DATE: 20050922
DOCKET: C40519 and C41024
COURT OF APPEAL FOR ONTARIO
LASKIN, CRONK and GILLESE JJ.A.
B E T W E E N :
DIANE RODEN
Hedy L. Epstein for the appellants
Plaintiff (Appellant)
- and -
THE TORONTO HUMANE SOCIETY
Pellegrino Capone for the respondent
Defendant (Respondent)
A N D B E T W E E N :
KAREN MOTTRAM
Plaintiff (Appellant)
- and -
THE TORONTO HUMANE SOCIETY
Defendant (Respondent)
HEARD: April 1, 2005
On appeal from the judgment of Justice Blenus Wright of the Superior Court of Justice dated July 4, 2003.
GILLESE J.A.:
[1] Diane Roden and Karen Mottram were employed by The Toronto Humane Society (the “Society”). After they repeatedly refused to implement the Society’s policies in respect of accepting stray animals, their employment with the Society was terminated.
[2] They appeal from the judgment of Wright J. dated July 4, 2003, in which he dismissed their respective wrongful dismissal actions.
[3] For the reasons that follow, I would dismiss their appeals.
BACKGROUND
[4] The Society, a charitable institution, was founded in 1887 and has operated continuously since then. Its purpose is to provide humane treatment for stray animals and to prevent cruelty and suffering in animals.
[5] The Society operates a large animal shelter in Toronto on a twenty-four hour, seven day a week basis. It is an affiliate of the Ontario Society for Prevention of Cruelty to Animals (Ontario Humane Society). It derives some of its powers from, and operates its shelter facilities in accordance with, the Ontario Society for the Prevention of Cruelty to Animals Act, R.S.O. 1990, c. O.36 (the “OSPCA Act”). Part of the Society’s operating revenue comes from the sale of animals to the public through its adoption program.
[6] Ms. Roden began her employment with the Society on October 12, 1999, as Shelter Manager. Her employment with the Society ended on June 25, 2002. As Shelter Manager, Ms. Roden oversaw the day-to-day operations of the shelter, which involved moving the animals through the shelter from their admission to their return to their owners or through to adoption once a hold period had been completed. She was responsible for all union staff, a group that numbered up to 50 people. Three supervisors, including the appellant, Karen Mottram, reported to her.
[7] Ms. Mottram began work with the Society on April 3, 2000, as a Shelter Supervisor. Her employment with the Society ended on June 25, 2002. As one of three shelter supervisors, Ms. Mottram reported directly to Ms. Roden. She supervised all union staff at the shelter and was responsible for animals being moved through the shelter into release to the public.
[8] Before April of 2001, the Society took in stray animals from the City of Toronto, pursuant to a contract that it had with the City. The City of Toronto contract required the Society to pick up and house dogs under the auspices of the Animal Research Act, R.S.O. 1990, c. A.22 and the Pounds Act, R.S.O. 1990, c. P.17. The Society also took in cats and other animals in distress from the City of Toronto that were not covered by the provisions of the contract. Those animals were taken in pursuant to the Society’s powers as an affiliate of the Ontario Humane Society and pursuant to the OSPCA Act.
[9] After the City of Toronto amalgamated with other municipalities, the Society’s contract was not renewed because the City assumed responsibility for dealing with stray animals. The contractual relationship ended on April 1, 2001, and for approximately a year thereafter, the Society did not take in stray animals from the City of Toronto. However, it continued to take in stray animals from shelters outside of the City of Toronto. With fewer animals in care, staff were laid off.
[10] The reduction in the size and scope of the Society’s operations led the Society to undertake a review of its operations. After a due diligence process that included obtaining legal opinions as to the processes necessary to operate under the OSPCA Act and determining funding requirements, the Society decided to again take in all stray animals, including those from within the City of Toronto.
[11] Accordingly, in March of 2002, the Society instructed its employees to recommence taking in and caring for all animals in distress. It advertised those services to the public and, also in March of 2002, began a training period for staff so that animals would be processed in accordance with its powers and obligations under the OSPCA Act. The Society gave detailed operating instructions to staff, including the appellants, from March to June 2002. Throughout that period, members of the Society’s management held numerous meetings with staff, including the appellants, to explain the process and procedures and to answer concerns raised by staff about the Society’s apparent change in direction. The appellants were particularly vocal in expressing their concerns about the Society’s authority to take in stray animals.
[12] In an attempt to allay staff concerns, senior management sent the staff additional memos, entered into discussions with concerned staff members and held meetings at which the staff had an opportunity to express their concerns.
[13] On May 23, 2002, Mr. Webster, Acting Chief Executive Officer, sent a memorandum to all staff which reads in part:
The Toronto Humane Society is once again caring for lost animals. Effective immediately, all lost animals brought to the Society will be sheltered. We will try to find the rightful owner, if no owner can be found we will try and find the animal a new home.
I think it is a positive sign to see the Toronto Humane Society returning to its traditional roles of caring for lost pets. Currently there is no other shelter or pound in downtown Toronto for people to adopt an animal or locate a lost pet. The City's new pound at the Exhibition Place is not scheduled to open until early 2003; the THS is filling that void. People expect us to care for lost animals, it is why we exist; it is why people support us.
Should you have any questions about this change please speak with your Supervisor, Manager or Director.
[14] On May 30, 2002, Mr. Webster sent the following memorandum to the appellant, Diane Roden:
A record should be kept of each and every animal that is adopted and the fee should not be deposited to our regular account but rather to a trust account for which a record is retained for each animal and the monies thus attributed.
[15] Mr. Webster issued a second May 30, 2002, memorandum to all staff which said:
• Lost animals will be held for seven full days, not including the day of admission, and on the eighth day they become potential candidates for adoption. (Animals admitted prior to May 27, 2002 will be considered to have been admitted May 27, 2002.)
• During the seven day period they may be cared for, walked, and receive necessary veterinary medical care. (This does not include spaying or neutering.)
• Subsequent to being available for adoption, they may still be reunited with their owners and a record should be maintained of the original lost status.
[16] By the end of May of 2002, the Society operations had returned to full capacity with all previously laid-off staff having been rehired.
[17] On June 4, 2002, Ms. Roden wrote to Mr. Sheridan, the Director of Animal Services and the person to whom she reported, stating that she was not in favour of placing stray animals into the Society’s adoption program. The letter read, in part, as follows:
This letter is to advise you that I have given a great deal of thought and have taken the time to research the situation with the lost (stray) animals we currently have at the Society.
I am genuinely concerned that the manner in which we have these animals under our care does not entitle us to place them in our adoption program.
Prior to April 1, 2001 the Toronto Humane Society operated under the Animals for Research Act & Pound Act (City of Toronto Contract). This enabled the Society to place in adoption animals that had completed the mandatory waiting period for strays.
I believe that The Toronto Humane Society no longer has the ability to act under the Animals for Research Act or the Pound Act and as a result I feel that we may be putting ourselves in an unwise position. I refer to the Toronto Humane Society Code of Business Conduct that states, 'the Society expects all of its employees to act ethically, with the highest standards of integrity, and to abide by the principles of lawful conduct in all their business dealings. No one in the Society, from the Chief Executive Officer to the newest employee is ever expected to commit or condone any illegal or unethical act or to instruct other employees to do so'.
I have been asked to ensure that the lost (stray) animals be placed available for adoption to the public. I have not been given written assurance that we are acting in a lawful manner.
[18] On June 5, 2002, Mr. Webster and Mr. Trow, the Society’s volunteer President, held a meeting with supervising staff. Ms. Roden and Ms. Mottram were in attendance. They were directed to take in stray animals and process them through to adoption. The appellants stated that they had a difference of opinion in terms of the direction the Society was taking and that they objected to that direction.
[19] After the meeting on June 5, 2002, Mr. Trow sent the attendees this memorandum:
This will confirm that we met today.
Mr. Webster and I discussed his instructions to you of June 5, 2002 and answered your various objections and concerns at length.
You will kindly carry out those instructions effective today.
[20] On the same date, Mr. Webster sent the following memorandum to all staff:
Lost dogs and cats will be put up for adoption today beginning with those animals that we admitted on May 27, 2002 and previously.
From now on, a different colour of ‘lost’ tag will be placed with each animal's papers, i.e. Monday - yellow; Tuesday - red, etc. and the animal will go up for adoption one week from the day it was admitted, i.e. the day of the same colour.
The only exception is where there are behaviour problems or serious health problems. These animals will be reviewed each day by shelter management as to their acceptability for adoption.
All lost animals that arrive at the shelter will be admitted and none will be turned away.
[21] On June 6, 2002, Ms. Mottram wrote to Mr. Webster, stating that she would not follow the Society’s directive nor direct others to do so. The letter reads as follows:
I have reviewed Ms. D. Roden’s letter to you dated June 6, 2002 and have also consulted legal counsel. With great thought and consideration and advice from my legal counsel I am unable to follow through with your directives contained in the memo dated June 5, 2002 ‘Lost Animals for Adoption’. I am not comfortable that the Society has legal authority to act as you have directed, and I will not direct others to do as you have requested.
[22] On June 7, 2002, the Society held another general staff meeting to further address any staff concerns. The appellants attended the meeting, as did the Chief Inspector of the Ontario Humane Society. A presentation given at the meeting went over the terms and conditions of how animals were to be taken in and the legality for doing so. The Society had obtained five legal opinions, all of which were to the effect that the Society had authority under the OSPCA Act to take in stray animals. Four of the legal opinions dealt with the OSPCA Act and the fifth dealt with the Animals for Research Act. Excerpts from the legal opinions were read to the staff. Neither Ms. Mottram nor Ms. Roden expressed any concerns at this meeting.
[23] After the June 7, 2002 general staff meeting, Ms. Roden went home and, apart from attending at work on June 13, did not return to the workplace until June 25, 2002. While absent, she received a letter sent to her home from the Society that asked her to attend a meeting with management on June 25, 2002. The letter, dated June 18, 2002, reads as follows:
As you are aware, I am in receipt of correspondence you addressed to Steve Sheridan and copied to me dated June 4th and to me dated June 6th.
With good intentions to resolve your concerns, I would like you to come to a meeting on Tuesday, June 25, 2002 at 9:00 a.m. in my office to discuss various matters.
In addition to yourself, Steve Sheridan and Tim Trow will also be in attendance at that meeting.
In the interim, your instructions to place lost animals in adoption appropriate to policy remain unaltered.
[24] After the June 7 general staff meeting, Ms. Mottram worked a few days and then was absent from work beginning on June 13, 2002. While absent, she received a similar letter from the Society asking her to attend a meeting with senior management on June 25.
[25] Two separate meetings were held on June 25, 2002. Mr. Webster, Dr. Sheridan and Mr. Trow met first with Ms. Roden for a period of 10 to 15 minutes. Mr. Webster discussed Ms. Roden’s job functions and responsibilities with her. Then Mr. Webster asked Ms. Roden if she was prepared to carry out her job responsibilities as assigned. She replied “no”. In Mr. Webster’s opinion, this demonstrated that Ms. Roden had withdrawn her services and he handed her a letter of termination.
[26] Mr. Webster, Dr. Sheridan and Mr. Trow then met with Ms. Mottram. Mr. Webster discussed Ms. Mottram’s job responsibilities and her willingness to do her job as assigned. When asked whether she was prepared to put animals into adoption, Ms. Mottram responded that she could not and would not. She was then handed a termination letter.
[27] Both the appellants were provided with 2 weeks termination pay and company benefits, with the exception of short term and long term disability, for a specified period.
[28] The appellants commenced separate actions for wrongful dismissal that were tried together. The trial judge dismissed their actions.
THE TRIAL DECISION
[29] The trial judge determined that the appellants had been dismissed for cause. The key factual findings that underpin this determination are in paras. 34 to 46 and 50 to 52 of the reasons, set out below.
[34] The plaintiffs admit that they were instructed on more than one occasion to follow the Society's instructions to put stray animals into adoption. They admit that they refused to follow those instructions and at some point were told to follow the instructions “or else”.
[35] The plaintiffs maintain that at the June 25 meeting they were called separately into Mr. Webster's office where Mr. Webster, the Society President and Dr. Sheridan were present; they were handed a termination letter; there was no discussion; they asked why they were being terminated and were given no answer.
[36] In his testimony Mr. Webster admitted that the termination letters were prepared beforehand, but that a decision to terminate had not been predetermined. Mr. Webster, the President and Dr. Sheridan had previous discussions on the fact that the failure of the plaintiffs to perform their responsibilities was hurting operations. The number of animals had increased dramatically. The shelter had Ms. Roden as manager and Ms. Mottram as one of three supervisors. Therefore, only the other two supervisors were carrying out the responsibilities of animal adoptions and Ms. Roden the manager of the shelter and Ms. Mottram as supervisor were not willing to follow instructions, nor were they available to counsel other employees with respect to any adoption problems.
[37] In Mr. Webster’s view the June 25 meeting with the plaintiffs was the final opportunity for the plaintiffs to agree to follow instructions. On June 25, Mr. Webster said they had a discussion with Ms. Roden around “our wish that they would perform as instructed”. He referred to the various meetings and memorandums which had been sent. When he asked Ms. Roden if she was prepared to carry out her duties as assigned she said, “No. She was uncomfortable in doing so”.
[38] Mr. Webster stated that they had a similar discussion with Ms. Mottram to the effect that they hoped she would do her job responsibilities so that they could move forward. Her response was “She could not and would not”.
[39] On the basis of the responses he received from the plaintiffs, Mr. Webster determined that the plaintiffs had withdrawn their services and he gave them their termination letters.
[40] Dr. Sheridan testified that prior to the June 25 meeting discussions were held between Mr. Webster, the President and himself about needing to have the operation run effectively with everyone playing their part. There was a need to have animals moving through the shelter using the OSPCA Act. He said that the purpose of the June 25 meeting was to find out what the plaintiffs were willing to do because it was important to have a full complement of staff.
[41] At the June 25 meeting Dr. Sheridan said that the discussion centred around:
Whether they were comfortable with the way we had it in place, about how they felt about using the Act and being able to process animals through the shelter. They were not comfortable doing it.
[42] According to Dr. Sheridan termination of the plaintiffs’ employment was based on what transpired at the June 25 meeting.
[43] Mr. Webster has 30 years experience working in the area of human resources. I cannot accept the plaintiffs’ evidence that there was no discussion with the plaintiffs on June 25 and that they were just handed the termination letters and were asked to leave.
[44] Furthermore, Mr. Webster and Dr. Sheridan agreed that the plaintiffs had been exemplary employees up until the changes in March 2002, with respect to stray animals. The Society had invested over two years for each of the plaintiffs, training them in the various responsibilities.
[45] I find that the plaintiffs would not have been terminated from their employment if on June 25 they had agreed to follow the instructions of senior management with respect to stray animals.
[46] I also cannot accept the plaintiffs’ position that they did not know why their employment was terminated.
[50] Commencing in March of 2002 the focus of the Society shifted to once again take in stray animals. The taking in of stray animals and the process of putting those animals up for adoption was a primary concern of the Society for the subsequent months. The major part of the shelter’s work was to implement the new focus. The plaintiffs refused to be part of the Society’s new direction.
[51] The plaintiffs had no basis upon which to be concerned that the taking in of stray animals by the Society was illegal. Senior management made the decision to take in stray animals. No consequence could flow to the plaintiffs by following the instructions of senior management. The Society continues to take in stray animals with no challenge to its authority to do so.
[52] I find that the failure of the plaintiffs to follow the instructions of senior management of the Society amounted to serious misconduct which was wilful. Therefore, I conclude that the plaintiffs were dismissed for cause.
[30] The trial judge also held that, if the appellants had been terminated without cause, the notice provisions in their contracts of employment were valid and enforceable and that the Society had made payment in accordance with those notice provisions.
THE ISSUES
[31] The appellants raise a number of grounds of appeal. All but one can be dealt with by deciding the following three issues:
Did the trial judge err in finding that the appellants had been dismissed for cause?
Did the trial judge err in failing to find that the Society had a duty to warn the appellants that if they refused to deal with stray animals in accordance with Society procedures, their employment would be terminated?
If the appellants were dismissed without cause, did the trial judge err in finding that the termination provisions in their employment contracts were valid and in compliance with the provisions of the Employment Standards Act, 2000, S.O. 2000, c. 41 (the “Act”)?
[32] The remaining ground of appeal can be dealt with shortly. It consists of the appellants’ argument that the trial judge err in inferring that they had absented themselves from work for part of June 2002. In effect, they say that the trial judge was obliged to accept their testimony that they were absent due to illness because the Society had not asked them for medical documentation at the relevant time nor had the Society contested the matter in its pleadings.
[33] At paras. 28 – 31 of the reasons, the trial judge explains why he drew the impugned inference.
[28] Subsequent to the June 7th meeting Ms. Roden was off sick on Monday, Tuesday and Wednesday, June 10, 11 and 12. She was present at work on June 13 but was off sick from June 14 until the meeting of June 25 when her employment was terminated.
[29] Ms. Mottram was present at work up to and including June 13 but was off sick at the same time as Ms. Roden until her employment was terminated on June 25.
[30] The plaintiffs were off sick for twelve days, commencing June 14. I have only their evidence that they were sick with no real evidence that they were so ill that they had to be absent from work for twelve days. The Society operates 24/7. For a 12-day absence because of sickness I would expect to see some medical evidence to support the plaintiffs' position that they were too sick to come into work.
[31] Absent medical evidence and the fact that both plaintiffs were off sick at the same time, coupled with their opposition to the Society taking in stray animals, an inference can be drawn that the plaintiffs absented themselves from work on purpose between June 14 and 25.
[34] As the trial judge did not rely on this inference in concluding that the appellants were dismissed for just cause, it does not appear that any legal consequences would flow from a determination that he erred in making the inference. That said, I see no basis for interfering with the trial judge’s inference on the matter.
[35] Findings of fact and the drawing of evidentiary conclusions are the province of the trial judge; an appellate court is only to interfere with such determinations where the trial judge has made a palpable and overriding error. See Housen v. Nikolaisen, [2002] 2 S.C.R. 35. On the record, and in light of the fact findings the trial judge made in coming to that determination, it was open to the trial judge to draw the inference that he did. I know of no principle of law – and none was cited - to support the proposition that the trial judge was obliged to accept the appellants’ testimony on this matter simply because the Society chose to not call into question their assertions that they were ill until sometime after pleadings had closed.
DISMISSAL FOR CAUSE
[36] The appellants argue that the Society is barred from raising just cause as a defence because, prior to the litigation, it treated the appellants as though they had been dismissed without cause. In support of this position, the appellants point to such things as the fact that the termination letters do not mention cause and that the Society offered severance packages, to the appellants, in excess of those that would have been required had the appellants been dismissed for cause. They rely also on Mr. Webster’s testimony that, in his view, the appellants were dismissed without cause.
[37] Alternatively, the appellants argue that if it was open to the trial judge to find that they had been dismissed for cause, the trial judge erred in so finding. Specifically, the appellants argue that the trial judge erred in (1) finding that the appellants’ refusals to instruct their subordinates to follow Society instructions in relation to stray animals amounted to serious and wilful misconduct justifying dismissal for cause; and (2) in failing to draw an adverse inference regarding what transpired at the termination meetings on June 25, 2002.
[38] I do not accept that the Society was precluded from arguing that it had dismissed the appellants for cause. The question of cause was a live issue, raised on the pleadings. In paragraphs 8 and 9 of the statement of defence in both actions, the Society states that it was entitled to terminate the appellants’ employment contracts because the appellants had withdrawn their services thereby repudiating their contracts of employment.
[39] And, the fact that the Society initially treated the appellants’ dismissals on the basis that they were without cause is not determinative of the parties’ respective legal rights and obligations. Given that cause was in issue, the trial judge had the legal power and obligation to decide whether the Society was entitled to terminate the appellants’ employment for cause. He was not bound to decide the matter in accordance with the views of any particular witness or the actions of the parties taken before legal proceedings had begun.
[40] I turn next to a consideration of the appellants’ alternative submission. The trial judge held that the appellants’ refusals to discharge their responsibilities amounted to serious and wilful misconduct justifying dismissal for cause. In my opinion, however, based on the trial judge’s findings, the applicable principles are those that govern repudiation of employment contracts rather than misconduct.
[41] In Howard Levitt, The Law of Dismissal in Canada, (Aurora, Ontario: Canada Law Book, 2004) at p. 12–11, repudiation or abandonment of employment is described in these terms:
Just as an employer cannot insist on a significant change in the employment agreement and, if it does, an employee can treat it as a constructive dismissal, similarly, an employee cannot insist on a significant change. If an employee does so, the employer is justified in dismissing the employee.
[42] Although there is little jurisprudence on repudiation, that which exists is consistent with that description. For example, in Dowling v. Ontario (Workplace Safety and Insurance Board) (2004), 246 D.L.R. (4th) 65 this court held, at para. 72, that “[the employee] Mr. Dowling repudiated the employment contract by engaging in conduct incompatible with the obligations that he owed thereunder. This constituted a fundamental breach of his employment obligations.” Similarly, the Newfoundland Court of Appeal in Sparkes v. Enterprise Newfoundland and Labrador Corp. (1998), 167 Nfld. & P.E.I.R. 218, at para. 23, cited the following passage with approval:
The employee's conduct, and the character it reveals, must be such as to undermine, or seriously impair, the essential trust and confidence the employer is entitled to place in the employee in the circumstances of their particular relationship. The employee's behaviour must show that he is repudiating the contract of employment or one of its essential conditions. It must be conduct to which the employer could point as a good reason for having lost confidence in the employee's ability faithfully to discharge his duties.
See also Peterson v. Cowichan School District No. 65 (1988), 22 B.C.L.R. (2d) 98 (C.A.), Middelkoop (Trustee of) v. Canada Safeway Ltd. (2000), 2000 MBCA 62, 148 Man.R. (2d) 30 (C.A.), Pombert v. Brunswick Mining and Smelting Corp. (1987), 84 N.B.R. (2d) 296 (C.A.) to the same effect.
[43] The trial courts have followed a similar approach. See, for example, Sandercock v. Nabors Drilling Ltd. (2001), 287 A.R. 381 (Q.B.), Stevens v. HSBC James Capel Canada Inc. (1998), 57 O.T.C. 161 (Gen. Div.), Prest v. Ottawa Roman Catholic Separate School Board (1980), 29 O.R. (2d) 678 (H.C.J.), aff’d (1981), 128 D.L.R. (3d) 384 (Ont. C.A.), and Gould v. Hermes Electronics (1978), 34 N.S.R. (2d) 321 (S.C. T.D.).
[44] Jurisprudence on the law of dismissal provides additional guidance on the proper approach to determining whether an employee has repudiated his or her employment contract. In McKinley v. BC Tel, 2001 SCC 38, [2001] 2 S.C.R. 161, the Supreme Court of Canada held that a contextual approach was required when deciding whether an employee’s dishonesty provides just cause for dismissal. At para. 48, Iacobucci J., writing for a unanimous court, explains:
[W]hether an employer is justified in dismissing an employee on the grounds of dishonesty is a question that requires an assessment of the context of the alleged misconduct. More specifically, the test is whether the employee’s dishonesty gave rise to a breakdown in the employment relationship. This test can be expressed in different ways. One could say, for example, that just cause for dismissal exists where the dishonesty violates an essential condition of the employment contract, breaches the faith inherent in the work relationship, or is fundamentally or directly inconsistent with the employee’s obligations to his or her employer.
[45] In my view, a similar approach is warranted in cases of repudiation. Whether an employer is justified in terminating the employment relationship based on repudiation requires an assessment of the context of the employee’s refusal, in order to determine whether the employee refused to perform an essential condition of the employment contract or whether the refusal to perform job responsibilities was directly incompatible with his or her obligations to the employer.
[46] However, there is a crucial distinction between dismissal for misconduct and termination for repudiation. When an employer claims to have dismissed an employee for cause based on serious misconduct, the employer must point to conduct that took place prior to dismissal. It is then for the courts to determine whether the conduct was sufficiently serious so as to constitute cause. Repudiation, on the other hand, takes place when an employee refuses to perform an essential part of his or her job duties in the future. In such a situation, the employer is entitled to accept the repudiation and treat the employment relationship as terminated because the parties no longer agree on the fundamental terms of the contract.
[47] In the case at bar, the trial judge’s findings are consistent with repudiation. He did not find that the appellants’ employment was terminated because of any prior conduct on their parts. Rather, he found that termination occurred because, at the meetings on June 25, following a review of the appellants’ job responsibilities, the appellants were asked if they would carry out their assigned duties in the future and they refused. In para. 45 of the reasons, the trial judge concludes:
I find that the plaintiffs would not have been terminated from their employment if on June 25 they had agreed to follow the instructions of senior management with respect to stray animals.
[48] The Society’s evidence as to what transpired at the meetings on June 25, 2002, came from Messrs. Webster and Sheridan. Mr. Trow was present throughout the trial but the Society did not call him as a witness nor did it offer an explanation for failing to call him. The appellants contend that the trial judge made a palpable and overriding error by failing to make an adverse inference as to what transpired at the June 25, 2002 meetings because of that.
[49] The question of an adverse inference based on Mr. Trow’s failure to testify was not raised below; it ought not to be raised for the first time on appeal. That said, I see no basis for interfering with the trial judge’s findings in respect of the June 25 meetings. The trial judge gave reasons for his findings that are amply supported on the record before him. Two senior Society employees who had been at the meeting testified; there was no obligation on the trial judge to draw an adverse inference because the third member of the management team was not also called.
[50] In my view, the appellants’ unequivocal refusals on June 25, 2002, to perform their job duties amounted to repudiation of their employment contracts. The Society exists in order to provide treatment and care for stray animals. Ms. Roden was the Society’s Shelter Supervisor. Ms. Mottram was one of three shelter managers. Both played key roles in the Society’s operation. Both had, as a primary job responsibility, the obligation to ensure that the animal shelter operated efficiently and effectively. The appellants’ prior refusals to follow the Society’s instructions and ensure that stray animals were taken in and cared for in the shelter, and their refusals to instruct their subordinates to follow the Society’s directions in that regard, had resulted in serious overcrowding of animals within the shelter, which in turn had led to sickness and stress for the animals and shelter staff. When asked on June 25 if they were prepared to fulfil their job responsibilities, they refused. Given their respective positions with the Society, it is apparent that their continuing refusals to process stray animals would undermine the functioning of the shelter. Such refusals were antithetical to the fulfilment of essential conditions of their employment, namely, to ensure that the shelter operated effectively and efficiently. The refusals evidenced the appellants’ clear intentions to no longer be bound by the terms of their employment contracts.
[51] The appellants admit that they refused to follow Society instructions in respect of stray animals and that they also refused to instruct staff to follow the Society’s instructions in that regard. The reason that the appellants gave for refusing to follow instructions was that they were uncomfortable with the legality of what they perceived to be a change in the Society’s direction.
[52] Where an employee has a reasonable excuse for refusing to perform, such a refusal may not constitute repudiation. However, in the case at bar, there is a clear finding against the appellants on this point. In para. 51 of the reasons, the trial judge found (1) that the appellants had no basis upon which to be concerned that the taking in of stray animals was illegal and (2) that no consequences could flow to the appellants as a result of following Society instructions. While the appellants may have been justifiably concerned about the legality of what they perceived to be a change in the Society’s direction, their concern had been fully aired and addressed prior to the meetings on June 25. The staff meeting on June 7, 2002, is particularly significant in this regard, as it was devoted to explaining not only how animals were to be taken in but also the legality for so doing. As was also explained at that meeting, the Society had five legal opinions stating that it had the authority to take in stray animals. In light of the Society’s considerable efforts to address the appellants’ concerns, their refusals on June 25 to perform their jobs going forward were not reasonable.
[53] Accordingly, the Society had the right to accept the appellants’ repudiations of their employment contracts and to treat the employment contracts as terminated. As it was the appellants who effectively caused the employment relationship to come to an end, they are not entitled to damages for wrongful dismissal.
THE DUTY TO WARN
[54] As the foregoing analysis explains, in my view, the Society elected to accept the appellants’ repudiation of the employment contracts with the result that the contracts came to an end. In the circumstances, the issue of whether an employer has a duty to warn before termination in all cases of employee misconduct is not squarely raised and I decline to decide it.
ENTITLEMENT IF THE APPELLANTS WERE DISMISSED WITHOUT CAUSE
[55] The appellants’ employment contracts contained provisions that governed termination for cause and termination without cause. The termination provisions are similar in both contracts. That part of Ms. Roden’s employment contract that addresses termination without cause (the “without cause provision”) can be found in paragraph 8. It reads as follows:
Otherwise, the Employer may terminate the Employee’s employment at any other time, without cause, upon providing the Employee with the minimum amount of advance notice or payment in lieu thereof as required by the applicable employment standards legislation.
[56] Section 61(1) of the Employment Standards Act provides that:
An employer may terminate the employment of an employee without notice with not less than what is required under sections 57 or 58 if the employer,
(a) pays to the employee termination pay in a lump sum equal to the amount the employee would have been entitled to receive under section 60 had notice been given in accordance with that section; and
(b) continues to make whatever benefit plan contributions would be required to be made in order to maintain the benefits to which the employee would have been entitled had he or she continued to be employed during the period of notice that he or she would otherwise have been entitled to receive.
[57] The trial judge held that the without cause provisions in the appellants’ employment contracts were valid and enforceable. He found that the Society had paid both of the appellants the full amounts to which they were entitled under the Act and that it had continued to provide all of the benefits to which the appellants were entitled during the notice period.
[58] The appellants accept that an employer’s legal obligation to give reasonable notice of termination can be displaced by an express contrary agreement. However, they say that the without cause provisions require the Society to make only the payment stipulated in s. 61(1)(a) of the Act, not to make the benefit contributions required by s. 61(1)(b). Thus, they contend, the without cause provisions are void because they fail to comply with the minimum standards contained in the Act. In the result, they say, they are entitled to common law damages for wrongful dismissal. I do not agree.
[59] It is correct that the without cause provisions do not address the Society’s obligations in respect of benefit plan contributions during the notice period. However, in my view, they do not attempt to limit the Society’s obligations, in case of termination without notice, to payment of a lump sum. Rather, the without cause provisions provide a mechanism for calculating the amount to be paid in lieu of notice and are silent in respect of the obligation to provide benefits.
[60] Any question as to the validity of the without cause provision is answered by reference to the decision of the Supreme Court of Canada in Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986. It is important to note that in Machtinger, the employment contract provided that the employer’s obligation in respect of notice, in the event of dismissal without cause, was limited to something less than that which was required by the provincial employment standards legislation.
[61] Justice Iacobucci, writing for the majority, explains at pp. 999-1000 of the reasons, that an employment contract that attempts to contract out of the statutory minimum notice period by providing lesser benefits is void. However, he states at pp. 1004-1005 that an employment contract that referentially incorporates the legislated minimum notice period is valid:
Absent considerations of unconscionability, an employer can readily make contracts with his or her employees which referentially incorporate the minimum notice periods set out in the Act or otherwise take into account later changes to the Act or to the employees’ notice entitlement under the Act. Such contractual notice provisions would be sufficient to displace the presumption that the contract is terminable without cause only on reasonable notice.
[62] The without cause provisions in question are of precisely the type that Iacobucci J. says are valid: they referentially incorporate the minimum notice period set out in the Act. The without cause provisions do not attempt to provide something less than the legislated minimum standards; rather, they expressly require the Society to comply with those standards. As I have said, in my view, the provisions do not purport to limit the Society’s obligations to payment of such amounts. That is, they do not attempt to contract out of the requirement to make benefit plan contributions. Because the contracts are silent about the Society’s obligations in respect of benefit plan contributions, the Society was obliged to – and did – comply with the requirements of the Act in that regard.
[63] The appellants also argue that the contractual provision requiring an employee to give four weeks written notice of resignation is unconscionable and in violation of the Act. The trial judge dealt with this claim saying, at para. 68 of the reasons, that the appellants had not pleaded unconscionability and, at para. 73, that there was insufficient evidence to determine unconscionability. The evidence is unchanged from that which was before the trial judge. There is no basis upon which to interfere with the trial judge’s determination in respect of unconscionability.
[64] Ms. Mottram also argues that the termination provisions in her employment contract violate s. 13 of the Act because they empower the Society to set-off outstanding payments to the employee. I do not agree.
[65] Paragraph 4.01 of Ms. Mottram’s employment contract, which she signed, reads as follows:
By signing this Agreement, the Employee authorizes the Employer to deduct from any outstanding payment owed to the Employee by the Employer any monies owed by the Employee to the Employer at the time of the Employee’s dismissal.
Section 13(3) of the Act provides:
An employer may withhold or make a deduction from an employee’s wages or cause the employee to return them with the employee’s written authorization.
[66] Rather than violating s. 13 of the Act, para. 4.01 is consistent with s. 13. In any event, the Society made no deduction from her wages.
[67] Consequently, I would dismiss this ground of appeal.
DISPOSITION
[68] Accordingly, I would dismiss the appeals with costs to the respondent fixed at $8,000, inclusive of disbursements and GST.
RELEASED: September 22, 2005 “JL”
“E.E. Gillese J.A.”
“I agree John Laskin J.A.”
“I agree E.A. Cronk J.A.”