CITATION: Kurt v. Idera Inc., 2016 ONSC 3799

DIVISIONAL COURT FILE NO.: 690/15

DATE: 20160609

ONTARIO SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

H. SACHS, G. P. DI TOMASO, C. HORKINS JJ

BETWEEN:

MURAT KURT

Plaintiff/Appellant

– and –

IDERA INC. o/a UPTIME SOFTWARE INC

Defendant/Respondent

Andrew Monkhouse and Sara Yousefi, for the Plaintiff/Appellant

Daniel E. Attwell, for the Defendant/ Respondent

HEARD at Toronto: June 6, 2016

C. hORKINS J.

OVERVIEW

[1] This is an appeal that arises out of an alleged constructive dismissal.

[2] The appellant commenced employment with the respondent Uptime Software Inc. on June 14, 2012. His employment was governed by a written employment contract. In November 2014, Idera Inc. (“Idera”) acquired Uptime and the Uptime employees, including the appellant, continued their employment with Idera.

[3] On December 15, 2014, Idera placed the appellant on a temporary unpaid layoff. During this layoff period, he received health and dental benefits.

[4] In June 2015, Idera notified the appellant that he was being recalled to return to work. The appellant did not return to work on June 24 2015, the date designated for his return. In fact, on June 15, 2015, the appellant had commenced alterative employment elsewhere at a comparable rate of pay.

[5] The appellant retained counsel who informed Idera on June 17, 2015 that the appellant “was neither accepting nor declining this recall as he was in fact constructively dismissed from his position when he was laid off.” This was the first time that the appellant had notified Idera of his position that he had been constructively dismissed, when he was laid off on December 15, 2014.

[6] As a result of the appellant’s refusal to return to work, Idera advised the appellant in writing that he was deemed to have resigned from his position.

[7] On July 9, 2015, the appellant commenced this action for wrongful dismissal and breach of contract, seeking damages of "8 months' pay in lieu of reasonable notice" and the value of employment-related benefits over the claimed notice period.

[8] On November 30, 2015, the appellant brought a motion for summary judgment before Justice Glustein, seeking a determination of whether the December 2014 layoff amounted to a constructive dismissal.

[9] The motion judge found that the appellant had acquiesced to the temporary layoff and, as a result, the constructive dismissal claim could not succeed. As a result, there was no genuine issue requiring a trial on the issue. The motion judge dismissed the action with costs to the respondent. The appellant appealed.

COURT’S JURISDICTION:

[10] The Divisional Court has jurisdiction to hear appeals from judges’ orders pursuant to s. 19(1)(a) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”), when the order in question was final and the monetary limits are satisfied. The Divisional Court has appellate jurisdiction where the dismissed claim was for an amount less than $50,000.

[11] While the statement of claim seeks damages in excess of $50,000, the appellant has limited his claim to $40,000. On this basis, the parties agree that this court has jurisdiction to hear the appeal.

STANDARD OF REVIEW:

[12] The Supreme Court of Canada directs that the standard of review in a judicial appeal is correctness for questions of law, reasonableness for findings of fact, and findings of mixed fact and lie on a spectrum between the two depending on the nature of the issue: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 8, 10, 36.

analysis

[13] The appellant raises numerous grounds of appeal. In particular, he argues that the motion judge erred in law when he found that the appellant had acquiesced to the layoff. For the purpose of this decision, it is not necessary to deal with the appellant’s grounds of appeal. While I agree that the motion judge erred in law when he found acquiescence, I reach this conclusion for a different reason. The motion judge found that the appellant acquiesced to the temporary layoff and, as a result, he rejected the constructive dismissal claim. He did this without considering the terms of the employment contract. This approach was contrary to the courts direction in Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10 (“Potter”).

[14] Potter explains at paras. 37-39 that determining whether constructive dismissal has occurred is a two-step approach:

37 At the first step of the analysis, the court must determine objectively whether a breach has occurred. To do so, it must ascertain whether the employer has unilaterally changed the contract. If an express or an implied term gives the employer the authority to make the change, or if the employee consents to or acquiesces in it, the change is not a unilateral act and therefore will not constitute a breach. If so, it does not amount to constructive dismissal. Moreover, to qualify as a breach, the change must be detrimental to the employee.

38 This first step of the analysis involves a distinct inquiry from the one that must be carried out to determine whether the breach is substantial, although the two have often been conflated by courts in the constructive dismissal context. Gonthier J. conducted this inquiry in Farber, in which an employee had been offered a new position that was found to constitute a demotion. He stated that "the issue of whether there has been a demotion must be determined objectively by comparing the positions in question and their attributes": Farber, at para. 46.

39 Once it has been objectively established that a breach has occurred, the court must turn to the second step of the analysis and ask whether, "at the time the [breach occurred], a reasonable person in the same situation as the employee would have felt that the essential terms of the employment contract were being substantially changed" (Farber, at para. 26). A breach that is minor in that it could not be perceived as having substantially changed an essential term of the contract does not amount to constructive dismissal.

[15] The motion judge referred to Potter, but erred in law because he did not follow the two-step approach in Potter. A review of his reasons reveals that he found acquiescence without considering the employment contract. The employment contract is a necessary part of the analysis that did not occur. It is an important part of the context within which the motion judge should have considered the issue of acquiescence.

[16] The motion judge framed the issue on the summary judgment motion as follows:

[B]oth parties ask the Court to consider whether the employment agreement between Kurt and Uptime … explicitly or implicitly allows Uptime to temporarily lay-off Kurt and if so whether the particular provision complies with the ESA.

… Both parties agreed that the constructive dismissal argument was limited to whether the December 15, 2014 Notice that he was temporarily laid off constitutes a constructive dismissal, based on the terms of the employment agreement, the common law, and the issue of compliance with the ESA.

[Emphasis added.]

[17] The employment agreement is obviously relevant since it may allow temporary layoffs that comply with the ESA. The parties do not agree on whether the employment agreement permitted the layoff and whether the agreement complied with the ESA. Having framed the issue as one that required the court to examine the employment agreement, the motion judge declined to make a determination as to what, if anything, the employment agreement stated concerning layoffs.

[18] In addition to relying on Potter, the motion judge relied on Wronko v. Western Inventory Service Ltd., 2008 ONCA 327 where at para. 34, Winkler CJO stated “First, the employee may accept the change in the terms of employment, either expressly or implicitly through apparent acquiescence, in which case the employment will continue under the altered terms.” Determining whether an employee accepts a change in the terms of employment must start with a determination of what the agreement provides.

[19] Without considering the employment contract, the motion judge found that the appellant’s claim for constructive dismissal would fail. He stated as follows:

In the present case, the December 15, 2014 lay-off notice constituted at best a “unilateral amendment to a fundamental term of a contact of employment” (Wronko para. 35) if I accept for the purposes of this analysis (without deciding) Kurt’s submission that Idera could not effect the lay-off under the Employment Agreement (of the term should be struck out as a violation of the minimum ESA requirements) Even under this “best case” scenario of Kurt’s submissions on contractual interpretation and public policy to discourage terms that fall below the ESA, Kurt’s argument for constructive dismissal cannot succeed.

[20] The motion judge then proceeded to examine the facts that were not in dispute. This led him to find that the appellant had acquiesced to the layoff. He stated as follows:

The above facts demonstrate no genuine issue requiring trial on the issue of whether Kurt was constructively dismissed. Even if Idera could not layoff Kurt based on the employment agreement such that it was a unilateral change to the contract, Kurt consented or acquiesced in the decision to suspend his pay but continue to provide benefits. Kurt could have rejected the change and searched for new employment, but instead he sought to obtained benefits of being laid off (as an employee) without having to take the risk of Idera having the right under the Employment Agreement to effect the layoff.

[21] While it appears that constructive dismissal was the main focus of the appellant’s action he also has a claim for damages for breach of contract. The motion judge dismissed the entire action without any consideration of this claim.

[22] Six months elapsed between the layoff notice and the appellant’s recall to work. The motion judge found that the appellant acquiesced to the layoff during this period of time. He rejected the appellant’s argument that the acquiescence period should be the same as the two year time period under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. He explained that “[i]f an employee could continue in employment for two years without objecting and then claim constructive dismissal, it would render the consent or acquiescence component of Potter negatory.” While I accept that this is correct in law, the finding of acquiescence in this case was not.

[23] In summary, I conclude that the motion judge erred in law when he determined the acquiescence issue without first deciding what the employment agreement provided and whether it complied with the ESA. The two issues are inextricably interrelated and acquiescence cannot be fairly determined without a full understanding of the terms that govern the employment relationship between the parties.

[24] The order of the motion judge is set aside and the action is remitted back to another judge to be dealt with as that judge directs.

[25] The parties have agreed on costs. The respondent shall pay the appellant costs fixed at $12,500.

___________________________ C. Horkins J.

H. Sachs J.

G. P. Di Tomaso J.

Released: June 9, 2016

CITATION: Kurt v. Idera Inc., 2016 ONSC 3799

DIVISIONAL COURT FILE NO.: 690/15 DATE: 20160609

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

H. SACHS, G. P. DI TOMASO, C. HORKINS JJ

BETWEEN:

MURAT KURT

Plaintiff/Appellant

– and –

IDERA INC. o/a UPTIME SOFTWARE INC

Defendant/Respondent

REASONS FOR JUDGMENT

C. Horkins J.

Released: June 9, 2016