DATE: 20011116 DOCKET: C35520
COURT OF APPEAL FOR ONTARIO
CHARRON, MacPHERSON and CRONK JJ.A.
B E T W E E N :
Jeffrey D. Broadbent,
RUTH CHRISTENSEN
for the appellant
Appellant
- and -
John R. Sproat,
for the respondent
FAMILY COUNSELLING CENTRE OF
SAULT STE. MARIE AND DISTRICT
Respondent
Heard: October 17, 2001
On appeal from the order of the Divisional Court (Justices J. D. Ground, Robert C. Desmarais and Alan D. Sheffield) dated September 25, 2000.
CHARRON J.A.:
[1] The appellant, Ruth Christensen, sued the respondent Family Counselling Centre of Sault Ste. Marie and District for damages for wrongful dismissal alleging that the notice of termination of her employment was inadequate. There were three substantial issues to be determined at trial:
Were the provisions regarding termination of employment contained in the respondent’s policy manual part of Christensen’s contract of employment?
Did such provisions limit Christensen’s common-law entitlement to damages in lieu of reasonable notice?
What was the appropriate quantum of damages, if any, to which Christensen was entitled?
[2] The trial judge held that regardless of the answer to the first question, the provisions contained in the employer’s policy manual were not sufficiently clear to limit Christensen’s common-law entitlement to damages. She assessed the damages on the basis of her finding that eight months’ notice should have been given. The trial judgment was set aside on appeal to the Divisional Court. Christensen appeals from the decision of the Divisional Court with leave of this court.
[3] Christensen was hired by the respondent as a therapist in May 1990. On September 22, 1997, she was advised by the respondent that her employment was terminated by reason of funding cuts imposed by the provincial government. The trial judge found that the respondent had the right to terminate Christensen’s employment and that it had not acted in bad faith in doing so. The respondent provided Christensen with ten weeks’ pay, continuing insurance benefits until the end of 1997, and a very complimentary letter of reference. It also volunteered to assist Christensen in her new job search.
[4] The first issue to be determined at trial was whether the provisions regarding termination of employment contained in the respondent’s policy manual were in fact part of Christensen’s contract of employment. It was common ground between the parties that the contract of employment consisted of a letter of offer dated May 15, 1990 signed by both the employer and Christensen. The only reference to termination in the letter related to the six month probationary period during which time either the employer or employee would be free to terminate the contract on giving four weeks’ notice. The letter also set out the remuneration for the position and made the following reference to the respondent’s staff manual:
The responsibilities of this position have been outlined and I am enclosing a staff manual which contains the conditions of employment and agency policies.
[5] The trial judge accepted Christensen’s testimony that the manual was not sent with the letter. Christensen testified that she did not ask for the manual because she did not want to appear to be complaining before her work even started. She did, however, ask for and receive a copy of the manual during her first week of employment, she read it and she understood it. She did not pay particular attention at the time to the termination provisions contained in the manual nor were they explained to her by her employer. The relevant provisions in the manual read as follows:
This Personnel Code is to be considered as a policy guideline setting for [sic] the minimum expectations of employment and benefits obtaining therefrom.
H. Termination of Employment
Section A.
- By Employee
b) Professional Staff: will require one month notice in writing to the Executive Director and their supervisor.
- By Employer
b) Professional and Clerical Staff: will be in writing from the Executive Director and the same ratios as above will apply, that is one month’s notice to professional staff … and/or as established by legislation. [Emphasis added.]
[6] The trial judge noted that the reference to “legislation” was not defined in the manual and concluded that, in context, it was likely intended to refer to the Employment Standards Act, R.S.O. 1990 c. E-14. She then considered the following relevant provisions of the Act:
4 (1) An employment standard shall be deemed a minimum requirement only.
(2) A right, benefit, term or condition of employment under a contract, oral or written, express or implied, or under any other Act or any schedule, order or regulation made thereunder that provides in favour of an employee a higher remuneration in money, a greater right or benefit or lesser hours of work than the requirement imposed by an employment standard shall prevail over an employment standard.
6 (1) No civil remedy of an employee against his or her employer is suspended or affected by this Act.
57 (1) No employer shall terminate the employment of an employee who has been employed for three months or more unless the employer gives,
(g) seven weeks notice in writing to the employee if his or her period of employment is seven years or more but less than eight years;
64.3 (2) Subject to subsection (4), an employee is not entitled to commence a civil action for wrongful dismissal if he or she files a complaint alleging an entitlement to termination pay or severance pay relating to the same termination of employment.
(3) The employee is not entitled to commence a civil action in the circumstances described in subsection (1) or (2) even if the amount owing to the employee is greater than the amount for which an order can be made under the Act.
[7] The trial judge held that the provision for termination was capable of multiple interpretations. She explained them as follows:
Firstly, it might be interpreted as setting a ceiling for termination pay, implicitly providing that the lesser of one month’s pay or the termination pay provided for by what is now section 57 of the Employment Standards Act. This interpretation would result in a violation of the minimum standards set by the Employment Standards Act for employees whose period of employment is five years or more.
This interpretation would necessitate a conclusion that the provision was null and void as violating the minimums prescribed by the Employment Standards Act and thus would entitle the Plaintiff to damages in lieu of reasonable notice on termination. (Machtinger v. HOJ Industries Ltd. (1992), 1992 CanLII 102 (SCC), 91 D.L.R. (4th) 491).
It cannot be assumed that the Personnel Code was drawn to comply with the Employment Standards Act. I note that section H(A) 5 reserves to the employer the right to withhold the final salary payment until records and reports are completed by the employee, despite the prohibition in section 8 of the Employment Standards Act against retention of wages.
Secondly, it might be interpreted as providing the greater of one month’s pay or the notice required by the Employment Standards Act, that is, establishing a maximum and a minimum for the level of payments to be made on termination.
Thirdly, it might be interpreted as providing for one month’s notice and the notice or pay in lieu of notice required on termination by the Employment Standards Act.
Finally, it might be interpreted as permitting an action for damages for wrongful dismissal, but setting a minimum of one month’s notice to be given in any event.
[8] The trial judge held that in the event of any ambiguity in the provision, it must be construed in favour of the employee who took no part in the preparation of the document. The respondent does not take issue with this finding that the principle of contra proferentem should apply. The trial judge then concluded as follows:
If the Defendant wished to limit its obligations on termination of employment to the notice provisions provided by section 57 of the Employment Standards Act, it should have clearly expressed those intentions and brought them home to the prospective employee. As noted by Iacobucci J. in Machtinger v. HOJ Industries Ltd. 1992 CanLII 102 (SCC), 91 D.L.R. (4th) 491 at p. 503,
… In Canada it has been established since at least 1936 that employment contracts for an indefinite period require the employer, absent express contractual language to the contrary, to give reasonable notice of an intention to terminate the contract if the dismissal is without cause.
and …
… I would characterize the common law principle of termination only on reasonable notice as a presumption, rebuttable if the contract of employment clearly specifies some other period of notice, whether expressly or impliedly.
In this case, the contractual provision is unclear. Two of four possible interpretations would permit the Plaintiff to claim damages for wrongful dismissal. The Plaintiff is entitled to the benefit of a favourable interpretation of this ambiguous provision and I therefore conclude that even if part of the employment contract, it does not bar a claim for damages for wrongful dismissal.
[9] Finally, the trial judge assessed the damages on the basis that eight months’ notice of termination should have been given.
[10] On appeal to the Divisional Court, a unanimous court was of the view that the termination provisions of the manual were part of the employment contract and that, although she had made no specific finding to that effect, the trial judge had so found because she had “concentrate[d] on the various interpretations of the termination provision” in her judgment. The court held further that the trial judge had erred in her conclusion that Christensen was entitled to common-law damages for wrongful dismissal. In a brief endorsement, the court gave its reasons as follows:
The termination provision, although ambiguous, is not unfair, onerous or does not result from any undue influence on the employee or any ignorance or infirmity of the employee.
The employer acknowledges that the contra proferentem principle applies and that the interpretation most beneficial to the employee should govern, that is that she is entitled to one month’s notice plus the 7 weeks prescribed for in the Employment Standards Act. She has in fact received slightly more than that amount.
This being the case, there has in our opinion been no breach of the employment contract and Justice Pardu was clearly wrong in concluding that the employee was entitled to common law damages for wrongful dismissal.
[11] The Divisional Court therefore set the trial judgment aside and dismissed Christensen’s action with costs.
[12] It is my view that there was no basis for interfering with the trial judge’s decision.
[13] First, the Divisional Court erred in stating that the trial judge had found that the termination provisions in the manual were part of the employment contract. It is clear from her reasons that the trial judge expressly declined to make a final determination on this issue because she was of the view that, regardless of the answer to this question, the contract provisions in question were not sufficiently clear to rebut the common-law presumption that an employee can only be terminated on reasonable notice.
[14] Second, and more importantly, the Divisional Court erred in failing to give effect to the principle in Machtinger v. HOJ Industries Ltd. (1992), 1988 CanLII 4645 (ON CA), 66 O.R. (2d) 545 (S.C.C.). The determinative question here was not whether the termination provisions in the manual were unfair, onerous or the result of undue influence or any power imbalance. Rather, as found by the trial judge, the case turned on whether the termination provisions, if they formed part of the contract, were sufficiently clear to rebut the common-law presumption. The trial judge’s conclusion that they were not was entirely reasonable and ought not to have been interfered with.
[15] The respondent takes no issue on this appeal with the quantum of damages assessed at trial. I would therefore allow the appeal, set aside the judgment of the Divisional Court, and restore the trial judgment. I would award the appellant her costs throughout on a party-party basis.
(signed) “L. Charron J.A.”
(signed) “I agree J. C. MacPherson J.A.”
(signed) “I agree E. A. Cronk J.A.”