraged to use their beer allocation to introduceSteam Whistle Pilsner to family, friends and acquaintances. This is agreat way for Steam Whistle to market its product cost effectivelyand help us build our brand awareness in Ontario. We welcome anyfeedback you get from these tastings and this feedback can be di-rected to the Quality Assurance department and Marketingdepartment.

15 It is quite clear that the employees were only “encouraged” to use theproduct and report any inconsistencies or to introduce the product to theirfriends, family, and acquaintances. There was no evidence of amandatory requirement to do so. The evidence is that employees werenot even required to use their tickets for free beer and some did not. TheAppellant’s Human Resources manager herself confirmed such reportingwas not a requirement of any employment contract. Even though she tes-tified that quality control was a constant theme in management and em-ployee meetings she attended and employees would feel obligated to re-port any problems as a result of their happiness in working there andtheir commitment to the Appellant, this does not make it a mandatoryrequirement. No employees testified in this matter either.

16 Moreover, the evidence is that from over 100 employees in the yearsin question, there were only 14 reports in 2006, 10 in 2007, and 11 in


2008, and that none of these reports came from employees who receivedthe highest number of tickets per year which seems highly unlikely not-withstanding that employees were only required to report negative find-ings. In fact, it was the Appellant’s President who represented the Appel-lant at this hearing that received the most tickets per year at 104 in 2006,52 in 2007 and 2008, but never submitted any report. If, as the Appellantsuggested, this program was a large savings from utilizing any indepen-dent quality control firm to monitor a similar number of employees, onewould have thought that the Appellant would expect to receive reportsfrom all of them in consideration of the fee paid, in this case free beer,whether good or bad, and especially from the highest users.

17 As for the Appellant’s argument that by using the employees as anadditional quality control group the company saved spending as much as$300,000 per year, or the equivalent of $3,000 per employee, absolutelyno documentary or independent evidence was submitted to support sucha claim for the Court to weigh.

18 On the whole, I cannot find the employees had any legal obligation asa term of their employment to cash in a ticket, sample the product, shareit with others or report any quality control problems.

19 In the case of Rachfalowski v. R., 2008 D.T.C. 3626 (Eng.) (T.C.C.[Informal Procedure]), relied upon by the Appellant, the taxpayer wasoffered membership in a golf club as part of its employment package anddenied the cash equivalent by the employer. The taxpayer was not re-quired to include the value of the golf membership in income because theCourt found the membership was primarily for the benefit of the em-ployer who wanted senior executives to belong to the golf club to en-hance the company’s image and to entertain clients. In Rachfalowski, themembership was mandated and not voluntary. In the case at hand, takingand cashing the beer ticket was totally voluntary. Moreover, Rachfalow-ski was an informal proceeding and has no precedential value.

20 Apart of the voluntariness aspect of this free beer perk, the fact thatthe Appellant did not even monitor who utilized the tickets let alonewhether they themselves drank it or shared it with others, hardly suggeststhe program was considered as serious a tool of quality control and mar-keting as the Appellant has suggested.

21 The employees were offered free beer, 99 percent of them took it ac-cording to the Appellant, to the tune of $440 per year on average, hardlyan incidental benefit. I am not satisfied on the evidence before me that


they were required to share or report on the quality of the beer and pack-aging and few of them ever did. Certainly, having regard to the Appel-lant’s brew master’s duties involving quality testing, the Appellant can-not convince me it relied primarily on the employees to perform suchfunction. There is not even any evidence the employees were qualified orsuited to perform such role or given any parameters or training to do so.On the whole, the Appellant has not satisfied me that the Minister’s as-sumption that it was the employees (and not the employer) who primarilybenefited from the distribution of beer tickets was rebutted.

22 In my view, the employees are the ones who primarily benefited fromthe beer tickets as a perk from employment and the Appellant is the onewho received an incidental benefit, not the other way around.

23 As for the value of the taxable benefit, the Appellant argues that thecost of the beer to the Appellant would be the appropriate value to assignto the benefit based on the case of Detchon v. R. (1995), [1996] 1 C.T.C.2475 (T.C.C.), where Justice Rip, as he then was, used the average costof a school in educating a child to determine the taxable benefit of freetuition. However, the Federal Court of Appeal in Schroter v. R., 2010FCA 98, [2010] 4 C.T.C. 143 (F.C.A.), and Spence v. R., 2011 FCA 200,[2011] 5 C.T.C. 188 (F.C.A.), has confirmed that the equal treatment oftaxpayers is facilitated by valuing their benefits at their fair market value.In Spence, the Federal Court of Appeal overturned the decision of JusticeFavreau at the trial level who relied on Detchon, relying instead on theSchroter case. In paragraph 10 of Spence, Justice Letourneau stated:

...What is in issue here is not the cost for the employer of grantingthe benefit to the employees. It is the value of the benefit received bythe employees...

24 Accordingly, it is established law that the value of the benefits re-ceived by an employee pursuant to paragraph 6(1)(a) of the Income TaxAct is the fair market value of the benefit, in this case the retail value ofthe beer.

25 I would also like to comment on the Appellant’s suggestion that theCRA has not fairly applied the law to all brewers based on its commentsthat the CRA sent notice to all members of the Brewers’ Association ofthe change in CRA policy regarding free beer to employees as beingfully taxable from January 1, 2006 onwards. The Appellant may not havereceived such letter but was not discriminated against with in respect tothe application of the law as all brewers were responsible for compliance


after January 1, 2006, and the years in appeal hereunder only start from2006 onwards.

26 Moreover, the Brewers Association received that letter in response totheir inquiry regarding the taxation of benefits. If the Appellant choosesnot to belong to associations that may lobby on behalf of the industry, hecannot complain he is entitled to be included in correspondence initiatedby such organizations. Compliance with the law is every taxpayer’sobligation.

27 Accordingly, the Appellant’s appeals are dismissed. Thank you.

MR. HEAPS: Thank you, Your Honour.

THE REGISTRAR: Order please. Court is in recessed for a fewminutes.

28 — Whereupon the proceedings adjourned at 9:41 a.m.

Appeals dismissed.

CANADIAN CASES ON EMPLOYMENT LAW

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