SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 13-58818
DATE: 2015/07/08

RE: Carolyn Cloutier and Gilles Cloutier, Plaintiffs

AND

Q Residential LP Corp, Conundrum Capital Corporation, Q Residential Managing GP INc., Q Reit Sub LP, Con Res III Operating LP, Habitat du Lac Leamy LP and Con Res II Operating Limited Partnership Number One, Defendants

BEFORE: Mr. Justice Marc R. Labrosse

COUNSEL:
Janice B. Payne and Craig Stehr, Counsel for the Plaintiffs
Evert Van Woudenberg, Counsel for the Defendants

HEARD: April 1, 2015 at Ottawa

ENDORSEMENT

OVERVIEW

[1] On December 19, 2014, the Plaintiff, Carolyn Cloutier (the “Plaintiff”), provided the Defendants with a medical note confirming that she was not able to work and would be on sick leave. Although the Plaintiff’s employment contract stated that there was no coverage while on sick leave, the Defendants supported the Plaintiff by paying her full salary for several months.

[2] Unbeknownst to the Plaintiff and less than five weeks after she went on sick leave, the Defendants hired the Plaintiff’s replacement on a full‑time basis and not subject to the Plaintiff’s return to her position. The Defendants claim that the Plaintiff accepted to return to a previous position with less responsibilities and at a lower salary. The Plaintiff denies any such agreement.

[3] The Plaintiff and her husband, Gilles Cloutier, commenced a claim seeking damages for constructive dismissal, aggravated damages and damages for breach of the Ontario Human Rights Code, R.S.O. 1990, c. H.19. The parties reached a settlement as to the claims of Gilles Cloutier. The Plaintiff now moves for summary judgment with respect to the above issues.

[4] For the reasons which follow, I am of the view that there is no genuine issue for trial on the constructive dismissal of the Plaintiff by the Defendants and that the Plaintiff is entitled to a notice period of 15 months. Conversely, I am of the view that there are genuine issues which warrant a trial with respect to the Plaintiff’s claims for aggravated damages and for damages for breach of the Ontario Human Rights Code. While the Plaintiff stated at the hearing of the motion for summary judgment that she would not proceed to trial solely on the issue of aggravated damages, she reserved her rights with respect to the damages for breach of the Ontario Human Rights Code. She will be given a reasonable period to decide as to how she wants to proceed on this issue.

BACKGROUND FACTS

[5] The Plaintiff commenced employment with Realstar Management as a Senior Resident in May 2003. Realstar Management contracted with the Defendant Conundrum Capital Corporation (“Conundrum”) to manage Conundrum’s properties. It was a “couple’s role” that the Plaintiff and her husband, Gilles Cloutier, held together.

[6] In 2009, Conundrum took over the management of its properties through a wholly‑owned subsidiary and the Plaintiff’s employment continued with a combination of entities being Q Residential LP Corp, Q Residential Managing GP Inc. and Q Reit Sub LP, which were all carrying on business as “Q Residential”. Q Residential recognized the Plaintiff’s hire date as May 12, 2003. All of the Defendants have admitted that they are jointly and severally liable to the Plaintiff.

[7] Shortly after October 2009, the Plaintiff was promoted to Property Manager and in November 2012, the Plaintiff’s title was changed to Regional Manager, Operations. The Plaintiff’s duties as Regional Manager included the management of approximately 1100 residential units; she had eight employees who reported to her and an overall staff of 22 employees.

[8] Commencing in or about November 2009, the Plaintiff began reporting to Tracey Shaw (“Ms. Shaw”), Vice‑President, Operations for Q Residential. Ms. Shaw was located in Toronto, therefore most of the communications were by phone or e‑mail. The Plaintiff states that Ms. Shaw did not treat her properly and was rude to her. The Plaintiff complained to the President, John Lago (“Mr. Lago”) but things did not change and she claims that her complaints were not investigated. The Defendants deny any mistreatment of the Plaintiff by Ms. Shaw.

[9] The Plaintiff claims that her treatment by Ms. Shaw worsened over the years and that Ms. Shaw was regularly berating and shouting at the Plaintiff in front of others. Ms. Shaw’s treatment of employees, as alleged by the Plaintiff, is supported by the evidence of two former employees, Roger Daigle and Melanie Gagnon. However, the Defendants produced a series of e‑mails which suggest that the relationship between Ms. Shaw and the Plaintiff was not as bad as the Plaintiff makes it seem to be.

[10] By December 2012, the Plaintiff’s health had deteriorated to the point where her family physician decided that she was no longer able to work. The Plaintiff states that this was caused by the treatment she received from Ms. Shaw and the lack of assistance from the Defendants following complaints made about Ms. Shaw. The Defendants deny that the Plaintiff’s health was affected by Ms. Shaw and point to events in the Plaintiff’s personal life as being the reason for her medical leave of absence.

[11] On December 19, 2012, the Plaintiff’s family physician determined that she was unable to work. The physician’s notes refer to the Plaintiff’s employment and the symptoms of anxiety, stress and depression she suffered as a result. In November 2013, the Plaintiff was referred to the Montfort Hospital out‑patient Mental Health Program where she continued to receive treatment at the time of her October 30, 2014 affidavit.

[12] In late January 2013, the Defendants began looking to hire a replacement for the Plaintiff and, on February 4, 2013, hired Brenda Williams (“Ms. Williams”) as the new Regional Manager. Ms. Williams lived in Calgary and relocated to Ottawa for the position. She started her indefinite term as Regional Manager on March 18, 2013.

[13] On at least one occasion during the Plaintiff’s medical leave of absence, Mr. Lago discussed with the Plaintiff the option of taking on a reduced role with the Defendants. Mr. Lago believed that she would benefit from the reduced stress and had determined that it would be best for the Plaintiff. On March 20, 2013, Mr. Lago was in Ottawa and attended the Plaintiff’s residence to meet with the Plaintiff and her husband to discuss a return to the Resident Manager duties she had previously held with her husband. If she accepted, her salary would be reduced from $75,000 to $40,000 per year.

[14] The facts surrounding the March 20, 2013 meeting at the Plaintiff’s residence are at the heart of this motion for summary judgment from the Defendants’ perspective. The Defendants allege that an agreement was reached and that the Plaintiff accepted to return to the duties of Resident Manager. The Plaintiff denies that any agreement was reached as the Plaintiff was in no position to accept, given her fragile mental health. The Plaintiff’s husband did not provide evidence for this motion.

[15] Following the March 20, 2013 meeting, the Defendants proceeded with steps to change the Plaintiff’s terms of employment. No agreement was put in writing to document this change although Mr. Lago admitted that it would have been the normal practice of the Defendants to do so when such an agreement is reached. The Plaintiff’s salary was changed to $40,000 per annum in or about April 2013 and she was paid her salary until April 30, 2013.

[16] On May 27, 2013, the Plaintiff’s counsel sent a demand letter to the Defendants confirming that they were of the view that the Plaintiff had been constructively dismissed and sought to negotiate the terms of her termination. Upon receipt of the demand letter, Mr. Lago contacted the Plaintiff by telephone but ultimately no agreement was reached. Her benefits were terminated effective August 31, 2013.

POSITION OF THE PARTIES

[17] The Plaintiff states that it is appropriate for summary judgment to be granted as there is no dispute that the Plaintiff was constructively dismissed. The Plaintiff relies on the affidavits of two former employees of the Defendants in support of her position that Ms. Shaw created a poisoned work environment, which caused the Plaintiff to take a medical leave of absence.

[18] The Plaintiff contends that Ms. Shaw’s treatment of the Plaintiff along with Mr. Lago’s refusal to intervene warrants an award of aggravated damages and in doing so, relies on the matter of Honda Canada Inc. v. Keays, 2008 SCC 39 in support of an award of aggravated damages.

[19] The Plaintiff further states that the Defendants’ termination of the Plaintiff while on medical leave of absence amounts to discrimination on the basis of the Plaintiff’s age and her medical health, thereby entitling the Plaintiff to damages for breach of the Ontario Human Rights Code. The Plaintiff relies upon Wilson v. Solis Mexican Foods Inc., 2013 ONSC 5799 in support of this claim. The Plaintiff estimates that the appropriate amount of damages for such a breach is $50,000.

[20] The Defendants state that this is not an appropriate case for summary judgment. In advancing this argument, the Defendants point to the facts in dispute surrounding the March 20, 2013 meeting as raising a genuine issue on the issue of constructive dismissal. While there was no signed agreement at the March 20, 2013 meeting, the Defendants state that the Plaintiff and her husband agreed that it would be best for the Plaintiff to return to her duties as Resident Manager and accept a reduction in pay to $40,000 per annum.

[21] In addition, the Defendants state that there are clearly genuine issues with respect to the claim for aggravated damages, as evidenced by the sample e‑mail communications filed by the Defendants which suggest that the Plaintiff was appreciative of the support provided by Ms. Shaw as the Plaintiff’s supervisor, and that the alleged poisoned atmosphere surrounding the Plaintiff’s employment is certainly in dispute. To the contrary, the Defendants state that the evidence shows a lack of bad faith as the Plaintiff’s salary was continued despite the employment contract providing that sick leave is without compensation.

[22] Finally, on the issue of a breach of the Ontario Human Rights Code, the Defendants again state that there are genuine issues which warrant a trial. The Defendants state that the evidence demonstrates that the proposed change to the Plaintiff’s employment were not imposed but discussed with her in advance and that the Plaintiff was meaningfully involved in the decision‑making process. Alternatively, if the Plaintiff is entitled to Human Rights damages, such damages should be modest in the circumstances and should not exceed $10,000.

ANALYSIS ON SUMMARY JUDGMENT

[23] Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that summary judgment shall be granted where there is no genuine issue for trial. In determining whether there is a genuine issue requiring a trial, Rule 20.04(2.1) grants certain fact‑finding powers and Rule 20.04(2.2) allows for a mini‑trial to be held to receive oral evidence from one or more parties.

[24] On a motion for summary judgment, the Court must first determine if there is a genuine issue requiring a trial based only on the evidence before the Court. If there appears to be a genuine issue requiring a trial, the Court should then determine if the need for a trial can be avoided by using the fact‑finding powers under Rules 20.04(2.1) and 20.04(2.2).

[25] The leading case on the use of summary judgment is Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 at para. 49, where the Supreme Court of Canada stated:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[26] As set out in Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 at para. 33, “if the court cannot grant judgment on the motion, the court should decide those issues that can be decided, … identify the additional steps that will be required to complete the record… seize itself of the further steps required to bring the matter to a conclusion.”

[27] On the evidence before me, I conclude that there is no genuine issue for trial with respect the Plaintiff’s constructive dismissal. However, I find that there remain genuine issues with respect to aggravated damages and damages from the alleged breach of the Ontario Human Rights Code. I will deal with each claim for summary judgment separately.

i) Claim for Constructive Dismissal

[28] While the Defendants contend that the disputed facts surrounding the March 20, 2013 meeting raise a genuine issue for trial, I disagree. By March 20, 2013, the Defendants had already hired the Plaintiff’s permanent replacement and had no equivalent position to offer the Plaintiff within the Ottawa area. Also, no proposal was made to offer equivalent employment anywhere else. The only option presented to the Plaintiff was a return to the Resident Manager position and there is no dispute that this was a position of lesser responsibility at a significantly reduced rate of pay.

[29] It should be noted that during the motion for summary judgment, the Plaintiff’s counsel advised that for the purposes of the motion, the Plaintiff was no longer relying on the allegation of a toxic work environment in support of the Plaintiff’s claim to being constructively dismissed.

[30] The guiding principle on constructive dismissal is well established by the Supreme Court of Canada in Farber v. Royal Trust Co. (1997), 1 S.C.R. 846, 1997 38 at para. 34 where the Supreme Court cites the following definition of constructive dismissal with approval:

In an article entitled "Constructive Dismissal", in B. D. Bruce, ed., Work, Unemployment and Justice (1994), 127, Justice N. W. Sherstobitoff of the Saskatchewan Court of Appeal defined the concept of constructive dismissal as follows at p. 129:

A constructive dismissal occurs when an employer makes a unilateral and fundamental change to a term or condition of an employment contract without providing reasonable notice of that change to the employee. Such action amounts to a repudiation of the contract of employment by the employer whether or not he intended to continue the employment relationship. Therefore, the employee can treat the contract as wrongfully terminated and resign which, in turn, gives rise to an obligation on the employer’s part to provide damages in lieu of reasonable notice.

[31] There is no dispute as to the terms of the Plaintiff’s employment contract. She was employed as Regional Manager for Q Residential at an annual salary of $75,000 plus an annual bonus of $10,000 per year. The Defendants do not dispute these terms and did not take issue with the contention that the bonus formed an integral part of the contract of employment.

[32] It is undisputed that by February 4, 2013, the Plaintiff’s replacement was hired and that person replaced her on a full‑time basis on March 18, 2013. The new Regional Manager was not hired on a temporary basis. The demotion was the only option available to the Plaintiff if she wished to continue her employment with the Defendants. I am of the view that the elements of constructive dismissal are made out.

[33] Regardless of the Defendants’ contention that the demotion was accepted by the Plaintiff, it is clear that by March 20, 2013 there had been a unilateral and fundamental change to the terms of the Plaintiff’s employment and the Plaintiff was not provided with reasonable notice of this change. As of March 20, 2013, the Regional Manager position was no longer available and there was no evidence of an equivalent position which could be offered to the Plaintiff. As such, there is no need for the Court to make a finding as to the presence or absence of an agreement by the Plaintiff to the demotion at the March 20, 2013 meeting. The Court need not utilize its fact‑finding powers on this issue, as it is not necessary to determine if the Plaintiff consented to the demotion, as the change to the Plaintiff’s terms of employment had already taken place.

[34] Finally, on the issue of consent to the demotion, while I find that while the Defendants were well‑intentioned in having a face‑to‑face meeting with the Plaintiff to address the change in terms of employment, the Defendants’ actions do not assist them in avoiding a finding of constructive dismissal. Those actions are, however, relevant as to the remaining two issues.

ii) Claim for Aggravated Damages

[35] The claim for aggravated damages finds its basis in the actions of the employer when terminating the employee’s employment. The leading case is Honda Canada Inc. v. Keays, 2008 SCC 39 at para. 57 where the Supreme Court of Canada quoted with approval from Wallace v. United Grain Growers Ltd. (c.o.b. Public Press), [1997] 3 S.C.R. 701, 1997 332, when it stated:

Damages resulting from the manner of dismissal must then be available only if they result from the circumstances described in Wallace, namely where the employer engages in conduct during the course of dismissal that is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive” (para. 98).

[36] The Plaintiff also relies on Boucher v. Wal‑Mart Canada Corp., 2014 ONCA 419 at para. 50, which stands for the proposition that aggravated damages are warranted when the employer belittles, humiliates and demeans an employee causing the employee to become sick or suffer mental anguish.

[37] In these circumstances, the Plaintiff relies amongst other things on the fact that the Defendants were aware of the Plaintiff’s mental health issues, they falsely told other employees that she had retired and replaced her before discussing a change in her employment.

[38] I am of the view that, to a minimum, there are clearly genuine issues as to the Plaintiff’s entitlement to aggravated damages. I make this finding for the following reasons:

a. The Defendants provided the Plaintiff with salary and benefits continuation during her medical leave of absence although the employment contract specifies that there are no benefits for sick leave and the Defendants had no policy which provided benefits during a medical leave;

b. The e‑mail communications filed by the Defendants raise a genuine issue as to the Plaintiff’s claim of a poisoned work environment relating to the Plaintiff’s treatment by Ms. Shaw;

c. The Defendants attempted to be sensitive to the Plaintiff’s condition in stating that she had retired rather than state that she was on sick leave (despite the fact that such an announcement should have been discussed with the Plaintiff in advance);

d. The President, Mr. Lago, showed sensitivity in meeting with the Plaintiff at her home, in the presence of her husband, to propose the change in her employment. Neither party suggested that there was a dispute at the March 20, 2013 meeting;

e. While the Plaintiff denies that she accepted the demotion and states that she felt pressured, the evidence does not persuade me that Mr. Lago was not genuine in his belief that a return to the Resident Manager’s position was in the Plaintiff’s best interest; and

f. While I am not persuaded that the March 20, 2013 meeting resulted in an agreement to accept a demotion, the evidence suggest that this was still a fairly productive meeting where the Defendants attempted to help the Plaintiff find a solution to her difficulties at work.

[39] Overall, there are clearly genuine issues to determine if the Defendants’ treatment of the Plaintiff warrants an award of aggravated damages.

iii) Claim for Human Rights Damages

[40] Both parties agree with the statements of the Human Rights Tribunal of Ontario in Duliunas v. York‑Med Systems Inc., 2010 HRTO 1404 at para. 72 in support of the fact that “a change in positions or a reduction in pay as part of accommodating a disabled worker is not automatically considered discriminatory.” However, it does warrant scrutiny.

[41] The Plaintiff also relies on the absence of a credible non‑discriminatory explanation for the demotion to the position of Resident Manager. She submits that this is further indicia of discrimination. (See Knibbs v. Brant Artillery Gunners Club Inc., 2011 HRTO 1032 at para. 136).

[42] Having considered the totality of the evidence, I am of the view that there are genuine issues requiring a trial on the Plaintiff’s claim for Human Rights damages. I make this finding for the following reasons:

a. The Defendants’ evidence suggests that the demotion came about as a result of Mr. Lago’s genuine belief that a return to the Resident Manager position was in the Plaintiff’s best interest. At this time, the evidence does not allow me to make a finding that Mr. Lago is not credible on this point.

b. While the Plaintiff has challenged the decision to hire a permanent replacement and to announce the Plaintiff’s replacement as being discriminatory, I am unable to make such a finding at this point and further evidence would be required on these actions. A finding on Mr. Lago’s credibility is required to determine if there is a non‑discriminatory explanation for the demotion.

c. The Defendants’ decision to maintain full salary for the Plaintiff during her medical leave and the President taking time to meet with the Plaintiff personally to encourage the change to Resident Manager could be viewed as efforts made by the Defendants to accommodate the Plaintiff.

[43] While I conclude that there are genuine issues in connection with the claim for Human Rights damages, I am of the view that this issue could be properly dealt with by way of a mini‑trial given the extensive evidentiary record. The Plaintiff has reserved her right to request a trial on the issue of Human Rights damages. Once she makes her decision, the parties may have a preference between proceeding with a mini‑trial before me or a short trial before another judge. I am prepared to case manage this matter to determine the most efficient manner of dealing with the claim for Human Rights damages should it proceed.

MITIGATION AND DAMAGES

[44] The Defendants did not seriously argue the issue of mitigation at the motion. This was reasonable given the Plaintiff’s evidence that she made reasonable mitigation efforts in the circumstances.

[45] The Plaintiff details how following the cessation of salary and benefits, she remained ill and medically unable to work through 2013. She was able to secure work in March 2014 as a property manager with Killam Properties Inc. Then, in July 2014, she obtained new employment with Carleton Condominium Corporation #340 as Office Administrator. This was a couple’s position she shared with her husband at a combined salary of $45,000 per annum, together with an apartment rent‑free (which is a taxable benefit).

[46] The burden of establishing a failure to mitigate falls on the employer. (See Evans v. Teamsters Local Union No. 31, 2008 SCC 20). The Defendants have not alleged a failure to mitigate and have not met the burden of establishing such a failure.

[47] As to damages, the parties agree that the employment contract is not relevant for the purposes of determining the proper notice period. The parties also agree that in the circumstances, the notice period, before deducting the income earned during the notice period, is between 12 and 18 months.

[48] I am satisfied that the Plaintiff’s bonus was an integral part of her remuneration package. This was not strongly opposed by the Defendants and I find that the evidence establishes that the bonus would have been paid to her. The Defendants admit in their pleadings that the Plaintiff performed her duties capably and with dedication.

[49] Both parties refer me to the factors in Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140. I have considered the cases relied upon by the Plaintiff in support of 18 months and by the Defendants in support of 12 months. The Plaintiff’s circumstances lie somewhere in between. In considering the Plaintiff’s age, her management position and the limited availability of similar positions in the Ottawa area, I find that the Plaintiff is entitled to 15 months’ pay in lieu of notice of termination, which should include her annual bonus.

[50] The Plaintiff provided a Damages Chart at the motion, which was agreed to by the Defendants as being an accurate calculation of how the mitigation income is to be calculated. There was also agreement on the value of monthly benefits as being $910 per month. As per the Damages Chart, the Plaintiff’s entitlement, given my finding of a 15‑month notice period, is as follows:

• Salary − $93,750.00
• Benefits − $13,650
• Bonus − $12,500
• Less Mitigation Income − ($13,506)
• Total Entitlement − $106,394.

DISPOSITION

[51] For the reasons set out above, I make the following findings:

a. Summary judgment is granted on the issue of constructive dismissal and the notice period shall be 15 months with damages set at $106,394;

b. Summary judgment is denied on the issue of aggravated damages, as there are genuine issues for trial. The Plaintiff advised at the hearing of the motion that she would not be pursuing the claim for aggravated damages at trial if summary judgment is not granted on this claim.

c. Summary judgment is denied on the issue of Human Rights damages, as there are genuine issues for trial. The Plaintiff will have 35 days from the date of this Endorsement to advise the Trial Coordinator in writing if she seeks to proceed with her claim for Human Rights damages. If the Plaintiff elects to proceed with her claim for Human Rights damages, I will remain seized of the matter for case management purposes and I will hear from the parties on their preference to hold a mini‑trial before me or to proceed to trial before another Judge.

[52] In the event that the parties are unable to agree as to costs, they may make written submissions to me. The Plaintiff will have 35 days from the date of this Endorsement and the Defendants will have 15 days thereafter to respond. Each costs submission shall be no longer than five pages in length, excluding the Costs Outline. The parties shall comply with Rule 4.01 of the Rules of Civil Procedure.

Mr. Justice Marc R. Labrosse

Date: July 8, 2015

COURT FILE NO.: 13-58818
DATE: 2015/07/08

ONTARIO

SUPERIOR COURT OF JUSTICE

RE: Carolyn Cloutier and Gilles Cloutier, Plaintiffs

AND

Q Residential LP Corp, Conundrum Capital Corporation, Q Residential Managing GP INc., Q Reit Sub LP, Con Res III Operating LP, Habitat du Lac Leamy LP and Con Res II Operating Limited Partnership Number One, Defendants

BEFORE: Mr. Justice Marc R. Labrosse

COUNSEL: Janice B. Payne and Craig Stehr, Counsel for the Plaintiffs
Evert Van Woudenberg, Counsel for the Defendants

ENDORSEMENT

Labrosse J.

Released: July 8, 2015