DATE: 20050331
DOCKET: C40981
COURT OF APPEAL FOR ONTARIO
McMURTRY C.J.O., ARMSTRONG AND LANG JJ.A.
B E T W E E N :
Carol Blondeau
John R. Dunn for the appellant
(Appellant)
- and -
Holiday Ford Sales (1980) Limited
Frances R. Gallop for the respondent
(Respondent)
Heard: March 9, 2005
On appeal from the judgment of Justice Hugh R. McLean of the Superior Court of Justice dated October 20, 2003.
McMURTRY C.J.O.:
Facts
1The respondent automobile dealership (“Holiday Ford”) employed the appellant (“Blondeau”) for 14½ years. During the last years of her employment, Blondeau worked as a “professional service advisor” (a Ford Canada term) dealing with the service needs of Holiday Ford’s customers. Holiday Ford agreed that the job was a stressful one and that Blondeau performed her duties extremely well.
2In the calendar year before Blondeau left her employment, she earned $34,144.00, which included a base salary of $400.00 per week and a commission of $13,344.00.
3During 2000 and 2001, Blondeau experienced a series of family tragedies and on April 19, 2001, was advised by her family physician to take a stress leave from her employment. Blondeau applied for and received short-term disability and then long-term disability payments from Holiday Ford’s insurance carrier, Empire Life.
4During her years of employment with Holiday Ford, Blondeau twice took one-year maternity leaves and each time she returned to her job as a “service advisor”.
5In June of 2001, Holiday Ford advised Blondeau that she had been replaced as a “service advisor” but that a new “service advisor” position would be created for her on her return.
6Over a period of several months, there were conversations between Blondeau, Empire Life, and Holiday Ford about Blondeau’s return to work. On October 18, 2001, a representative of Empire Life advised Blondeau that Holiday Ford did not have a “service advisor” position available and that Blondeau could gradually return to work in the parts department. Blondeau testified that she was “shocked” and “devastated” when she learned that she was not going to return to a full-time “service advisor” job and as result sought legal advice.
7Blondeau’s solicitor wrote Holiday Ford and stated that, if Blondeau was not able to return to her former job on a full-time basis, it would be regarded by Blondeau as a constructive dismissal.
8On Friday, October 19, 2001, Holiday Ford responded by faxing to Blondeau’s solicitor a one-line letter that stated “We will have Mrs. Blondeau back to Holiday Ford as a service writer 7:30 a.m. Monday October 22, 2001 at the same rate of pay”. It is agreed that the phrase “service writer” is another term for the job “service advisor”. The letter was followed by a telephone call to Blondeau by Holiday Ford’s General Manager, David Edgerton (“Edgerton”), confirming the letter. After complaining that Blondeau was causing him to buy a new computer, Edgerton abruptly ended the conversation.
9Edgerton prepared another letter dated October 19, 2001, which stated that Holiday Ford would “need time” to place Blondeau in her former job and that in the meantime she would be asked to “perform other duties”. This letter was never sent.
10Blondeau arrived at Holiday Ford on Monday, October 22, 2001, at 7:20 a.m. She encountered Edgerton who abruptly turned around without speaking in a manner that indicated to her that Edgerton wished to avoid her. Blondeau then reported to the Service Manger who greeted her by saying, “Don’t look at me. I don’t have any room for you”.
11For three days, Blondeau was assigned various menial routine tasks, none of which involved contact with the customers of the dealership. On the Thursday of that week, Blondeau spoke to Edgerton who told her that there would be no service advisor position unless an existing service advisor left the dealership. Blondeau made a contemporaneous note, which stated, “Spoke to Dave Edgerton was told there is no Service Advisor available”.
12The Service Manager testified that he told Blondeau that there would be a “service advisor” position available once Holiday Ford finished building another “service advisor” station in the service department but he did not mention any time frame.
13Blondeau also asked Edgerton about the rate of pay and was told that it would be ten dollars per hour. She inquired about the bonus or commission that she was accustomed to earning in her previous position. He told her that he would get back to her but had not done so by the time she left the dealership the next day, Friday, October 26, 2001.
14Blondeau also testified that during the week of her return she was treated “coldly” by her fellow employees and that when she was sitting in the lunchroom on the Thursday of that week the Service Manager, with whom she had worked closely for nine years, simply ignored her.
15The evidence at trial was that after Blondeau’s departure from the dealership Holiday Ford did not establish a third “service advisor” workstation.
16On Sunday, October 28, 2001, Blondeau’s solicitor faxed Holiday Ford a letter to the effect that Blondeau had been constructively dismissed and would not be returning to work. The letter included the following statements:
a) Edgerton told Blondeau that he would not have a service advisor position available for her unless one of the persons currently employed in the company resigned, and
b) Edgerton told Blondeau that she would be compensated for her work at her previous base rate of pay rather than at an amount equivalent to the previous base rate of pay plus commission.
Analysis
17The unfortunate dispute that arose between the parties probably could have been resolved to each party’s satisfaction if the representatives of Blondeau and Holiday Ford had made a more serious effort to discuss the unresolved issues.
18Blondeau and her solicitor may have acted in a rather precipitous fashion but Holiday Ford knew that Blondeau had been on stress leave for a lengthy period of time and was obviously in a vulnerable condition. In my view, a more responsible employer would have made greater efforts to address Blondeau’s concerns when she returned to the auto dealership.
19Holiday Ford’s one-line letter of October 19, 2001, to Blondeau’s solicitor, which is repeated here for convenience, simply stated “We will have Mrs. Blondeau back to Holiday Ford as a service writer 7:30 a.m. Monday October 22, 2001 at the same rate of pay”. Holiday Ford clearly breached this representation and, in doing so, unilaterally changed the fundamental terms of Blondeau’s employment.
20The trial judge found as a fact that when Blondeau returned to the dealership “she was given certain tasks to fulfill in the parts department and other menial tasks. She was not given a job as a service advisor at that time”.
21The trial judge also found as follows: “The factual analysis, it seems in this particular case, that it was a situation where the employee did not really wish to return to work”. In my view, the evidence adduced at trial simply does not support this finding of fact. The evidence clearly demonstrates that the appellant wanted to return to her former job at the same rate of pay.
22The trial judge made only one brief reference to Holiday Ford’s letter to Blondeau inviting her back to her former job at her former rate of pay: “[B]asically, the second one and a half line letter was sent, saying that she could come back”. In my view, this statement represents a fundamental misapprehension of the evidence by the trial judge; he did not appreciate the significance of the letter in relation to Blondeau’s contractual terms of employment when she returned to work. The trial judge also found that “the defendant [was] doing its best to provide employment for her until they could set up the permanent job as they stated in their letter, which was faxed to Mr. Dunn”. However this letter, while drafted, was never sent to Blondeau’s solicitor as the trial judge stated earlier in his reasons.
23The trial judge also decided that, if there had been a constructive dismissal, the appropriate notice period would have been ten months.
The Applicable Law
24The trial judge properly referred to Farber v. Royal Trust Co., 1997 387 (SCC), [1997] 1 S.C.R. 846 where Gonthier J. writing for the court at para. 24 stated:
Where an employer decides unilaterally to make substantial changes to the essential terms of an employee’s contract of employment and the employee does not agree to the changes and leaves his or her job, the employee has not resigned, but has been dismissed. Since the employer has not formally dismissed the employee, this is referred to as “constructive dismissal”. By unilaterally seeking to make substantial changes to the essential terms of the employment contract, the employer is ceasing to meet its obligations and is therefore terminating the contract. The employee can then treat the contract as resiliated for breach and can leave. In such circumstances, the employee is entitled to compensation in lieu of notice and, where appropriate, damages.
To reach the conclusion that an employee has been constructively dismissed, the court must therefore determine whether the changes imposed by the employer substantially altered the essential terms of the employee’s contract of employment.
25It is my conclusion that Blondeau was constructively dismissed. Holiday Ford unilaterally made a substantive alteration to the essential terms of Blondeau’s contract of employment when it did not return her to her former position as “service advisor” with the same rate of pay.
Wallace Damages
26The appellant submitted in her factum that she is entitled to additional compensation because of the manner in which she was dismissed. The issue was not pursued in oral argument.
27In Wallace v. United Grain Growers, 1997 332 (SCC), [1997] 3 S.C.R. 701, Iacobucci J. at para. 103 for the majority formulated the test for what has become known as “Wallace damages”:
[A] dismissed employee is not entitled to compensation for injuries flowing from the fact of the dismissal itself… Thus, although the loss of a job is very often the cause of injured feelings and emotional upset, the law does not recognize these as compensable losses. However, where an employee can establish that an employer engaged in bad faith conduct or unfair dealing in the course of dismissal, injuries such as humiliation, embarrassment and damage to one’s sense of self-worth and self-esteem might all be worthy of compensation depending upon the circumstances of the case.
28It is my view that Blondeau has not established that Holiday Ford engaged in bad faith conduct or in unfair dealing. I am satisfied that Holiday Ford intended to return Blondeau to her former job and level of pay on a gradual basis but that it failed to communicate this to Blondeau who reasonably believed that the fundamental terms of her employment had been altered without her consent.
Assessment of Appellant’s Damages
29The trial judge decided that if Blondeau had been constructively dismissed, he would have awarded her ten months of salary including her bonus, calculated on the basis of her remuneration for her last twelve weeks of employment. We agree with Blondeau’s submission that the calculation should be based on the entire calendar year, as the trial judge’s calculation would have included the “slow” winter months but not the “busy” summer months.
30In my view, the award of ten months salary was not unreasonable and does not demonstrate an error in principle. Ten months notice equals an award of $28,357.50. Holiday Ford also owed Blondeau the following amounts:
Course and textbooks taken re: Mitigation of damages $ 557.67
Salary October 22 – 26, 2001 $ 624.47
Unpaid vacation pay $ 105.10
$1,287.24
31It is agreed that Blondeau owed Holiday Ford $917.82 for unpaid automotive repair services provided to her and for unpaid group insurance premiums. The net amount of $369.42 owing to Blondeau should therefore be added to the sum of $28,357.50.
Conclusion
32The decision of the trial judge is therefore set aside and Blondeau is granted judgment against Holiday Ford for damages in the amount of $28,726.92 plus pre-judgment interest on the amount of the judgment in accordance with Section 128 of the Courts of Justice Act at the rate of 2.5 per cent. Blondeau is entitled to her costs of the appeal fixed in the amount of $8,500.00.
33The trial judge awarded Holiday Ford costs of the trial in the amount of $35,000.00 plus disbursements of $3,777.62 and GST in the amount of $2,7443.00. We do not have any information about what Blondeau would have claimed for disbursements had she been successful at trial. We are therefore ordering that Blondeau be awarded costs in the sum of $35,000.00 for the trial plus proper disbursements and GST. If the parties are unable to agree as to the proper figure for disbursements, we will receive written submissions in that regard.
“R. Roy McMurtry C.J.O.”
“I agree. Robert P. Armstrong J.A.”
“I agree. Susan S. Lang J.A.”
RELEASED: March 31, 2005 “RRM”
