Sullivan v. KSD Enterprises Ltd., 2019 ONSC 6698
CITATION: Sullivan v. KSD Enterprises Ltd., 2019 ONSC 6698
DIVISIONAL COURT FILE NO.: 281/18
DATE: 20191122
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
Christopher Sullivan Plaintiff//Appellant
– and –
KSD Enterprises Ltd. o/a International Plaza Hotel & Conference Centre Toronto Airport Defendant/Respondent
Howard Markowitz, Counsel for the Plaintiff//Appellant
Mitchell Smith and Alisha Kassam, Counsel for the Defendant/Respondent
HEARD at Toronto: November 21, 2019
Backhouse J.
Overview
[1] The appellant appeals from a decision of Deputy Judge L.-K.Hum (“the trial judge”) of the Toronto Small Claims Court dated April 9, 2018 wherein she dismissed the appellant’s claim for damages arising from the dismissal of his employment with the respondent.
[2] The appellant submits that the trial judge erred in finding that he was subject to a 6 month probation period when the employment agreement contained a general heading of “Base Annual Salary and Probationary Period” and then only provided for a performance review after 6 months. The appellant further submits that the trial judge erred in finding that the respondent was entitled to rely on a termination clause which provided for the minimum amount due under the Employment Standards Act (“ESA”) upon termination when the appellant, as an employee who had been employed for less than 3 months, was not covered by the ESA.
Facts
[3] The appellant was employed as a Guest Support Services Manager for approximately 6 weeks until the respondent terminated his employment on January 23, 2017 based on lack of suitability. His employment agreement provided in part:
“2) Base Annual Salary and Probationary Period
…You will receive a performance review 180 days (6 months) after assuming your new position.
Upon successful completion of the performance review, you will receive a salary increase up to $57,000.00 CDN.
[4] Paragraph 11 of the appellant’s employment agreement with the heading “Resignation, Termination and Severance” provides in part:
The Hotel may terminate your employment, at any time, at its sole discretion for any reason without cause, by provision to you of the minimum amount of notice or pay in lieu of notice and severance pay (if applicable) to which you are entitled under the Ontario Employment Standards Act, 2000.
Pay in lieu of notice and any severance pay shall be calculated on base wages as of the date of the notice of termination and in accordance with the Ontario Employment Standards Act, 2000. …Entitlement pursuant to this section is inclusive of statutory and common law entitlements.
By signing this agreement, you agree that upon the receipt of the entitlements described above, no further amounts will be due and payable to you whether under statute or common law.
The Hotel will also continue to make its premium contributions on your behalf so as to provide for your continued participation in those Employer group benefit plans in which you participated immediately prior to termination, where required to do so under the Ontario Employment Standards Act, 2000 and only for such time as required by the Ontario Employment Standards Act, 2000.
[5] In dismissing the action, the trial judge made the following findings:
(a) The language in the probationary clause was sufficiently clear in that it identified a period of 6 months during which the appellant was to show his suitability for the position at the Hotel.
(b) The phrase “Base Annual Salary and Probationary Period” and the language that followed clearly indicated that there were performance requirements that must be passed by the six-month mark. The trial judge concluded that “any reasonable person would conclude that this is a probationary clause.”
(c) The Hotel is entitled to rely on the probationary clause to terminate based on suitability.
(d) The Hotel was also entitled to rely on the ESA Termination Clause which was not ambiguous. The Hotel was entitled to terminate the appellant’s employment without notice or pay in lieu of notice because there is no minimum amount of notice required under the ESA for an employee with less than three months employment.
Standard of Review
[5] The appellant’s factum does not reference the applicable standard of review on an appeal from the trial judge’s decision.
[6] I agree with the respondent that whether the trial judge correctly determined that the ESA notice provisions are applicable to employees with less than three months of service is reviewable on the standard of correctness. The other issues under appeal are subject to the palpable and overriding error standard because they concern the interpretation of a contract. It is well established that the interpretation of a contract involves issues of mixed fact and law. (Carpenter v. Brains 11 Canada, Inc. 2016 ONSC 3614 at para.25 and 27). The trial judge’s factual findings are entitled to deference.
Analysis
The trial judge’s interpretation of paragraph 2 of the employment agreement as a 6 month probation period was not unreasonable
[7] The trial judge found that while the language in paragraph 2, under “Base Annual Salary and Probationary Period”, does not explicitly state that there is a probationary period, it clearly sets out that there are performance requirements that he must pass by the six-month mark. She rejected the appellant’s submission that paragraph 2 in explicitly providing for a 6-month performance review guaranteed at least 6 months on the job and was therefore incompatible with an implied 6 months’ probation period.
[8] The trial judge rejected the appellant’s argument that the court should find that the word “probationary” in the heading had no meaning since what follows does not mention probation, and because paragraph 10 also contains the heading “Hours of Work and Overtime” but does not provide that the appellant is entitled to overtime pay. The trial judge noted that paragraph 10 first deals with hours of work and then sets out that the appellant is not entitled to overtime, since he was a manager. The trial judge considered the words used in paragraph 2 within the context of the agreement as a whole. She also found that discounting the presence of the probationary heading would be inconsistent with the case law.
[9] The appellant relies on Hayman v. Landlord Property & Rental Manager Inc., Toronto Small Claims Court file no. SC-14-2081-00, October 14, 2015 where the court found that the probationary clause within the employment agreement could not be relied on because it had failed to specifically address what would occur if the employment relationship came to an end before the end of the probationary period. In Hayman, the court cited Easton v. Wilmslow Properties Corp., [2001] OJ No 447 for the application of this legal principle. However, the court’s reasoning in Easton was recently distinguished in a case relied upon by the trial judge in making her decision, Ly v. British Columbia (Interior Health Authority), 2017 BCSC 42, [2017] BCJ No 43. As it made clear in Ly, the court in Easton was reviewing the term “probation” in a context where the contract of employment had explicitly defined “probation” in a manner that was different from its meaning at common law. In these circumstances, the court found that the language relating to the probationary period in Easton was unclear. The court held at paras 25 and 26:
[25] Unlike Easton, the offer letter signed by Mr. Ly does not include language which suggests or provides for a contrary meaning to a probationary term of employment beyond the usual interpretation of “probation” in the employment law context.
[25] The term “probation” is well understood in business and industry as one where an employee is being assessed by the employer to ascertain the suitability of the employee as a permanent employee: see Ritchie v. Intercontinental Packers Ltd. (1982), 2 C.C.E.L.147 (S.K.Q.B.);citing Mitchell v. R. (1979), 1979 1922 (ON SC), 23 O.R. (2d) 65 (H.C.) at paras.13-14. In this context, an express reference to the term “probation” in a contract or letter of employment is sufficient.
[10] The appellant does not challenge the trial judge’s findings that the employer made a good faith determination that the employee was unsuitable for permanent employment and that he was given a fair and reasonable opportunity to demonstrate his suitability. The trial judge did not make a palpable and overriding error in interpreting paragraph 2 of the employment contract as a 6 month probation period which entitled the employer to terminate the appellant’s employment without notice during the probation period.
The trial judge did not err in finding that the termination clause was applicable to employees with under 3 months’ service
[11] The trial judge found that the wording of the termination clause in the agreement was clear and unambiguous. Under the termination clause, the appellant was entitled to the “minimum amount of notice or pay in lieu of notice” to which he is entitled under the Ontario Employment Standards Act, 2000.” Pursuant to section 3(1) of the ESA, the ESA applies to an employee and employer whose work is performed in Ontario or whose work is performed outside of Ontario and the work performed outside of Ontario is a continuation of the work in Ontario.
[12] The ESA carves out a limited number of exceptions to its application. Exceptions to the application of the ESA are enumerated in subsections 3(2)-(5) of the ESA; however, there are no exceptions for an employee on the basis that the employee has completed less than three months service.
[13] The minimum entitlements for notice or wages in lieu of notice are set out in sections 54 and 57 of the ESA. Employment of less three months is not specifically referenced.
[14] The cases relied upon by the appellant seem to have been decided prior to and superseded by the Court of Appeal decision in Nagribianko v. Select Wine Merchants Ltd., 2017 ONCA 540 which was correctly relied upon by the trial judge.
[15] I reject the appellant’s argument that the ESA declined to govern notice periods for employees under 3 months’ seniority because it does not explicitly provide that employees with less than 3 months’ service are not entitled to any termination pay and that accordingly, his notice is not governed by the termination clause. This argument was made in the context of the Canada Labour Code and rejected in Horwitz v. Canadian Imperial Bank of Commerce, Toronto Small Claims Court File NO.SC-16-00012477-0000, February 6, 2018 which was upheld by the Divisional Court on September 18, 2019 (File DC-18-377). I do not find the fact that Horwitz considered the Canada Labour Code and not the ESA or because the words “if applicable” appear in the appellant’s termination clause to be distinguishing factors. I find that the trial judge did not err in concluding that, pursuant to the termination clause, the respondent was entitled to terminate the appellant without notice or pay in lieu of notice because the ESA does not require a notice period or termination pay to be provided to an employee with less than 3 months service.
[16] Even if no probation clause had been found by the trial judge, she was correct to find that the respondent was entitled to terminate the appellant pursuant to the termination clause by providing any entitlement due under the ESA.
[17] In the result, the appeal is dismissed.
Costs
[18] The parties have agreed upon costs of the appeal in the amount of $4000 which the appellant shall pay to the respondent.
___________________________ Backhouse J.
Released: November 22, 2019
CITATION: Sullivan v. KSD Enterprises Ltd., 2019 ONSC 6698
DIVISIONAL COURT FILE NO.: 281/18
DATE: 20191122
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
Christopher Sullivan Plaintiff//Appellant
– and –
KSD Enterprises Ltd. o/a International Plaza Hotel & Conference Centre Toronto Airport Defendant/Respondent
REASONS FOR JUDGMENT
Backhouse J.
Released: November 22, 2019