DATE: 20050117

DOCKET: C40330

COURT OF APPEAL FOR ONTARIO

RE:

CHARLES JAKL (Appellant/Plaintiff) and RUSSELL TIRE & AUTOMOTIVE CENTRE (1990) INC., AND RUSSELL TIRE & AUTOMOTIVE CENTRE INC., AND GOODYEAR CANADA INC. (Respondent/Defendant)

BEFORE:

WEILER, MOLDAVER and SIMMONS JJ.A.

COUNSEL:

Diane J. LaRocque

for the appellant

R. Ross Wells

for the respondent Goodyear Canada Inc.

HEARD:

January 12, 2005

On appeal from the judgment of Justice G.P. Smith of the Superior Court of Justice dated June 17, 2003.

E N D O R S E M E N T

[1] On June 17, 2003, the trial judge ordered that Russell Tire & Automotive Centre (1990) Inc. and Russell Tire & Automotive Centre Inc. (collectively “Russell Tire”) pay the sum of $33,660.71 to the appellant on account of damages for wrongful dismissal. In addition, the trial judge dismissed the appellant’s claim for wrongful dismissal against Goodyear Canada Inc. On appeal, the appellant submits that the trial judge erred in dismissing his claim against Goodyear and that the trial judge further erred in requiring that the appellant pay Goodyear $4000 on account of costs.

[2] We agree with the appellant’s position. In particular, we are respectfully of the view that when addressing the appellant’s submission that, upon entering into the option agreement with the Russell Tire shareholders, Goodyear acquired the status of co-employer of Russell Tire’s employees, the trial judge focused erroneously on s. 12 of the Employment Standards Act, R.S.O. 1990, c. E. 14, and failed to determine whether Goodyear was a co-employer as a matter of common law. The trial judge found as a fact that, between the date of the option agreement (July 31 1997) and the date of the sale of Russell Tire’s business to The Beverly Group Limited (April 10, 1999), Goodyear was in effective control of Russell Tire’s business and employees. Based on this finding, we conclude that, as a matter of common law, Goodyear became a co-employer of Russell Tire’s employees: see Jones v. CAE Industries Ltd. (1991), 40 C.C.E.L. 236 (Ont. Ct. (Gen. Div.)).

[3] In this regard, we reject the respondent’s submission that the trial judge’s finding was limited to the conclusion that Messrs. Sharp and Bailey, were personally in control of Russell Tire’s business and employees during the relevant period. We note that at paragraph 37 of his reasons the trial judge stated:

The arrangement entered into between Goodyear and Russell Tire on July 31, 1997 (the option agreement) stripped Frank Russell, the President of Russell, of any real power, inserted the Goodyear management team of Bailey and Sharp into Russell Tire and placed the shares of Russell Tire into escrow pending the sale of that corporation. [emphasis added]

Read in context, this was a clear finding that it was Goodyear that had taken control of Russell Tire and that Goodyear’s control extended to Russell Tire’s employees.

[4] On appeal, the appellant argued that the option agreement amounted to a purchase of Russell Tire’s shares by Goodyear and that that purchase, either alone, or in combination with Goodyear’s actions in purchasing a 49% interest in Beverly prior to Beverly’s purchase of Russell Tire, made Goodyear responsible to the appellant for damages for wrongful dismissal calculated on the basis of the total period of the appellant’s employment with Russell Tire. The appellant submitted that Goodyear’s responsibility arose either from its status as the purchaser of Russell Tire or because its actions deprived the appellant unfairly of any practical ability to recover against Russell Tire.

[5] In our view, the trial judge’s findings extend no further than establishing that Goodyear was a co-employer at the time of the appellant’s dismissal and during the twenty-month period during which the option agreement was in effect. The trial judge did not address his mind to whether the option agreement was in fact a purchase agreement or whether the cumulative effect of Goodyear’s actions operated to the appellant’s detriment in a manner that was unfair[^1]. Accordingly, the appellant chose not to pursue these issues. It is therefore unnecessary that we address them.

[6] In light of our conclusion that Goodyear was a co-employer of the appellant at the time of his dismissal, Goodyear was responsible for providing reasonable notice of termination to the appellant and it is necessary that we determine the notice period for which Goodyear is responsible.

[7] The trial judge found Russell Tire responsible for nine months notice less credit for eight weeks wages that were paid in accordance with the Employment Standards Act. In reaching his conclusion, the trial judge considered several factors, including the following: i) at the time of trial the appellant was 33 years old and a fully licensed auto mechanic; ii) in 1999, the appellant earned a total of $54,087.79 from a combination of his hourly rate and an incentive arrangement; iii) the appellant was Russell Tire’s second highest paid mechanic, had been promoted to shop foreman prior to the date of the option agreement and was highly regarded as an excellent mechanic and employee; and, iv) the appellant was employed by Russell Tire for a total of nine years.

[8] Taking account of the twenty month period during which Goodyear was a co-employer, the first three factors considered by the trial judge, and the fact that Goodyear obtained the benefit of an employee with several years experience in the particular business (see Gresmak v. Yellowhead Town & Country Inn (1989), 77 C.B.R. (N.S.) 245 (B.C. Co. Ct.), in our view, Goodyear should be responsible to the appellant for a period of twelve weeks notice. Goodyear should also be given credit for two of the eight weeks wages that Russell Tire paid to the appellant in accordance with the Employment Standards Act. Because Goodyear and Russell were co-employers of the appellant for a period of twenty months, and because Russell employed the appellant for an additional several years, in our view, their obligations under the Employment Standards Act are overlapping rather than cumulative. Two weeks wages represents Goodyear’s responsibility under s. 57(b) of the Act. However, it is not appropriate to credit Goodyear with any of the additional payments made by Russell because Russell’s indebtedness to the appellant substantially exceeds its joint indebtedness to the appellant with Goodyear.

Disposition

[9] Based on the foregoing reasons: 1) the appeal is allowed; 2) paragraphs 1 and 4 of the judgment dated June 17, 2003 dismissing the appellant’s claim against Goodyear and requiring that the appellant pay Goodyear $4000 on account of costs are set aside; and 3) an order is substituted for paragraph 1 of the judgment requiring that Goodyear pay to the appellant a sum equivalent to twelve weeks wages less credit for two weeks wages paid in accordance with the Employment Standards Act.

[10] Costs of the appeal and of the trial as against Goodyear are awarded to the appellant on a partial indemnity basis payable by Goodyear fixed in the amount of $8000 inclusive of disbursements and applicable G.S.T.

_ “K.M. Weiler J.A.”

“M.J. Moldaver J.A.”

_ “Janet Simmons J.A.”

[^1]: In fairness to the trial judge it is not clear whether these arguments raised by the appellant on appeal were raised at trial.