COURT OF APPEAL FOR ONTARIO
CITATION: Keenan v. Canac Kitchens Ltd., 2016 ONCA 79
DATE: 20160127
DOCKET: C60019
Gillese, MacFarland and van Rensburg JJ.A.
BETWEEN
Marilyn Keenan and Lawrence Keenan c.o.b. as Keenan Cabinetry
Plaintiffs (Respondents)
and
Canac Kitchens Ltd., a division of Kohler Ltd., and Kohler Canada Co.
Defendant (Appellant)
Paul Boshyk, for the appellant
Bram A. Lecker and Matthew A. Fisher, for the respondents
Heard: January 18, 2016
On appeal from the judgment of Justice Graeme Mew of the Superior Court of Justice, dated January 21, 2015.
Gillese J.A.:
[1] This appeal depends upon the answer to two questions. The first question relates to exclusivity. Exclusivity is a significant factor in determining whether a person is a dependent or independent contractor. Is exclusivity to be determined at, or about, the time of termination of the business/employment relationship? The second question relates to reasonable notice. Were there exceptional circumstances in the present case which support an award for a period in excess of 24 months?
BACKGROUND IN BRIEF
[2] Lawrence Keenan began working for Canac Kitchens Ltd., a division of Kohler Canada Co., in 1976. Canac was a manufacturer, distributor, and retailer of kitchen cabinets and related accessories. For the first six or seven years, Mr. Keenan worked as an installer of kitchen cabinets. In 1983, he became a foreman, supervising the work crews which installed Canac kitchens in new homes.
[3] Marilyn Keenan is Lawrence Keenan’s wife. She formally began work for Canac in 1983, as a foreman. Before that, she had helped out her husband on an informal basis.
[4] The Keenans’ relationship with Canac came to an end on March 15, 2009, when they were called to a meeting and told that Canac was closing its operations and their services were no longer needed. At that time, Mr. Keenan was 63 years of age and Mrs. Keenan was 61.
[5] Canac gave the Keenans nothing on termination - no notice, no pay in lieu of notice, and none of the usual statutory entitlements. None has ever been provided or paid. Why? Because in Canac’s view, the Keenans were independent contractors. To understand this, one needs to appreciate how the employment relationship between Canac and the Keenans unfolded.
[6] As already indicated, Mr. Keenan and Mrs. Keenan worked fulltime for Canac beginning in 1976 and 1983 respectively. They continued as fulltime Canac employees until October 1987 when they were called into a meeting and told that they would carry on their work as contractors.
[7] Canac told the Keenans that their job title had changed from foreman to “Delivery and Installation Leader” and that, going forward, installations would be done in the following way. The installers would provide their own trucks and pick up the kitchens from Canac. They would then deliver the kitchens to job sites where they would be installed. Canac would set the rates to be paid to the installers and give the Keenans the amounts owing to the installers. The Keenans were then to pay the installers. The Keenans were also made responsible for any damage to cabinets that occurred while in transit and told that they were expected to obtain insurance to cover those costs.
[8] The Keenans themselves were to be paid, as before, on a piece work basis for each box or unit installed but the amount would be increased to reflect the fact that they were paid in gross, without deductions for income taxes, employment insurance and CPP.
[9] Shortly after the 1987 meeting, Canac presented the Keenans with a draft agreement, which reflected the new arrangements and which had already been signed by Canac. Only Mrs. Keenan signed the agreement. The Keenans did not obtain independent legal advice before she signed. The agreements required the Keenans, as “sub-contractors” of Canac, to devote “full-time and attention” to Canac.
[10] The Keenans also received records of employment, which showed that the reason for issuance was that they had quit their jobs with Canac. Neither paid any attention to those records because their working relationship with Canac was continuing. The Keenans never incorporated; they carried on business as Keenan Cabinetry, a sole proprietorship.
[11] For all intents and purposes, after the 1987 meeting, the Keenans’ working relationship with Canac and their duties remained unaltered. The Keenans continued to supervise the delivery, installation and service of Canac kitchens. And, the Keenans considered themselves loyal Canac employees. They continued to enjoy employee discounts, wore shirts with the Canac logo, and used Canac business cards. Mr. Keenan received a signet ring for 20 years of loyal service. In the words of the trial judge:
To the outside world, and in particular, to Canac’s customers, the [Keenans] were Canac’s representatives.
[12] With the exception of some weekend jobs and work for friends and family, the Keenans continued to work exclusively for Canac until the end of 2006.
[13] Beginning in 2007, the Keenans started to do some work for Cartier Kitchens, a competitor of Canac. They did so because the work from Canac had slowed down. Canac turned a “blind eye” to the work that the Keenans performed for Cartier.
[14] At p. 5 of his reasons, the trial judge found that, despite taking on work for Cartier, a “substantial majority” of the Keenans’ work continued to be done for Canac. In 2007, the Keenans’ revenues attributable to Canac and Cartier were 80% and 20% respectively. In 2008, it was 66.4% and 33.6%. And, in 2009, to the point of termination, the split was 72.6% and 27.4%.
[15] After Canac ended the relationship in March 2009, the Keenans brought the within action.
[16] At trial, a short statement of agreed facts was entered and both the Keenans testified. Canac did not call any evidence. Although initially there was a suggestion that the Keenans remained employees throughout, as the trial developed it became clear that the real issue was whether the Keenans were dependent or independent contractors in March of 2009.
[17] The trial judge considered the five principles set out in Belton v. Liberty Insurance Co. of Canada (2004), 70 O.R. (3d) 81, 2004 6668 (C.A.) for distinguishing employees from independent contractors. Based on McKee v. Reid’s Heritage Homes Ltd., 2009 ONCA 916, at para. 32, the trial judge noted that those principles also apply to distinguishing employees from dependent contractors. The trial judge found that all five of those now well-known principles favoured a finding that the Keenans were dependent contractors from 1987 until termination.
[18] In particular, the trial judge found that the Keenans were economically dependent on Canac due to the fact that they worked exclusively for Canac or at a high level of exclusivity.
[19] Having found that the Keenans were dependent contractors, they were entitled to reasonable notice on termination. The trial judge awarded them damages of approximately $125,000 in lieu of 26 months’ notice.
[20] Canac appeals.
THE ISSUES
[21] Canac contends that the trial judge erred in:
finding that the Keenans were dependent – rather than independent – contractors; and
awarding the Keenans 26 months of notice.
ANALYSIS
Issue #1 – Dependent or Independent Contractors
[22] Canac takes issue with only one aspect of the trial judge’s determination that the Keenans were dependent contractors: his finding of exclusivity. Canac acknowledges that the Keenans worked exclusively for it until the end of 2006. However, from then until termination, on the findings of the trial judge, the Keenans also worked for one of its competitors. Canac contends that exclusivity is a matter to be determined at, or about, the time of termination of the relationship. Thus, it argues, as the Keenans did not work exclusively for Canac in the approximately two-year period immediately preceding termination, the trial judge erred in finding that the Keenans were dependent contractors.
[23] I reject this submission. I see no basis for interfering with the trial judge’s finding of exclusivity or near exclusivity.
[24] The trial judge observed that, in the jurisprudence leading to a recognition of the intermediate category of dependent contractors, a finding that the worker was economically dependent on the company due to complete exclusivity or a high level of exclusivity weighed heavily in favour of the conclusion that the worker was a dependent contractor.
[25] In my view, this observation is not only correct, it is vital to understanding how the question of exclusivity is to be approached. Exclusivity cannot be determined on a “snapshot” approach because it is integrally tied to the question of economic dependency. Therefore, a determination of exclusivity must involve, as was done in the present case, a consideration of the full history of the relationship. It is for the trial judge to determine whether, after examining that history, the worker was economically dependent on the company, due to exclusivity or a high level of exclusivity.
[26] The trial judge was fully aware that the Keenans did some work for one of Canac’s competitors in the last two years of the relationship – but he considered that information in context. Lawrence Keenan worked exclusively for Canac from 1976 to 2007. Marilyn Keenan worked exclusively for Canac from 1983 to 2007. Their agreement with Canac demanded nothing less. The services that the Keenans provided to Cartier were for a relatively short period, and done in response to a slowdown in work from Canac. Canac turned a “blind eye” to that work. Furthermore, on the findings of the trial judge, during the period that the Keenans provided services to Cartier, the “substantial majority” of their work continued to be done for Canac.
[27] Counsel for Canac conceded that between 1987 and the beginning of 2007 approximately 97.5% of the Keenans’ income was from Canac. And, I note, this figure does not include the Keenans prior periods of employment with Canac, as employees, when they worked exclusively for Canac.
[28] Of the approximately 32 and 25 years of service that Lawrence Keenan and Marilyn Keenan respectively gave to Canac, in all but two of those years they exclusively served Canac. With this history of the work relationship between the parties in mind, I see no fault in the trial judge’s finding of the requisite high degree of exclusivity.
[29] Accordingly, I would dismiss this ground of appeal.
Issue #2 – The Notice Period
[30] If it fails on the first ground of appeal, Canac asks this court to set aside the trial judge’s award of damages of 26 months of notice. Canac founds its position on this court’s decision in Lowndes v. Summit Ford Sales Ltd., 2006 14 (ON CA), [2006] O.J. No 13 (C.A.). At para. 11 of Lowndes, this court stated that while the reasonable notice period is a case-specific determination and there is no absolute upper limit on what constitutes reasonable notice, generally only exceptional circumstances will support a notice period in excess of 24 months. Canac says that the trial judge erred in principle by failing to make a finding of exceptional circumstances before awarding damages for reasonable notice in excess of 24 months. Consequently, it submits, this court can set aside the award. It urges this court to make an award of between 16 to 18 months but, in any event, not greater than 24 months.
[31] I agree that the trial judge failed to expressly make a finding of exceptional circumstances. I note that as part of the agreed statement of facts, the parties presented an agreed damages calculation that included figures for up to 26 months of notice. This may explain why there is no explicit finding of exceptional circumstances as it clearly indicates that an award beyond 24 months was in the contemplation of all parties. In any event, however, given the Keenans’ ages and lengths of service, and the character of the positions that they held, I would not interfere with the award.
[32] Lawrence Keenan and Marilyn Keenan worked for Canac for approximately 32 and 25 years respectively. Together, their average length of service was 28.5 years. They were 63 and 61 years of age at the time of termination. They held supervisory, responsible positions in which they oversaw the installation of Canac’s products and met with Canac’s customers as its representatives. For over a generation, they were Canac’s public face to the outside world. Over a period of approximately thirty years – the entirety of their working lives – the Keenans’ income had come from Canac and they relied on that income to support themselves and their family. Even during the approximately two years that they provided some services to Cartier, a “substantial majority” of the Keenans’ work continued to be done for Canac. These circumstances justify an award in excess of 24 months and I see nothing wrong in the trial judge’s finding that 26 months’ notice was reasonable.
[33] I also reject Canac’s submission that the trial judge erred in his assessment of reasonable notice by “basing” his decision on Cardenas v. Canac Kitchens, 2009, 17976 (ON SC). In Cardenas, a 43-year old shift supervisor who had worked for Canac for 27.5 years was awarded damages of 26 months’ notice.
[34] I do not accept that the trial judge based his award on that given in Cardenas. He considered the Cardenas case, along with the other cases put forward by the parties, when determining the period of reasonable notice. It is not an error to consider awards made in other cases involving the same company. While each case must be adjudicated on its own facts, previously decided cases – particularly those with analogous circumstances – offer useful guidance. The trial judge did precisely as he was required to do – he adjudicated this case, on its own facts, having due regard to the relevant case law.
DISPOSITION
[35] Accordingly, I would dismiss the appeal with costs fixed at $24,000, all inclusive.
Released: January 27, 2016 (“E.E.G.”)
“E.E. Gillese J.A.”
“I agree. J. MacFarland J.A.”
“I agree. K. van Rensburg J.A.”