CITATION: Lemyre v. Residential Energy Saving Products Inc. et al, 2022 ONSC 4231
DIVISIONAL COURT FILE NO.: 099/21
DATE: 20220720
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Dambrot, Stewart and King JJ.
BETWEEN:
Kim Lemyre
Respondent/Plaintiff
– and –
Residential Energy Saving Products Inc., c.o.b. as Beverley Hills Home Improvements and BHCC Administrative Service Inc.
Appellants/Defendants
Andrew J. Larmand, for the Plaintiff/Respondent
Mark A. Klaiman, for the Appellants/Defendants
HEARD: February 1, 2022
King J.
[1] This is an appeal from the decision of Ramsay J. dated December 4, 2020, awarding the plaintiff, Kim Lemyre (“Ms. Lemyre”), judgment in the amount of $41,000, plus costs totalling $41,520 all inclusive.
[2] The defendants, Residential Energy Savings Products Inc., c.o.b. as Beverly Hills Home Improvements (“RESP”) and BHHC Administrative Services Inc. (“BHCC”) ask this court to set aside the decision of Ramsay J. and grant the following order:
i. That the action against the Appellants be dismissed with costs;
ii. In the alternative, leave be granted to appeal the costs endorsement dated December 16, 2020; and
iii. If leave to appeal the costs endorsement is granted, that costs be reduced.
[3] The fundamental issue on this appeal is whether the trial judge erred in finding that the two defendants were the common employer of the plaintiff.
[4] For the reasons that follow, I would dismiss the appeal.
Background
[5] This matter arises out of an action for wrongful dismissal relating to the termination of Ms. Lemyre’s employment without cause on April 3, 2015. The termination followed a lengthy period of lay-off that became permanent.
[6] In the 17 years leading up to her lay-off in December of 2014, Ms. Lemyre worked for a series of successor employers.[^1] Those employers were involved in the business of providing window installation services to customers.
[7] At all times, Ms. Lemyre worked as a Customer Care and Service Representative at an office located at Suite 3-210 Barton Street East, Stoney Creek, Ontario. In this capacity, Ms. Lemyre dealt with customers, supervisors, and others with respect to a business known to the public as Beverly Hills Home Improvements (“BHHI”).
[8] Her duties involved scheduling window installations for BHHI. More specifically, she communicated information regarding installations and payment terms and obligations, responded to inquiries, maintained and modified contracts, monitored orders, assisted sales representatives, and provided reception assistance.
[9] On December 19, 2014, Ms. Lemyre was laid off. It was the sixth time she had been laid off during her 17 years and 11 months of continuous service.
[10] On April 3, 2015, the plaintiff received a notice of termination via email from Mr. Gordon Anderson at “ganderson@beverlyhillshome.com”. Mr. Anderson was identified on the letter as the Controller of BHHI. In the years before her termination, Ms. Lemyre dealt with Mr. Anderson for matters such as work scheduling and vacation.
[11] In 2014, Ms. Lemyre earned $31,971.07. That amount was paid by BHCC. While her pay was paid/provided by BHCC. Since 2010, she had been enrolled in a group benefit plan sponsored by RESP.
[12] On July 2, 2015, Mr. Anderson, in his capacity as Controller for BHHI, again emailed Ms. Lemyre to advise of her final vacation pay and her pay in lieu of notice to June 19, 2015. The email also indicated that she would maintain her benefits until September 19, 2015.
[13] On July 7, 2015, BHCC issued a Record of Employment. Ms. Lemyre received $3,774.37 in vacation pay and $7,121.44 (representing eight weeks of termination pay) in lieu of notice. Those amounts were paid by BHCC.
[14] BHCC issued her pay stubs and T4 slips.
[15] Mr. Anderson provided a signed letter of reference stating that Ms. Lemyre was an employee of “Beverly Hills Home Improvements” since May of 1998.
The Action
[16] On September 21, 2015, the plaintiff commenced an action for wrongful termination. Initially, the only named defendant was “Residential Energy Saving Products Inc., c.o.b. as Beverly Hills Home Improvements”.
a) The Motion to Add BHCC
[17] On December 18, 2019, Ms. Lemyre filed a motion to add BHCC as a party; the motion was heard and granted by Ramsay J.
[18] In his decision, reported at 2019 ONSC 7378, Ramsay J. determined this was an “obvious case of misnomer.”
[19] At para. 7, he cited the test in Davies v. Elsby Brothers Ltd. [1960] 3 All ER 672, which was accepted by the Supreme Court of Canada in Ladouceur v. Howarth, 1973 30 (SCC), [1974] S.C.R. 1111:
How would a reasonable person receiving the [statement of claim] take it? If, in all the circumstances of the case and looking at the document as a whole, he would say to himself: “Of course it must mean me, but they have got my name wrong.” Then there is a case of mere misnomer. If, on the other hand, he would say: “I cannot tell from the document itself whether they mean me or not and I shall have to make inquiries,” then it seems to me that one is getting beyond the realm of misnomer.
[20] At paras. 8-9 of his decision, Ramsay J. stated as follows:
In the circumstances there is a strong case that the named defendant is the employer. There is evidence that the proposed defendant was also the employer. There is no prejudice in allowing the plaintiff to plead both.
The proposed defendant must have known upon reading the statement of claim, “Of course it must mean me.” It operated through the same human beings as the named defendant at the same address. It hired the same lawyer to defend this action. The employer is entitled to arrange its corporate structure as it pleases but the employee is only responsible to serve notice of her complaint in such a way as to bring enough knowledge to the employer to let it defend the claim. She does not have to name the defendant with legal precision.
[21] The appellants did not appeal that decision.
b) The Trial
[22] The trial was held before Ramsay J. on December 2 and 3, 2020.
[23] The parties agreed upon many of the facts. These included Ms. Lemyre’s length of service (17 years, 11 months), salary, and benefits, as well as the evidence with respect to the lay-off leading to the cessation of her employment.
[24] The parties agreed that Ms. Lemyre was employed by BHCC. That is the entity that paid her salary, vacation pay, and termination pay. The defendants took the position that the action against BHCC was statute-barred, as no action had been commenced against that entity within two years.
[25] The defendants also took the position that the plaintiff was not an employee of RESP – the originally named defendant.
[26] The defendants were represented by the same counsel at trial. They submitted the action should be dismissed, as the plaintiff was not employed by RESP and the action against BHCC was statute-barred.
[27] With respect to the issue of whether BHCC and RESP were a common employer, there was no evidence provided at trial regarding the ownership or the directors of RESP.
[28] Justice Ramsay concluded that BHCC and RESP were a single business operation and that BHHI was one business with two corporate entities.
[29] The trial judge described the nature of the business that operated to sell residential doors and windows. He concluded that RESP employees performed the warehouse and measuring functions while BHCC employed the office staff. The installation work was performed by contractors. The purpose behind having the two entities was to minimize the financial burden imposed under the Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Sched. A, as the premium costs for the employees of RESP were higher for RESP personnel than BHCC staff.
[30] In his trial decision, reported at 2020 ONSC 7542, the trial judge focused on the relationship between the corporate entities in relation to the duties performed by Ms. Lemyre and the business in general. He relied on the decision of the Court of Appeal for Ontario in Downtown Eatery (1993) Ltd. v. Ontario (2001), 2001 8538 (ON CA), 54 O.R. (3d) 161 (C.A.) (“Downtown Eatery”), at para. 36, where the court stated as follows:
However, although an employer is entitled to establish complex corporate structures and relationships, the law should be vigilant to ensure that permissible complexity in corporate arrangements does not work an injustice in the realm of employment law. At the end of the day, Alouche’s situation is a simple, common and important one – he is a man who had a job, with a salary, benefits and duties. He was fired – wrongfully. His employer must meet its legal responsibility to compensate him for its unlawful conduct. The definition of “employer” in this simple and common scenario should be one that recognizes the complexity of modern corporate structures but does not permit that complexity to defeat the legitimate entitlements of wrongfully dismissed employees.
[31] Notwithstanding that he had no evidence regarding the shareholders or directors of RESP, the trial judge relied on evidence of operational interaction between personnel and functions of the two entities and the nature of their enterprise to conclude they were a single business.
[32] He then addressed the issue of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, and concluded that the 2015 claim “named the plaintiff’s employer sufficiently if not with legal correctness.” At para. 13 of his decision, he stated:
It misled no one and prejudiced no one. The principals and agents of BHHC Administrative, not to mention the corporate solicitor, upon serving the statement of claim would have said to themselves, “of course it must refer to BHHC Administrative, too because it says Beverly Hills Home Improvements, which is our name for the business.” It is not a question of discoverability. It is a question of misnomer. I find that the action is not barred by prescription.
[33] He noted the original claim was filed within six months of termination. After having been served with the Statement of Claim, RESP took no steps to clarify any apparent error.
[34] He awarded Ms. Lemyre damages in the amount of $41,000 against both defendants, jointly and severally.
[35] The plaintiff was also awarded costs of $35,000, plus HST and disbursements for a total of $41,520. A portion of those costs were awarded on a substantial indemnity basis as the amount awarded in damages exceeded the quantum of a r. 49 offer Ms. Lemyre had made that was not accepted by the defendants: see Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[36] In determining costs, Ramsay J. rejected the submission of the defendants that r. 49 did not apply. The defendants’ position was that the amount awarded to the plaintiff was less than the r. 49 offer the plaintiff made once the income taxes that the plaintiff would have to pay were deducted. Ms. Lemyre had made a r. 49 offer for $32,000, which was not accepted by the defendants. It was the position of the defendants that the tax payable by Ms. Lemyre would be at least 25 percent. At that rate, the amount she would have received net of income tax would be approximately $30,750. As this amount was less than the $32,000 offer she made, the defendants submitted she should not receive a portion of her costs on a substantial indemnity basis.
[37] Ramsay J. concluded that the determining factor in assessing r. 49 is the “damages won, not the tax consequences.”
ISSUES ON APPEAL
[38] The appellant raises three grounds of appeal:
i. Did the trial judge err in finding RESP was an employer?
ii. Was the action against BHCC statute-barred?
iii. Did the trial judge err in awarding the plaintiff substantial indemnity costs on the basis that she exceeded the Rule 49 offer she made before trial?
ANALYSIS
i. Did the trial judge err in finding RESP was an employer?
[39] The appellants submit that the trial judge erred in concluding that RESP was also the employer of the plaintiff because there was no evidence at trial as to the identity of any of the RESP officers, directors, or shareholders.
[40] In order to find liability under the common enterprise theory, it is necessary to find common control between the companies. No evidence was provided that the principal of BHCC (“Mr. Zaborski”) had any control over RESP or had any interest as an officer, director, or shareholder of RESP.
[41] The appellant submits the lack of such evidence was fatal to a finding that RESP and BHCC were a common employer.
[42] The appellant relies on the decision in Downtown Eatery, where the Court of Appeal for Ontario, at para. 30, adopted the decision of the British Columbia Court of Appeal in Sinclair v. Dover Engineering Services Ltd. (1987), 11. B.C.L.R. (2d) 176 (S.C.), aff’d (1988), 1988 3358 (BC CA), 49 D.L.R. (4th) 297 (B.C.C.A.), which stated in part, at p. 181:
As long as there exists a sufficient degree of relationship between the different legal entities who apparently compete for the role of employer, there is no reason in law or in equity why they ought not all to be regarded as one for the purpose of determining liability for obligations owed to those employees who, in effect, have served all without regard for any precise notion of to whom they were bound in contract. What will constitute a sufficient degree of relationship will depend, in each case, on the details of such relationship, including such factors as individual shareholdings, corporate shareholdings, and interlocking directorships. The essence of that relationship will be the element of common control.
[43] The appellant submits the failure to establish whether Mr. Zabrowski had any control over RESP or any interest as an officer, director, of shareholder of RESP is fully determinative of the issue. It was a reversible error for the trial judge to speculate as to the issue of control in the absence of that evidence.
[44] The respondent submits that whether a common employer relationship exists, and whether a limitation period applies, are questions of mixed fact and law. Accordingly, unless the judge committed an error of law, or made a palpable and overriding error of fact, the decision of the trial judge should be given deference.
[45] Furthermore, the failure to lend evidence to establish that Mr. Zabrowski had any control over RESP or any interest as an officer or director of RESP was not fatal to a common employer declaration. While evidence of common shareholdings, corporate shareholders, and/or interlocking directorships can be strong evidence of common control, they are not the only indicia that the court can consider in determining whether an entity is an employer.
[46] Ms. Lemyre references para. 36 of Downtown Eatery as relied on by the trial judge. In particular, a common-sense analysis of the nature of her employment as part of BHHI demonstrates both RESP and BHCC were her employer.
[47] At para. 50 of Downtown Eatery, the court concluded that the plaintiff’s true employer was the consortium of two companies that operated under the business name of “For Your Eyes Only.”
[48] The same conclusion applies in this matter. RESP and BHCC operated under the business name, Beverly Hills Home Improvements. Employees from those two companies performed the services necessary to achieve the business intentions of BHHI. Mr. Anderson managed the employees of both entities. The compensation and benefits received by Ms. Lemyre were provided in part by both entities.
[49] The essential question at trial was whether the business of “Beverly Hills Home Improvements” was carried on by more than one entity. Justice Ramsay held that these two entities, RESP and BHCC, were the employer. On the evidence, that conclusion was available to the trial judge. As that was a question of mixed fact and law, that decision should be given judicial deference.
[50] At para. 10 of the trial decision, Ramsay J. stated:
I cannot speculate on the identity of the shareholders and directors of RESP Inc. but I have no reason to doubt Mr. Andersen’s evidence and the only sense I can make out of it is that BHCC Administrative and RESP Inc. were a single business operation. BHHI was one business with two corporate identities. It is agreed that Josip Zaborski controls BHCC. He must have some control over RESP Inc. Why else would RESP Inc. be sponsoring his employees for group benefits? RESP Inc. is a party to this action. If there was not element of common control, I would have expected someone from RESP Inc. to come forward and say so. That is not proof of common control, but there is a glaring absence of any explanation for the circumstantial evidence that I do have. I find the plaintiff was employed by the defendants.
[51] There were instances where the trial judge focused on RESP’s failure to call evidence to contradict that they were a common employer with BHHC. Those references may have created the impression that the trial judge reversed the onus of proof by requiring RESP to disprove it was a common employer. However, I have concluded that there was ample evidence upon which a finding of common employer could be made. In particular, there was evidence of the nature of the business of BHHI, two corporations, the representation to the customers with respect to the products and services provided by BHHI, the supervision of Mr. Anderson for both companies, and the fact that the wages and benefits provided to Ms. Lemyre for her services were provided by both entities. Given this evidence, I have determined that the trial judge made no palpable and overriding error in concluding that RESP and BHCC were a common employer. There was ample evidence upon which such a finding of common employer could be made.
[52] I would dismiss this ground of appeal.
ii. Was the action against BHCC statute-barred?
[53] In a word, no.
[54] Justice Ramsay granted Ms. Lemyre’s motion to add BHCC as a defendant. That decision was not appealed. At trial, he concluded that RESP and BHCC were a common employer. The action against RESP was commenced within the applicable limitation period. Accordingly, there is no basis to conclude that the trial judge committed an error in law by not concluding that the action against BHCC was statute-barred.
[55] I would dismiss this ground of appeal.
iii. Did the trial judge err in awarding the plaintiff substantial indemnity costs on the basis that she exceeded the Rule 49 offer she made before trial?
[56] Even if leave to appeal the costs awarded by the trial judge can be granted, I would not interfere with the costs awarded for the following reasons.
[57] The appellants submit the trial judge erred in awarding Ms. Lemyre substantial indemnity costs because the amount she received net of income tax was less than the amount she offered before trial pursuant to r. 49.
[58] The r. 49 offer made by Ms. Lemyre was for the sum of $32,000 for general damages for a human rights violation. Had the defendants accepted that offer, Ms. Lemyre would have received that amount without withholding of income tax, or the requirement to pay income tax on that amount.
[59] The trial judge awarded damages of $41,000. The appellants submit that Ms. Lemyre would be required to pay at least 25 percent income tax on that amount. That would result in the net amount awarded to Ms. Lemyre of least $30,750, or less. This was less than the $32,000 (without tax consequences) she made at trial. Therefore, the appellants argue that the trial judge should not have awarded costs on a substantial indemnity basis for fees incurred following the date of the r. 49 offer.
[60] Rule 49.10(1) provides that where a plaintiff makes a proper offer that is not accepted by the defendant and obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date of the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.
[61] By awarding substantial indemnity to Ms. Lemyre in circumstances where she received a net amount that was less than $32,000 without tax, the appellants submit that the trial judge erred. That was not an offer that was as favourable or more favourable as her r. 49 offer.
[62] I disagree this constituted a reviewable error.
[63] A determination of whether an award of damages at trial exceeds a r. 49 offer can only be made based on the actual quantum of damages awarded by the court.
[64] To conclude otherwise would lead to litigation uncertainty and chaos. Parties would be required to factor in a myriad of external considerations in order to assess the merits of making or accepting a r. 49 offer, rather than assess same using a dollar-to-dollar comparison.
[65] This would introduce an element of subjectivity and variables into the calculation of offers that is not delineated in the wording of the rule directly, or by inference.
[66] Such an outcome could also result in different costs considerations for identical judgments awarded to separate plaintiffs based on their different individual circumstances such as applicable tax rates.
[67] In their factum, the defendants submit that the statutory deductions of the plaintiff “would have amounted to at least 25 percent of the award.” That statement is both unproven and, more importantly, would require an examination of the personal financial assessment of the plaintiff to ascertain what her actual tax rate would be at that specific time. That is not contemplated by the rule.
[68] For these reasons, I conclude that the trial judge did not commit a palpable and overriding error in awarding Ms. Lemyre a portion of the costs on a substantial indemnity basis pursuant to r. 49. I would dismiss this ground of appeal.
CONCLUSION AND COSTS
[69] For the aforementioned reasons, the appeal is dismissed. The parties agreed that the successful party should receive costs in the amount of $9,000. That amount is awarded to the plaintiff. It is payable within 30 days.
Dambrot J.
Stewart J.
King J.
Released: July 20, 2022
CITATION: Lemyre v. Residential Energy Saving Products Inc. et al, 2022 ONSC 4231
DIVISIONAL COURT FILE NO.: 099/21
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Dambrot J., Stewart J. and King J.
BETWEEN:
Kim Lemyre
and
Residential Energy Saving Products Inc., c.o.b. as Beverley Hills Home Improvements and BHCC Administrative Service Inc.
Released: July 20, 2022
[^1]: Prior to her final period of employment, those employers were: i) Canada Wide Marketing - October 1997 to May 5, 2000; ii) North American Enterprises Inc. – May 8, 2000 to March 31, 2008; iii) BHCC Business Services Inc. (Business Services) – April 1, 2006 to November 12, 2010; iv) BHCC – March 14, 2011 to April 3, 2015. It is not disputed these were successor employers within the meaning of the Employment Standards Act, 2000, S.O. 2000, c. 41, and at common law.