COURT OF APPEAL FOR ONTARIO
CITATION: Bennett v. Cunningham, 2012 ONCA 540
DATE: 20120817
DOCKET: C53920
MacPherson, Gillese and MacFarland JJ.A.
BETWEEN
Dawn Marie Bennett
Plaintiff (Respondent)
and
Karen Rosalee Cunningham
Defendant (Appellant)
Kenneth M. Alexander, for the appellant
William R. Gale and Michael Stitz, for the respondent
Heard: May 8, 2012
On appeal from the order of the Divisional Court (Hackland R.S.J., Harvison Young and Whitaker JJ.), dated January 19, 2011, with reasons by Hackland R.S.J. reported at 2011 ONSC 28, allowing an appeal from the judgment of Justice George T. Valin of the Superior Court of Justice, dated November 7, 2006.
MacFarland J.A.:
[1] This is an appeal from the order of the Divisional Court (with leave of this court granted June 24, 2011), which allowed an appeal from the trial judgment which found that the respondent Ms. Bennett had been dismissed for just cause. The Divisional Court found that the trial judge erred in failing to apply a contextual approach to the analysis of whether there was just cause. The Divisional Court also concluded that the trial judge would have found that dismissal for just cause was not made out had he undertaken the appropriate analysis.
[2] For the reasons that follow, in my view, the Divisional Court erred in finding that the trial judge failed to apply a contextual approach to his analysis of the question of whether there was just cause to terminate Ms. Bennett. I would overturn the order of the Divisional Court and restore the trial judgment in all respects.
THE FACTS
[3] At all relevant times the parties were lawyers and members of the Law Society of Upper Canada. Ms. Cunningham operated a one-woman law firm in Mississauga, Ontario, and in the summer of 2002 was looking for a junior associate lawyer to assist her with litigation files. She interviewed Ms. Bennett, who had been called to the bar in 2001, for the position on July 4, 2002, and on July 8, 2002 Ms. Bennett accepted Ms. Cunningham’s offer of employment.
[4] At trial, much time was spent on the issue of whether Ms. Bennett was an employee or an independent contractor. The trial judge determined that Ms. Bennett was an employee. That issue is not before us here.
[5] At the time of her hiring, Ms. Bennett elected to be compensated on the basis of the first of two schemes offered by Ms. Cunningham. She would be paid fifty percent of all fees billed and collected with an annual, recoverable advance against commission of $38,000.
[6] The trial judge’s other factual findings are set out in paragraphs 5 through 17 of his reasons for judgment:
[5] Ms. Bennett began work on July 15, 2002. During her first morning of work, Ms. Cunningham presented her with a written agreement specifying the terms of the position. The written agreement contained a number of provisions that had not been discussed during either the interview or the subsequent telephone conversation when Ms. Bennett accepted the position. Ms. Bennett signed the agreement.
[6] Ms. Bennett immediately assumed responsibility for a number of files, the majority of which were family law cases, an area in which she had little experience. The office was busy. Ms. Bennett worked long hours from Monday to Friday, and often on weekends. She became concerned that Ms. Cunningham was not providing her with the tools she required to do her work. Her concerns focused on the paucity of office resources available to her and the inadequacy of the technology in place.
[7] Ms. Bennett prepared a proposed business plan to address those concerns. She met with Ms. Cunningham in mid-August 2002 to discuss them. In addition to office resource and technology issues, Ms. Bennett expressed concern that she had been asked to sign a written agreement relating to her position on such short notice, particularly when there had been no mention of a written agreement during the interview or at the time of the job offer.
[8] In response [to] Ms. Bennett’s concerns, Ms. Cunningham had the staff attend at the office on a Saturday after her meeting with Ms. Bennett. They identified and listed the files assigned to Ms. Bennett. Ms. Cunningham invested in voice mail and software known as Amicus Attorney. She also adopted Ms. Bennett’s suggestion that each file contain a sub-folder for lawyer’s notes.
[9] Prior to the introduction of the Amicus Attorney software, Ms. Bennett had submitted handwritten dockets for the time spent on all files she worked on. The receptionist was responsible for entering the dockets into the office computer for file and billing purposes. The receptionist retired suddenly about August 22, 2002, and was not replaced until September 1, 2002.
[10] Ms. Cunningham met with Ms. Bennett on the evening of November 5, 2002. Ms. Bennett expressed concern that, while her share of fees billed was about $26,500, only $2,650 had been collected. She was also concerned about whether all her time dockets had been entered. A subsequent comparison of the handwritten documents with the computer records for her files confirmed that 42.8 hours of her docketed time had not been entered in the computer.
[11] The two lawyers met again on December 16, 2002. Ms. Bennett remained concerned. The gap between fees billed and collected had increased; after five months, the advances paid to Ms. Bennett exceeded her share of fees collected by about $10,000. She asked Ms. Cunningham for a legal assistant. Ms. Cunningham told her that if she wanted one, she would have to bear the cost from her commission income.
[12] Prior to this meeting, Ms. Bennett had pulled some accounts rendered and discovered a number of instances where time she had docketed had been credited to Ms. Cunningham. When she learned of this, Ms. Cunningham told Ms. Bennett that these errors would be corrected upon receipt of copies of the accounts where such errors had occurred.
[13] Ms. Bennett met with Ms. Cunningham on Saturday morning, December 21, 2002, just prior to Ms. Cunningham leaving on a Christmas vacation. She handed Ms. Cunningham a four-page letter dated December 21, 2002, which documented nine areas of concern. She also sent her a copy by registered mail. In the letter, Ms. Bennett made a number of statements that Ms. Cunningham claimed were untrue. Under the heading “Docketing System”, Ms. Bennett accused Ms. Cunningham of being dishonest and negligent. The letter contained other comments suggesting that Ms. Cunningham was disorganized and incompetent.
[14] Ms. Cunningham left on vacation and returned to the office on January 6, 2003. On that date, she invited Ms. Bennett to her office and informed her that she was terminated. On January 8, 2003, Ms. Cunningham handed a termination letter dated January 7, 2003 to Ms. Bennett, advising that her last day of work was to be January 10, 2003.
[15] Ms. Bennett subsequently secured a similar position on similar terms with another lawyer. She began working for him on March 25, 2003, although he had invited her to commence work as of March 1, 2003.
[16] Prior to the commencement of this action, Ms. Cunningham never asked Ms. Bennett to re-pay her any money by way of excess advances paid over Ms. Bennett’s share of fees collected, although the agreement dated July 15, 2002 entitled her to do so. While Ms. Bennett may have been concerned about her ability to pay Law Society fees and liability insurance premiums due at the end of December, she never expressed that concern to Ms. Cunningham.
[17] During the trial, Ms. Cunningham admitted through her counsel that Ms. Bennett’s share of fees billed and collected to date, and remaining unpaid net of advances, is $18,545.73. Ms. Cunningham admitted that she owed that amount to Ms. Bennett.
DECISIONS BELOW
A. Trial Judgment
[7] After reviewing the facts, the trial judge analyzed the nature of the contract between Ms. Bennett and Ms. Cunningham. Again, as indicated above, that issue is not before this court. The parties now accept the trial judge’s finding that Ms. Bennett was an employee at the relevant time.
[8] At paragraph 29 of his reasons for judgment the trial judge turned to the question of whether Ms. Cunningham had just cause to terminate Ms. Bennett. After briefly reviewing the context in which Ms. Bennett gave Ms. Cunningham the December 21, 2002 letter, the trial judge went on, at para. 32, to outline how Ms. Cunningham had responded to Ms. Bennett’s concerns about the shortcomings of the office’s organization that were raised at meetings in August and November. These responses included having her entire staff attend on a Saturday to help Ms. Bennett organize her files, authorizing Ms. Bennett to use the office process server to obtain copies of missing pleadings, installing Amicus Attorney computer software, installing voicemail, revising the office filing system to include a sub-folder in each file for lawyer’s notes, and offering to correct docketing errors where it appeared that Ms. Cunningham had been credited for time that should have been credited to Ms. Bennett.
[9] At para. 33, the trial judge listed his findings regarding the December 21, 2002 letter. The trial judge found that Ms. Bennett had made several unsubstantiated allegations about Ms. Cunningham’s practice.
[10] At paras. 34 to 40, the trial judge further analyzed the language and tone of the letter. He assessed whether it provided a sufficient basis upon which to conclude that Ms. Bennett had been insolent to the extent that the employment relationship could no longer be maintained, thereby justifying summary dismissal.
[11] At para. 35, the trial judge noted Ms. Bennett’s concerns over the fact that she appeared to owe more to Ms. Cunningham than she had earned and that her Law Society and insurance dues would soon require payment. He also noted that Ms. Bennett had not mentioned her concerns about her fees to Ms. Cunningham.
[12] Beginning at para. 41, the trial judge concluded his analysis:
[41] The relationship between lawyers practicing in the same law office is fundamentally based on confidence, respect and trust. After she had an opportunity to read the letter in its entirety and to consider its implications, Ms. Cunningham concluded that she could no longer have a working relationship with Ms. Bennett.
[42] Her conclusion in that regard was justified. The letter was highly critical of the operations in the law office and of Ms. Cunningham's integrity. The comments and accusations in the letter undermined the confidence she had in Ms. Bennett and destroyed the employment relationship.
[43] I find that the contents and tone of the letter constituted serious misconduct on the part of Ms. Bennett. The insolence was not reconcilable with maintaining the employment relationship. In the circumstances, Ms. Cunningham had just cause for terminating the services of Ms. Bennett without notice.
B. Divisional Court Decision
[13] The Divisional Court, in its decision to reverse the trial judgment, focused on the failure of the trial judge to apply a contextual approach to the assessment of whether there was just cause for dismissal, as mandated by the decisions in McKinley v. BC Tel, 2001 SCC 38, [2001] 2 S.C.R. 161, and Dowling v. Ontario (Workplace Safety and Insurance Board) (2004), 2004 CanLII 43692 (ON CA), 246 D.L.R. (4th) 65 (Ont. C.A.).
[14] At paras. 9 and 11 of its reasons, the Divisional Court stated the following:
[9] I agree with the appellant Ms. Bennett’s submission that there was an absence of the required contextual analysis concerning the cause for dismissal in this case and that such an analysis would have led to the finding that her letter of December 21, 2002 did not warrant dismissal for cause.
[11] I am of the opinion that a failure to apply a contextual approach to a determination of just cause for dismissal, as mandated by the Supreme Court of Canada in [McKinley], is an error of principle and constitutes an overriding and palpable error justifying appellate intervention, see Henry v. Foxco Ltd. 2004 NBCA 22, (2004), 31 C.C.E.L. (3d) 72 (NBCA).
ANALYSIS
[15] The Supreme Court of Canada instructs us in McKinley, at para. 34, that the contextual approach involves examining “both the circumstances surrounding the conduct as well as its nature or degree”. In my view, a fair reading of paragraphs 32 through 43 of the trial judge’s reasons for judgment clearly demonstrates that he did precisely that, even if he did not use the words “contextual approach”.
[16] The case was neither complicated nor complex. The trial judge considered the circumstances leading up to the writing of the letter, the facts surrounding the actual delivery of the letter to Ms. Cunningham, and the nature of the allegations and accusations contained in the letter. He also considered the nine areas of concern Ms. Bennett outlined in her letter and found many of her complaints to be unsubstantiated. He was entitled to make these factual findings on the record before him. Only after having done so, did the trial judge conclude that Ms. Cunningham had just cause for terminating the services of Ms. Bennett.
[17] The trial judge’s decision was also premised on his factual findings, included at the beginning of the judgment that set out the nature of the parties’ relationship. The trial judge need not repeat his factual conclusions when he considers the question of whether there was just cause for termination. He zeroed in on the central question in this case: whether Ms. Bennett’s four page letter dated December 21, 2002 provided just cause for her immediate termination. He concluded it did and I agree with his disposition. The trial judge’s conclusion in this regard is essentially factual in nature, and, absent palpable and overriding error, will not be overturned on appeal. See Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.
[18] In effect the Divisional Court simply substituted its view of the facts for that of the trial judge. This is not the role of an appellate court. The trial judge found that the December 21, 2002 letter did constitute just cause for dismissal and he was entitled to do so on the evidence before him.
CONCLUSION
[19] In the result, I would allow the appeal, set aside the order of the Divisional Court, and restore the trial judgment in all respects.
COSTS
[20] In view of the result, the costs before the Divisional Court should be to the appellant in this court.
[21] The costs of the appeal, including the application for leave to appeal, are fixed in the sum of $12,000.00 inclusive of disbursements and applicable taxes, and are payable to the appellant.
“J. MacFarland J.A.”
“I agree J.C. MacPherson J.A.”
“I agree E.E. Gillese J.A.”
Released: “J. MacF.” August 17, 2012