Filiatrault v. Tri-County Welding Supplies Ltd., 2013 ONSC 3091

Filiatrault v. Tri-County Welding Supplies Ltd., 2013 ONSC 3091

Court File No.: CV-09-390038 Date: 2013-05-27 Ontario Superior Court of Justice

Between: Paul Joseph Filiatrault and Shirley Mills Filiatrault, Plaintiffs – and – Tri-County Welding Supplies Ltd. and Air Liquide Canada Inc., Defendants

Counsel: Howard Levitt / Sunira Chaudhri, for the Plaintiffs Angus McKinnon / Matthew Diskin, for the Defendants

Heard: February 19, 20, 21, 22, 25, 26 and March 28, 2013

Before: Allen J.

Reasons for Judgment

The Parties

1By Amended Amended Statement of Claim issued on October 28, 2009, the plaintiffs Paul Filiatrault and Shirley Filiatrault (collectively, "the Filiatraults") brought this action in wrongful dismissal against the defendant Tri-County Welding Supplies Ltd. ("Tri-County") and wrongful dismissal and inducing breach of contract against Liquid Air Canada ("Liquid Air"). The Filiatraults are both currently in their mid-80s and were in their early 80s when their employment with Tri-County and their distributorship with Liquid Air ended in 2009.

2Liquid Air is a company incorporated in Quebec with its head office in Montreal. It carries on the business of supplying gases and related products and services to various purchasers including to industrial and medical customers. Liquid Air distributes its products through its own sales force and through authorized local distributors.

3Tri-County is a company incorporated in Ontario. Mr. Filiatrault founded the company in 1967 as an authorized distributor for Liquid Air in the Kitchener area supplying gases and welding supplies. Before founding Tri-County, Mr. Filiatrault's entire working life was with Liquid Air where he was employed in Quebec from age 18 in various capacities in sales and marketing.

4Mr. Filiatrault left Liquid Air as an employee and Mrs. Filiatrault left her teaching position and, with their three young sons, moved to Kitchener. Mr. Filiatrault's positions with Tri-County were President and CEO and he also acted as Chairman of the Board. Mrs. Filiatrault's position was Vice-President Human Resources. The three sons also eventually joined the company. Robert joined in 1976, John, in 1980 and Paul Jr., in 1984. In 2009 when their parents' employment with Tri-County ended, Robert was President and COO, John was VP Sales and Marketing and Paul Jr. was VP Filling and Distribution. The family controlled Tri-County through ownership of a holding company, 404022 Ontario Limited ("404"), which owned and issued shares of Tri-County.

5Tri-County had nearly 40 employees and became very profitable while under the Filiatraults' control. It was the largest Liquid Air distributor in Ontario and one of the five largest in Canada. The income and benefits from the business afforded the Filiatraults a very comfortable life.

Distributorship Agreements with Liquid Air

The 1967 Agreement

6In September 1967, with the founding of Tri-County, the Filiatraults entered a distributorship agreement with Liquid Air ("the 1967 Agreement"). The 1967 Agreement set out the parties' rights and obligations with respect to the distribution of products in the Kitchener area. Under the initial distributorship agreement, among other terms, Liquid Air had a right of first refusal to purchase Tri-County's shares and assets. The 1967 Agreement was amended from time to time until a fresh agreement was entered into in 1996.

The 1996 Agreement

7The Filiatraults and their three sons entered into a new distributorship agreement with Liquid Air on October 1, 1996 ("the 1996 Agreement") which set out the rights and obligations of the parties with respect to distribution in the Kitchener region. Mrs. Filiatrault voted against the agreement but was out-voted by the other family members. It was signed by the Filiatraults, their three sons, and by signatories for 404, Tri-County and Liquid Air. The Filiatraults were in their 60s at this time.

8One of the Filiatraults' interests at this time was to have the capacity to fill their own cylinders and to discontinue the requirement to buy pre-filled cylinders from Liquid Air. Article 4 granted this right to Tri-County. Article 23.1 provided for a put option whereby the Filiatraults were to notify Liquid Air when they wished to sell Tri-County and Liquid Air would be obliged to purchase Tri-County's shares in accordance with a share purchase formula.

9Article 23.10 is at the centre of the dispute. Mr. Filiatrault negotiated a term in the 1996 Agreement that would provide for the three sons' future employment with Liquid Air after the sale of Tri-County's shares. Article 23.10 provided a three-year management agreement would be negotiated with each of the three sons. It states:

Following the acquisition of the Shares by Liquid Air, Liquid Air will negotiate a management agreement (for period of not less than (3) years) between the Distributor and each of Robert Filiatrault, John Filiatrault and Paul Filiatrault Jr., for positions within the Distributor, it being understood that should one of the said individuals no longer be actively involved in the management of the Distributor at that date, then said individual will not be offered (sic) a position with the Distributor.

10The 1996 Agreement also contains a full agreement clause at Article 28.6 which states:

This Agreement shall supersede any agreement between the parties pertaining to the matters contemplated herein; it constitutes the full understanding among the parties pertaining to such matters and no statements or agreements, oral or written made prior to or at the signing hereof shall vary of (sic) modify the terms hereof.

11The share purchase was completed and the deal closed on September 15, 2009. There was no clause in the 1996 Agreement allowing either for continued employment or the termination of Mr. and Mrs. Filiatrault after the sale. Nor was there any other contract which provided for this. The Filiatraults learned of their termination by letter dated September 15, 2009 from Liquid Air's VP Human Resources and Communications and they were terminated without cause effective September 19, 2009. Each of the Filiatrault's termination letters contained the following paragraph:

As you know, paragraph 23.10 of the Agreement requires that ALC negotiate a management agreement with your three (3) sons following its acquisition of the shares of 404022 Ontario Limited. That clause of the Agreement specifically refers to and names your three (3) sons by name. It does not, however, require ALC to negotiate an employment agreement or management agreement with you. As such, the parties' intention when this Agreement was entered into was clear and unambiguous – the parties only intended that your three (3) sons remain with Tri-County Welding Supplies Limited upon ALC's acquisition of the shares in 404022 Ontario Limited.

The Filiatrault Family's Employment and Compensation at Tri-County

12Until 2008 Mr. Filiatrault was President, CEO and Chairman of the Board and Mrs. Filiatrault Vice-President Human Resources. By 2008 Robert was President and COO, John was VP Sales and Marketing and Paul Jr. was VP Filling and Distribution.

13Mr. Filiatrault launched Tri-County and became its directing mind. His evidence was that he set the policy and mission statement for the company and ensured the achievement of its objectives. He was the head of the management team and as such he was involved in managing and developing staff especially in the area of sales. He was in charge of training and managing his sons but indicated that Mrs. Filiatrault did not require management. Mr. Filiatrault testified that as President and Chairman of the Board he was primarily responsible for monitoring and measuring the company's financial well-being, strategic planning, image and the quality of the company. He prepared the budget and signed the cheques.

14A job description for Mr. Filiatrault in his capacity as Chairman and CEO was prepared after his September 2009 termination. It appears to portray a more limited role for Mr. Filiatrault than what he testified to in chief. The job description indicates he attended the office daily and it describes his functions as attending management meetings to assess operational plans, assessing competition, banking, overseeing profit margins and sales and maintaining contact with suppliers and customers

15On cross-examination, Mr. Filiatrault conceded that once Robert became President and COO in 2008, Robert took on more responsibility in the company. A job description dated September 22, 2009 prepared by Robert Filiatrault indicates Robert ensured the consistency of the company's practices with its mission statement, formulated policy and strategic planning for the Board, oversaw quality and the company's image, oversaw income and expenses, hiring and promotions. Mr. Filiatrault insisted that even with Robert's and the other sons' increased responsibilities in running the operation, he remained active in the background until he was terminated. Mrs. Filiatrault confirmed he remained very active in the company until termination working every day, during times off, weekends and after hours when required.

16Mr. Filiatrault's total compensation varied from year to year. His base salary remained relatively stable but he was paid an annual bonus in amounts that fluctuated with the company's profits which meant during more successful years the bonus would be greater. The bonus would be paid annually in an amount that would keep the company's income within the limits that allowed the company to enjoy small business tax advantages. His annual base salary remained at $180,000 from 2006 to 2009 and the bonus fluctuated. In 2006, total income was $805,000 (base $180,000 and bonus $625,000); in 2007 total income was $570,000 (base $180,000 and bonus $390,000); in 2008 total income was $315,000 (base $180,000 and bonus $135,000); in 2009, total income was $670,000 (base $180,000 and bonus $490,000).

17The Filiatraults enjoyed various benefits through the company including golf club memberships, exclusive private club memberships, season sport tickets boxes, a home security system, automobiles and mileage, computers and telephones at the home and cottage, home insurance, life and disability insurance and medical/dental benefits.

18As VP Human Resources, Mrs. Filiatrault was responsible for human resources policy and for hiring. She was in charge of the office where five employees reported to her, being the accounts receivable, accounts payable and sales invoice clerks and the receptionist. Her position involved managing the administrative functions of the business such as preparing weekly accounts receivable reports, overseeing accounts payable and payroll and administering all employee benefits and company insurance. She also wrote the cheques for the company which Mr. Filiatrault signed. Mrs. Filiatrault conceded her responsibility for the payroll function was limited since the bulk of that function was contracted out to a payroll management company. Mrs. Filiatrault indicated Tri-County did not have an employee assistance program and that she often dealt with work-related and personal issues of employees.

19Like Mr. Filiatrault, Mrs. Filiatrault testified that the business was the centre of the family's life and that she remained active until termination. She worked until 6 p.m. each day and on weekends and on other days off when necessary. The business was a constant topic of conversation among family members. They would regularly receive business-related calls while at the cottage.

20Mrs. Filiatrault's pay never changed during the time she worked for Tri-County. Her annual salary was $175,000 and she never received a bonus. The sons received no bonuses and their annual salaries were set at approximately $200,000.

Issues

a) Are Mr. Filiatrault and Mrs. Filiatrault entitled to damages for wrongful dismissal?

To decide that issue, sub-issues first require determination.

(i) Should a term be implied in the 1996 Agreement that Liquid Air is required to give the Filiatraults reasonable notice of termination? or

(ii) Should a term be implied in the 1996 Agreement that the Filiatraults would resign or retire with Liquid Air's purchase of Tri-County's shares in 2009?

b) If the Filiatraults were wrongfully dismissed, what is the appropriate quantum of damages each is entitled to?

c) Did the Filiatraults reasonably mitigate their damages?

d) How should litigation costs be awarded?

The Parties' Positions and the Court's Analysis

Should A Term of Reasonable Notice be Implied?

21Solicitor/client privilege with respect to communications between the Filiatraults and the lawyer they retained in 1996 has been waived for the purposes of this litigation. Mr. and Mrs. Filiatrault testified they never intended to resign or retire from Tri-County following the share purchase by Liquid Air. They testified about the advice they received from their then legal counsel Mr. Robert Sutherland at the time the 1996 Agreement was negotiated. Mr. Sutherland also gave evidence.

22Mr. Sutherland, now 81 years of age, has been retired from the practice of law for five years. He confirmed the Filiatraults' intention not to resign or retire with the sale of Tri-County's shares. He confirmed Mrs. Filiatrault's evidence in reference to the management agreement for the three sons, that she asked Mr. Sutherland "What about us?" This question is a reference by Mrs. Filiatrault to the fact there was no such provision in the 1996 Agreement for her and her husband's continued employment.

23Mr. Sutherland's evidence was in accord with Mrs. Filiatrault's evidence that his advice was that the Filiatraults' rights on termination would be taken care of by statutory protections and the reasonable notice requirements at common law. He advised, and the Filiatraults agreed, there was no need to raise that issue in the negotiations and it was Mr. Sutherland's view that to do so might hinder the progress of the negotiations.

24There is no dispute that no discussion took place at any time between the Filiatraults and Liquid Air about termination. This is even true for the period leading up to termination, the time between the notice of sale in April 2009 and the share sale in September 2009.

25The Filiatraults testified they were shocked when they received the September 15 letters. In spite of their senior age at the time of termination, they say they continued to be active in the business right up to the day they were dismissed. The sentiment both Filiatraults expressed was that Tri-County was a family business that they had completely dedicated their lives to for 42 years and they had no doubt they could have continued to work. As they put it, had they expected to be dismissed they would have started to wrap up their work with Tri-County much earlier. As it was, they both remained on at Tri-County after September 19, without pay, Mrs. Filiatrault for two weeks and Mr. Filiatrault for one week, to assist with the transition.

26Liquid Air called the evidence of a retired executive of Liquid Air to testify about the negotiation of the 1996 Agreement.

27Mr. Guy Murray, now age 75 and retired from Liquid Air for over ten years, was Sr. VP Operations for Liquid Air in 1996. He testified about his involvement, together with Liquid Air's general counsel Mr. J. Pierre Girouard, in negotiating the 1996 Agreement. They were involved with Mr. Filiatrault in the negotiation of the three-year management agreements for the three sons. Mr. Murray confirmed there was no discussion about Mr. and Mrs. Filiatrault remaining employed or being terminated after the share sale. Mr. Murray said it never occurred to him when negotiating the 1996 Agreement that Mr. Filiatrault would want to stay on after operating his own business in his own way for over 30 years. He testified that when Mr. Sutherland became involved he did not raise the issue of continued employment for the Filiatraults.

28The Filiatraults argue that basic principles of employment and contract law support their entitlement to damages for wrongful dismissal.

29The Filiatraults did not have a conventional master/servant relationship. They operated a distributorship the sole purpose of which was to distribute Liquid Air products for their welding supply business.

30The courts have recognized an intermediate category of relationship that has come to be known as a "dependent contractor". The parties do not disagree that the Filiatraults through the distributorship relationship with Liquid Air provided services in that intermediate category. The law treats persons providing services in this type of relationship much like regular employees at termination [1193430 Ontario Inc. v. Boa-Franc Inc., 2005 39862 (ON CA); leave to appeal denied SCC Case 31276, April 13, 2006]. Courts have implied a term to terminate an agreement upon reasonable notice [See for instance, Carter v. Bell & Son (Canada) Ltd., 1936 75 (ON CA), [1936] O.R. 290 (Ont. C.A.); Conde v. Abrams Towing Services Ltd., [2001] O.J. No. 6067 (S.C.J.), appeal to C.A. dismissed [2003] O.J. No. 504 (Ont. C.A.); Moseley-Williams v. Hansler Industries Ltd., 2008 57457 (ON SC); Ross v. 413554 Ontario Ltd., [2008] O.J. No. 3381 (Ont. S.C.J.); and Slepenkova v. Ivanov, [2007] O.J. No. 4708 (Ont. S.C.J.)].

31This is also not the classic wrongful dismissal claim. The Filiatraults are seeking damages for having been dismissed without notice from their employment with Tri-County following a sale of its shares to the manufacturer of the products they distributed.

32Courts have also addressed the rights of an employee when their employer sells the shares of the business. The sale of a company's shares is merely a change of shareholders which does not affect the company's assets and as such the company continues to exist as it did prior to the share sale. The sale of a business through a sale of its shares does not alone result in the termination of an employee's employment. A further step would be required to terminate employment. The new owner takes the company subject to certain claims of the employees of the vendor business such as claims to severance pay. Courts have determined that the employee is entitled to the severance pay specified in an employment agreement and where there is a contract for a period of indefinite service, a term of reasonable notice of termination will be implied [Bagby v. Gustavson International Drilling Co. (1980), 1980 ABCA 227, 24 A.R. 181, paras. 15 and 16, (ABCA); and Pattillo v. Murphy Canada Exploration Ltd. 2001 CarswellAlta 1734, at paras. 19 and 20, (ABQB)].

33The Supreme Court of Canada recognized the special nature of employment contracts. Unlike conventional commercial contracts, employment contracts frequently do not emerge from equal bargaining between the employer and the employee over employment terms, particularly tenure of employment. The Supreme Court maintained the longstanding protective principle that where there is no agreement to the contrary a period of reasonable notice of intention to terminate will be implied with a dismissal without cause [Machtinger v. HOJ Industries Ltd., [1992] S.C.R. 986, at paras. 19 and 31, (S.C.C)].

34Liquid Air failed to negotiate terms in the 1996 Agreement to address severance or termination in relation to the senior Filiatraults. The Filiatraults were financially very successful with Tri-County and recovered a lucrative sum on the share sale. I find, contrary to Liquid Air's position, that this does not reduce in any meaningful way the gap in bargaining power or make the Filiatraults any less entitled to reasonable notice. Liquid Air is a large sophisticated corporation with extensive resources. It had the benefit of legal representation during the 1996 negotiations. It does not stretch expectation that when employment considerations were being discussed in relation to other employees, some thought might have been given to the senior Filiatraults' employment futures given their long dedicated service with Liquid Air.

35The courts have also held that to determine the length of reasonable notice with a corporate sale or reorganization an employee can look to their history of employment with their previous employer (and the period of employment with the new employer if their employment is continued) in the assessment of reasonable notice on termination. This will be presumed unless there is an express agreement to the contrary [Debenham v. CSI-Maximus, [2003] O.J. No. 1210, at para. 8, (Ont. C.A.)].

36It is therefore the Filiatraults' position that the principles of employment law support their view that the fact the 1996 Agreement lacks terms pertaining to their employment does not negate their entitlement to reasonable notice. In absence of an express agreement to the contrary, they argue, the court should imply a term of reasonable notice and calculate that notice period based on their lengthy history of employment with Tri-County.

Should a Term that the Filiatraults Would Resign or Retire be Implied?

37Liquid Air advances alternative arguments.

38Liquid Air's first position is that a term should be implied in the 1996 Agreement that the parties intended that Mr. and Mrs. Filiatrault would resign or retire when they exercised the option to sell Tri-County's shares to Liquid Air. That is, in absence of a specific agreement as to their continued employment their retirement or resignation would be the reasonable expectation of the parties.

39Liquid Air argues such a term can be implied from the following factual context:

• The Filiatraults were in their 60s when the 1996 Agreement was negotiated.
• Mr. Filiatrault specifically negotiated the arrangement for the three sons and did not seek a post-sale employment arrangement for himself and his wife.
• The inclusion of 404 as a party to the 1996 Agreement was for the purpose of facilitating the Filiatraults' estate planning.
• The Filiatraults recovered the lucrative sum of $11 million from the sale of the Tri-County shares.

40Liquid Air argues that the principles enunciated by the Supreme Court of Canada on the court's authority to imply terms are applicable to the 1996 Agreement and the surrounding factual context. Contractual terms can be implied in three situations:

a) based on custom or usage;

b) as legal incidents of a particular class or kind of contract; or

c) based on the presumed intention of the parties:

(i) where the implied term is necessary to give "business efficacy" to the contract; or

(ii) where the implied term otherwise meets the "officious bystander" test – that is, a term that the parties would say, if questioned, "of course" that would be understood to be a term of the contract.

[M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., 1999 677 (SCC), [1999], 1 S.C.R. 619, [1999] S.C.J. No. 17, at para. 27, (S.C.C.) and Canadian Pacific Hotels Ltd. v. Bank of Montreal, 1987 55 (SCC), [1987] 1 S.C.R. 711, at para. 32, (S.C.C.)].

41In Liquid Air's view, a term that the parties intended the Filiatraults to resign can be implied based on situation c) identified by the Supreme Court of Canada, the presumed intention of the parties. Liquid Air takes the position that the term must be implied to give business efficacy to the 1996 Agreement and that in the circumstances an officious bystander would naturally assume that would be a term of the agreement.

42Liquid Air's position treats the 1996 Agreement like a purely commercial contract. The principles set down by the Supreme Court in both cited cases arise in strictly commercial contexts − in M.J.B. Enterprises, supra, in a dispute over whether a term should be implied in a tendering process and in C.P. Hotels, supra, whether a term should be implied in a banker/customer contract. In neither case does the question of the implied term pertain to employment.

43I find those cases are clearly distinguishable from the case before me. At issue is Article 23.10 of the 1996 Agreement containing future employment arrangements for the three Filiatrault sons. In relation to that Article the question in this litigation arises from the absence of any such provision for Mr. and Mrs. Filiatrault's employment. The contractual matter at issue relates to employment. I find the Filiatraults' case therefore more appropriately falls under the Supreme Court's situation b) as a particular class of contract, an employment contract, where the law implies a term of reasonable notice on dismissal without cause.

44As the Supreme Court held in Machtinger v. HOJ:

The intention of the contracting parties is relevant to the determination of some implied terms, but not all. Intention is relevant to terms implied as a matter of fact, where the question is what the parties would have stipulated had their intention been drawn at the time of contracting to the matter at issue. Intention is not, however, relevant to terms implied as a matter of law.

… Requirements for reasonable notice in employment contracts fall into the category of terms implied by law.

[Machtinger v. HOJ, supra, at paras. 46 and 47]

45A further point must be addressed. There is a suggestion in Liquid Air's position that in the negotiation of the 1996 Agreement the Filiatraults ought to have disclosed their interest in employment continuation, that it was somehow wrong not to have mentioned this. However, this is not expected of parties engaged in contract negotiations. A longstanding principle of contract formation is that no such duty is imposed on a party to a contract and absent misrepresentation or fraudulent concealment a party negotiating an agreement has no duty to disclose material facts to the other party. There is no allegation of fraud or misrepresentation against the Filiatraults [John D. McCamus, The Law of Contracts, Second Edition, (Toronto: 2012), p.p. 341-342].

Conclusion on Implying Reasonable Notice

46The law clearly supports the Filiatraults' position. I find that a term of reasonable notice is implied and the notice period is calculated based on the duration of their employment with Tri-County. Counsel for the Filiatraults initially sought to have Mr. Filiatrault's notice period be determined based on the period from the time he first started as a regular employee with Liquid Air at age 18 until his termination in 2009, but abandoned that position in closing argument. Below I deal further with the compromises the Filiatraults made to their original claim.

Calculation of the Notice Period

47Liquid Air's alternative position is that if the court decides reasonable notice is an implied term of the 1996 Agreement, the calculation of severance pay should not be based on the annual incomes Mr. and Mrs. Filiatrault earned at Tri-County. The argument here is that the incomes Tri-County paid were not commensurate with their functions and responsibilities at Tri-County and were in Liquid Air's view much in excess of what they would have earned in the job market.

48Liquid Air provided the court with no legal authority for that position. There are no such authorities to the court's knowledge that allow a calculation of severance pay to be based on anything but the compensation an employee earned with their previous employer. Liquid Air attempted to show through cross-examination of the Filiatraults, and a lay witness' testimony about the content of Tri-County's website, that Mr. and Mrs. Filiatrault did not perform the type of tasks that are reflected by their lofty titles. Using a more diminished view of the Filiatraults' obligations at Tri-County, Liquid Air called expert evidence to provide an opinion on more reasonable levels of compensation for the Filiatraults.

49Liquid Air called the evidence of Mr. Steven Osiel, Vice President of a human resources consulting firm, Pal Benefits. One of his areas of expertise is the theory of executive compensation. He was retained to provide a comparative look at the Filiatraults' compensation in relation to that earned by employees with similar responsibilities from public companies in the broader job market. Mr. Osiel's report concludes that the Filiatraults' compensation substantially exceeded the compensation of employees in the job and compensation surveys he relied on for his opinion. Mr. Osiel offered opinions on more appropriate position titles and levels of compensation which he concluded would be more in keeping with the Filiatraults' positions and responsibilities at Tri-County.

50Liquid Air argues that the compensation levels proposed in Mr. Osiel's report should be used to calculate reasonable notice and severance pay.

51Apart from the fundamental problem that there is no authority for Liquid Air's position, there is the added problem that Mr. Osiel's studies did not involve compensation by companies like Tri-County, that is, private, family-owned businesses where compensation is often paid based on considerations that are different from those of public companies. His report was based on job and compensation surveys of employees in the public companies that participated in the surveys, companies with a more outward looking interest in the employee compensation market, an interest not usually the focus of private companies' compensation decisions.

52There is also the problem of the flood gate effect that could follow from the court adopting Liquid Air's approach. An onslaught of wrongful dismissal claims is foreseeable where employers in situations similar to Liquid Air could argue employees were being overpaid at termination and employees could equally claim they had been underpaid, both sides arguing that reasonable notice should not be based on income at termination. This is not a prospect that should be fostered.

53The law requires the length of reasonable notice and the calculation of severance pay on a corporate share sale be based on the employee's actual income and their history of employment with their previous employer. I have no reason to depart from the law as it stands.

54What this means, with the Filiatraults' advanced ages in their 80s at termination, their lengthy 42-year period of employment and their executive positions with Tri-County, is both would be entitled to rather sizeable severance payments based on the factors considered by the courts on wrongful dismissal [Bardal v. Globe & Mail Ltd. (1960), 1960 294 (ON SC), 24 D.L.R. (2d) 140 (Ont. H.C.J.)]. There are few, if any, cases where the courts have awarded notice periods of more than 24 months. The higher notice periods have normally been awarded to persons of senior age, usually persons in their 60s and less often in their 70s, not normally to persons in their 80s. The durations of employment that have attracted higher notice periods have rarely if at all been as great as 40 years. This will likely be an increasing trend with the statutory end to retirement at age 65, a point I will return to later. There is no suggestion here with the current reality of employees working to more senior ages that the upper limit on notice periods should be infinite. However, the fact of the matter is courts will have to increasingly grapple with adjusting what a reasonable notice period is in this new reality.

55However that task has not befallen me at this trial. Among the compromises the Filiatraults made during trial was to limit their claim to 18 months' notice if they were successful. They also abandoned their claims for Wallace damages, the various employment benefits, the claim for damages for violation of the Ontario Human Rights Code and the claim for punitive damages.

56So using a five-year average of each of the Filiatraults' salaries, their combined total recovery of damages for severance pay is $1,161,450. This amount is based on Mr. Filiatrault's five-year average calculated over 18 months which amounts to $898,950 plus Mrs. Filiatrault's five-year average calculated over 18 months equaling $262,500.

Mitigation

57Both Mr. and Mrs. Filiatrault gave evidence about their efforts to mitigate their loss by attempting to find employment after dismissal. They said that after decades of doing work they enjoyed, they missed going to work. They explained to the court they sent out resumes to employers, Mr. Filiatrault to 16 companies and Mrs. Filiatrault to 28 companies. They had no success. They both said they understood employers' reluctance to take on employees of their senior age. I encountered Mr. and Mrs. Filiatrault as spirited, clear minded and enthusiastic individuals whom I found credible in their desire to continue to work. I find they made reasonable attempts in the circumstances to mitigate their damages. There will be no discount on their damage award.

Final Remarks

58This case presents with a set of facts that have called for the application of the principles of wrongful dismissal in a rather unique context. This perhaps is what called for a novel defence by Liquid Air. I have commented on Liquid Air's use of job and salary surveys. I have a further observation to make.

59Perhaps there is a cautionary tale in all of this. Beyond the previously discussed legal bars to implying terms in employment contracts there are other legal and policy concerns that confront a court presented with the proposition advanced by Liquid Air at this trial. The end to mandatory retirement at age 65 was legislated in Ontario in December 2006. This brought retirement law into harmony with already existing human rights legislation and constitutional protections against age discrimination. I do not think there is a place in this social reality for an automatic presumption that persons should or would naturally retire on reaching senior age. What this means is that employers should be disinclined to ask a court, where there is no express agreement, to imply such a term in an employment contract based simply on that now time-worn presumption.

Liability

60Judgment is granted to Mr. Filiatrault and Mrs. Filiatrault for $898,950 and $262,500 respectively. Judgment is subject to pre- and post-judgment interest as provided by the Courts of Justice Act, R.S.O. 1990, c. C. 35 as amended.

61The Filiatraults plead that both Liquid Air and Tri-County are liable for damages, Liquid Air for wrongful dismissal and inducing Tri-County to breach the employment contract, and Tri-County for wrongful dismissal. There is a question whether joint and several liability should be imposed on Liquid Air and Tri-County. Liquid Air argues that the Filiatraults have not made out a case against Liquid Air in inducing breach of contract or wrongful dismissal and that if the Filiatraults are successful liability should only be imposed on Tri-County.

62The tort of inducing breach of contract arises where a person without lawful justification intentionally procures a breach of a valid, enforceable contract that results in damage to a party to the contract. This tort is applicable in an employment context in circumstances where a "new" employer, aware of the existence of the contract, intended to and actually procured a breach of the employee's contract with the "old" employer by persuading an employee to breach the employment contract with his old employer. Thus, the case law contemplates the commission of the wrong by a new employer who is a third party and not a party to the contract [Ontario Racing Commission v. O'Dwyer, 2008 ONCA 446; SAR Petroleum et al. v. Peace Hills Trust Company, 2009 Carswell NB 307, upheld 2010 NBCA 22 and Drouillard v. Cogeco Cable Inc., 2007 ONCA 322].

63Tri-County, 404, the senior Filiatraults and the three sons were all parties to the 1996 Agreement with Liquid Air. There is no question the Filiatraults were employees of Tri-County. Liquid Air as a party to the 1996 Agreement is not an outside third party that has interfered with the Filiatraults' contractual relations with Tri-County. That set of facts does not support a claim against Liquid Air in inducing breach of contract. Looked at another way, even if one looks at this issue from the perspective of the employment contract between the Filiatraults and Tri-County, I do not find that the tort can be made out. Liquid Air was not a "new" employer seeking a benefit from inducing the Filiatraults to breach their contract with Tri-County. There was no luring or persuasion. Liquid Air directed the termination of the Filiatraults.

64That set of facts however supports a claim for damages for wrongful dismissal against both Liquid Air and Tri-County and a finding of joint and several liability. Tri-County's liability arises from the fact it terminated the Filiatraults' employment without reasonable notice. Liquid Air's liability arises from the fact it directed Tri-County to terminate employment. Although the Filiatraults were employees of Tri-County they were also, with Tri-County, parties to a distributorship agreement with Liquid Air. As noted earlier, the law treats manufacturer/distributor relationships much like regular employer/employee relationships on termination and as such Liquid Air had an obligation to give reasonable notice [1193430 Ontario Inc. v. Boa-Franc, supra].

65I find Liquid Air and Tri-County jointly and severally liable to the Filiatraults for damages for wrongful dismissal.

Costs

66Counsel shall attempt to settle costs of the action and failing that they shall deliver cost outlines and written submissions (no more than 3 pages, tabbed) within 30 days of this Order, with an extra seven days for reply, if any. Counsel shall promptly advise my judicial assistant if costs are settled.

Order

67Order accordingly.

Allen J.