Ciszkowski v. Canac Kitchens, 2015 ONSC 73

COURT FILE NO.: CV-08-346585PD3

DATE: 20150107

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Kazimierz Ciszkowski

Plaintiff

– and –

Canac Kitchens, a division of Kohler Canada Co.

Defendant

R. Mark Fletcher, for the Plaintiff

Dave J.G. McKechnie, for the Defendant

HEARD: September 22-24 and 29-30, and October 1, 2014

Archibald j.

A) INTRODUCTION

[1] This case concerns the acrimonious termination of an 18-year work relationship between Kazimierz Ciszkowski (“the Plaintiff” and referred to as “Kaz” in the documentary evidence), and his employer, Canac Kitchens, a division of Kohler Canada Co. (“Canac”). The Plaintiff seeks damages in lieu of reasonable notice of termination. The Plaintiff also seeks damages for the tort of intentional infliction of mental suffering, damages for the bad faith manner of his dismissal, and an award of punitive damages against Canac. The company has countered with a limitation period defence and the doctrine of frustration of contract, and sought a proportional reduction in any award of damages for wrongful dismissal.

B) FACTS

[2] I have set out the pertinent chronology in some detail in order to give proper context to the employment relationship between the Plaintiff and Canac.

[3] The Plaintiff started working for Canac in January of 1990. The Plaintiff assumed the position of Contracts Project Manager effective February 25, 2000. In this position, he reported directly to Canac’s Chief Financial Officer.

[4] In November of 2001, the Plaintiff was asked to sign an employment agreement. The Plaintiff refused to sign the agreement as drafted. The Plaintiff was asked to sign the same employment agreement in August of 2002, and again refused to sign it as drafted. In November of 2003, the Plaintiff was once more asked to sign an employment agreement. He refused to sign it. A fourth attempt to have the Plaintiff sign an employment agreement in April of 2004 met with similar resistance. His refusal to sign the agreement plays a role in my overall assessment of his credibility.

[5] The Plaintiff left work due to a heart condition effective May 25, 2004. He had heart surgery on June 30, 2004, which included a bypass and the repair of a defective valve. The Plaintiff received short term disability benefits while on leave.

[6] The Plaintiff returned to work on a part-time basis on March 14, 2005. Through a graduated return-to-work plan, the Plaintiff resumed full-time hours by April 11, 2005. Upon his return to work, the Plaintiff was told by Scott Neece, Canac’s Chief Financial Officer, that he would now be reporting to Aziz Poonawalla, Credit Manager. Mr. Poonawalla asked the Plaintiff to report to Edmund Peng, Contracts Supervisor, but the Plaintiff objected and reported instead to Mr. Poonawalla for the remainder of his time at Canac. There were other significant changes to his employment which I will deal with in my analysis of his constructive dismissal.

[7] In May of 2005, Edmund Peng asked the Plaintiff and another employee, Mira Stergulc, to update a database with information about insurance certificates and contractors’ licences. The Plaintiff took exception to being asked to carry out this task and repeatedly asked for clarification. His reluctance to perform this job requirement informs my credibility analysis.

[8] The Plaintiff met with Mr. Poonawalla and Marilyn Smith of Canac’s Human Resources Department on June 2, 2005. They discussed the status of the Plaintiff’s employment with Canac. The meeting resulted in a formal corrective action, though it was classified as a confirmation of verbal discussion, the least serious form of corrective action. The Discussion Log indicates that the meeting addressed the Plaintiff’s “unprofessional and confrontational behaviour with other employees”. In particular, the specific performance or behavioural issues were as follows, with the action steps listed below each one. They are set out in detail because of the Plaintiff’s complaints of harassment.

a. On May 26 you got angry at Edmund in front of his staff member when Edmund asked for your assistance to complete a task. You demanded the Edmund’s authority to ask your assistance to complete the task and undermined the departmental team spirit as well as his authority over his own staff.

i. Getting angry with co-workers is not acceptable.

b. Insurance certificate’s is essential to move forward with our business. You mentioned that this is not your job.

i. Your assistance is required in follow up with US Associates and Showrooms to acquire the Certificate of Insurance and Contractor’s License by the due dates.

c. Kaz, there have been complaints about your interfering in other peoples work, wasting their time at work and reducing their morale by antagonizing them against processes that you think do not work and the company never doing well.

i. Wasting other co-workers time is affecting the morale of team members. Please concentrate on your work and if you have time left due to less work please inform your Supervisor. Instead of blaming a process make an attempt to change the process.

d. On your Max P, I had to ask you multiple times and have till date not received a proper communication on your goals.

i. I am attaching your updated Max P for your goals to achieve this year. This is considered as your Job description.

e. Kaz, I have also been told by team members that you mentioned about getting a package from Canac.

i. If you are not interested in working here we can assist you in finding another job within a certain time frame. However, there would not be a package given.

f. It has been noted that you check Internet on company time for personal use.

i. In Canac we have a disclaimer on Internet usage or any other company material for personal use.

[9] On June 3, 2005, the Plaintiff met with Mr. Poonawalla. The purpose of the meeting was to go over the Plaintiff’s Maximum Performance goals for the coming year. A number of other issues were also addressed during this meeting, including the need for the Plaintiff to make up the time he had missed due to his attendances at doctors’ appointments.

[10] As a result of the Plaintiff’s earlier surgery, he was required to attend doctors’ appointments on a regular basis. Mr. Poonawalla repeatedly asked the Plaintiff to provide him with sufficient notice of the working hours the Plaintiff would be missing in order to attend appointments, as well as confirmation of the appointments via doctors’ notes. The Plaintiff did not always abide by these requests.

[11] The date and times of the Plaintiff’s emails concerning his doctors’ appointments are integral to the analysis of the Plaintiff’s complaint of harassment. I have therefore set out in detail some of the emails concerning the doctors’ notes to give context to this issue. The Plaintiff testified that he felt that Mr. Poonawalla’s insistence on doctors’ notes was a form of harassment and made him feel “untrusted”. Mr. Poonawalla never provided him with written confirmation of Canac’s policy regarding doctors’ notes.

[12] For instance, on May 12, 2005, the Plaintiff informed Mr. Poonawalla of a doctor’s appointment that he would be attending the next morning from 8:00 to 10:00. Mr. Poonawalla responded later that evening by requesting more advanced notice of when the Plaintiff would be attending a doctor’s appointment, “as per [their] last conversation.” On May 31, 2005, the Plaintiff sent Mr. Poonawalla an email stating that he had to leave early “re Family matter”. Mr. Poonawalla responded immediately with “[w]hat time?”

[13] At 12:34 PM on June 13, 2005, the Plaintiff emailed Mr. Poonawalla advising him that he would be attending a doctor’s appointment on June 14, 2005, “in the morning”. Mr. Poonawalla requested that the Plaintiff obtain a doctor’s note for this visit and informed him that Canac would reimburse him for expenses incurred in obtaining the note.

[14] At 1:06 PM on June 27, 2005, the Plaintiff emailed Mr. Poonawalla informing him that he needed to attend a doctor’s appointment at 3:45 that afternoon. In reply, Mr. Poonawalla asked the Plaintiff to provide him with a doctor’s note. There were a number of other emails concerning doctors’ appointments but these examples are largely illustrative of the issue.

[15] On June 30, 2005, the Plaintiff met with Ms. Smith and Mr. Poonawalla. No formal corrective action resulted from the meeting, but a number of issues were discussed, including: the Plaintiff’s workplace attitude and demeanour; the Plaintiff’s continued refusal to sign an employment agreement; the Plaintiff’s interactions with Mr. Peng; an email exchange that the Plaintiff had recently had regarding the Bradfield and Gorrie contract; and the Plaintiff’s need to make up the hours of work that he had missed due to attendances at medical appointments.

[16] At 9:45 AM on Wednesday, December 28, 2005, the Plaintiff told Mr. Poonawalla that he had a doctor’s appointment that day at 10:30 AM, as well as another on Friday at 3:00 PM. The Plaintiff testified that his mention of Friday in his email was incorrect, and that his appointment was actually Thursday, the next day, at 3:00 PM.

[17] On January 6, 2006, the Plaintiff received a second corrective action. This time it was a written warning. The main issue was identified as “in-subordination”, and the specific performance or behavioural issues to be addressed were as follows:

a. On 09/26/2005, Kaz was reminded, via email, by his supervisor that he was required to present a doctor’s note following doctor’s office visits during regular Canac work hours. In what was deemed by Kaz’s supervisor to be disrespectful behavior, Kaz approached his Supervisor later on 09/26/2005 and asked if he had been delayed due to being at the Dr’s office and if he had a Dr’s note for the time that he was away. Kaz’s Supervisor reminded him that this was for his Supervisor (Director – Finance, Canac) to inquire.

b. On Dec 29^th at @ [sic] 10 a.m. Kaz was told by his Supervisor that the Credit and Contracts team would leave for the day at 3:30 pm. Kaz left work around noon and did not return to the office. Kaz failed to request time off prior to 3:30 pm.

c. As mentioned in 1. above, Kaz had been asked to present a Dr’s note for visits, and inform his Supervisor with sufficient notice so as to effectively plan work load management. Following Kaz’s Dec 28 and Jan 5^th doctor’s visits, Kaz failed to present a Dr’s note. For the Dec 28^th and Jan 5^th visits Kaz informed his Supervisor with only 0.75 hrs notice and 2.25 hrs notice respectively.

[18] The action steps to correct the issue were as follows:

a. Kaz is required to get a Dr’s note for his doctor’s visits and inform his Supervisor with reasonable notice.

b. Kaz must request from his Supervisor reasonable time off for his Dr’s visits when required.

[19] On January 6, 2006, at some point prior to the corrective action meeting, Herman Vijayakumar was the target of a joke. I will deal at greater length with my findings of fact concerning the joke, as the identity of the joke’s primary instigator was contested at trial. However, in essence, Mr. Vijayakumar was handed a toilet seat as an employee award in mockery of Canac’s service award. Mr. Vijayakumar emailed the Plaintiff that afternoon, stating that he was “disappointed with the joke you made in the morning” and asked him not to repeat it. The timing of his email is a key factor in my credibility analysis.

[20] On Sunday, January 8, 2006, Mr. Poonawalla emailed Mr. Neece seeking directions on how to manage the Plaintiff. Mr. Neece responded on Monday, January 9, 2006, with a detailed email in which he underlined Mr. Poonawalla’s requirement to “rise to the occasion and not get in the mud with Kaz. We need to continue being professional, specifically spelling out of [sic] expectations and acceptable behavior, giving Kaz an opportunity to change by a specific date, and taking the appropriate action.”

[21] The Plaintiff responded to Mr. Vijayakumar’s email of January 6, 2006, on Monday morning, January 9, 2006. Shortly thereafter, the Plaintiff forwarded the email from Mr. Vijayakumar to Darren Baccus. He asserted that he fully expected HR to deal with this situation in a fair and unbiased manner.

[22] Shortly after the Plaintiff sent these two emails, he was told by other employees that he did not look well. Others suggested that he should leave work and immediately go see a doctor. The Plaintiff left work that morning.

[23] Upon his return to work on the same day, the Plaintiff was given a third corrective action, again a written warning. The issues to be addressed were listed as “In-subordination and unproductive work environment”, with the performance or behavioural issues listed as follows:

a. On Jan/6/2006, around 8:30 a.m. during work hours Kaz played a joke with Herman that disturbed the work environment and resulted in wasted productive time. Kaz acted as if he was giving Herman a recognition trophy which was actually a toilet seat. On June 2, 2005 Kaz had been in writing made aware of his unprofessional behavior that he had shown towards Edmund. In the same corrective action of June 2, 2005, Kaz had been asked not to waste other co-workers time and inform his Supervisor if he had time left due to less work. Also, as an action item Kaz was warned not to disturb and antagonize other team members and respect co-workers dignity and work time.

b. On Jan/9/2006 Kaz left work at 9:21 a.m., without Managements prior approval or knowledge. On Jan/6/2006 in another Corrective action Kaz was reprimanded for insubordination by leaving work at 12 p.m. on Dec 29^th when he was asked by his Supervisor to leave at 3:30 p.m.

[24] The action steps to correct the issues were as follows:

a. Kaz is required to maintain a professional and productive environment at all times during work that does not disturb others.

b. Kaz must request permission prior to leaving work. Leaving work without proper approval will be considered as abandoning work.

c. Kaz will be asked to review his weekly performance with his Supervisor by way of written updates on work accomplished with time frame that the task was accomplished within based on his MaxP.

[25] The Plaintiff left work on January 11, 2006. He told Darren Baccus that he had “been feeling ill and emotional” and was also complaining of chest pain. The Plaintiff never returned to work at Canac at any subsequent time. He requested, and subsequently received, payment of long term disability benefits from Manulife.

[26] A letter from Dr. Brian Baker, the Plaintiff’s psychiatrist, to Dr. Martin Richmond, the Plaintiff’s cardiologist, dated March 27, 2006, diagnosed the Plaintiff with “a major depressive disorder with a marked anxiety component and suppressed anger is suspected. This patient has symptoms conforming to a post-traumatic stress response in relation to his experiences at work. He is not able to work. Psychiatric intervention is warranted.”

[27] A letter from Manulife Financial to the Plaintiff, dated November 27, 2006, confirmed his eligibility for Long Term Disability (LTD) benefits, retroactive to May 13, 2006, the date following his 119-day qualifying period.

[28] In an email to Kathryn Scott dated November 19, 2007, the Plaintiff set out briefly his version of events in the years leading up to his departure from work in January of 2006. The Plaintiff made six individual requests regarding a potential return to work, but in essence, he was requesting reinstatement to his former position. However, in a letter dated November 22, 2007, from Dr. Baker to the Plaintiff’s case manager at Manulife, Dr. Baker wrote that “[g]iven this patient’s anhedonia, low mood, periodic feelings of hopelessness, anger and inflexibility, I am of the opinion that this patient is not able to return to work.”

[29] Canac terminated the Plaintiff’s employment by way of letter dated May 29, 2008 because the company was in the midst of shutting down its operations in Canada. He has not returned to work in any capacity, with any employer, as of the date of trial.

Witness Testimony

[30] The parties called a combined total of four witnesses. The Plaintiff testified on his own behalf. The Plaintiff also called Dale Mathews and Gazan Mirza. Canac called Aziz Poonawalla as its sole witness. The evidence and medical reports of Dr. Brian Baker, the Plaintiff’s psychiatrist, and Dr. Kasra Khorasani, a consulting psychiatrist, were entered into the record on consent, for which I am grateful to counsel.

[31] Because of the Plaintiff’s lengthy tenure at Canac and the multiple incidents which took place, I thought it was prudent to summarize each witness’ evidence separately in order to best simplify this case and my analysis.

Plaintiff’s Testimony

[32] The Plaintiff testified that as Contract Project Manager for Canac, several employees reported to him over the years. He attended managerial meetings, and was responsible for negotiating and reviewing contracts with large builders. He reported directly to Canac’s Chief Financial Officer. He gave testimony with respect to Canac’s repeated requests that he sign the employment contract in the years from 2001 to 2004, and his refusal to do so.

[33] While away on disability leave following his heart surgery, Dale Mathews contacted him and warned him about the negative changes in his employment. When he returned to Canac, the Plaintiff spoke with Mr. Poonawalla who told him that he would be reporting to Edmund Peng. The Plaintiff explained that he felt “demoted to clerk”. His role and responsibilities had changed. Mira Stergulc no longer worked for him. His budget had been taken away. He lost control over processes he had previously been in charge of. He no longer attended certain meetings. In essence, the Plaintiff’s role had become clerical or administrative, whereas it had previously been more managerial. He found Mr. Poonawalla to be “abusive”. He seemed to have a policy where no one was allowed to leave their desk. He claimed that Canac employees felt threatened just by Mr. Poonawalla’s appearance in their office.

[34] The Plaintiff claimed that no one sought his side of the story before the confirmation of verbal discussion was administered on June 2, 2005. Edmund Peng had come to his cubicle, argued with him, and accused the Plaintiff of questioning Edmund’s authority. The Plaintiff asserted that dealing with the insurance certificates was “someone else’s job” and that he “wasn’t ardent about that, but someone should be hired to do it”. He testified that he always responded to people amicably and did not interfere with other employees’ work. The Plaintiff testified that the reprimand for using the internet felt like he was being accused of viewing pornography at work. He underlined that he felt that Mr. Poonawalla and Ms. Smith were trying to force him to quit. He felt anxiety, anger, and confusion during the meeting. The others in the room knew his level of emotional distress “just by looking at” him. The Plaintiff later followed up with Ms. Smith by email asking for further documentation relating to the corrective action. In cross-examination, the Plaintiff suggested that the issue of adequate notice of doctors’ appointments was discussed but was not set out in the final document given to the Plaintiff.

[35] The Plaintiff emphasized that he felt “put down” by Mr. Poonawalla in the course of their meeting on June 3, 2005.

[36] With respect to the June 30, 2005 meeting, Mr. Poonawalla called the meeting in response to the Plaintiff’s request for particulars related to the corrective action of June 2. The whole conversation was “one sided”. He felt that Ms. Smith was encouraging him to quit. The Plaintiff claimed that he was in a state of shock or anxiety during the meeting. The Plaintiff referred to this meeting as a “corrective action” but acknowledged in cross-examination that he did not receive a formal corrective action document in connection with the meeting.

[37] Darren Baccus and Mr. Poonawalla were present at the meeting of January 6, 2006. Mr. Poonawalla “rehashed” some of the issues from the June 2 and June 30, 2005 meetings, including the Plaintiff’s workplace attitude and the need to provide sufficient notice of appointments. The Plaintiff testified that his early departure from work on December 29, 2005 was the result of a mistake based upon his assumption that the Contracts Department would finish work at noon on that day, as it had in previous years. He did not provide doctors’ notes for the appointments on December 28, 2005, and January 5, 2006, because he felt “totally embarrassed” having to ask for them, and it was “degrading” to make him do so. He told Mr. Poonawalla and Mr. Baccus that they were going to put him into the hospital. Following the meeting, he felt chest pains, cloudiness, and anxiety. His blood pressure was “going through the roof.”

[38] The Plaintiff claimed that it was Mr. Mirza who handed the toilet seat to Mr. Vijayakumar. He was at a loss to explain why Mr. Vijayakumar would send him an email accusing him of playing the practical joke.

[39] The incidents forming the basis of previous corrective actions were again “rehashed” during the corrective action meeting of January 9, 2006. The toilet seat incident was discussed. He felt “trapped” that he was the subject of false and trumped-up accusations. He left work during the morning of January 9, 2006, because Mira Stergulc noticed that he was sick. Lois Layton recommended that he see a doctor. With respect to the toilet seat incident, he felt “overwhelmed with what was happening” and “couldn’t take it emotionally”, so he left work to see the doctor. The Plaintiff testified that Mr. Mirza was not given any corrective action for his role in the toilet seat incident. In cross-examination, the Plaintiff acknowledged that Debbie Khan, who also reported to Mr. Poonawalla, received a corrective action for her role in the incident.

[40] On his last day at work – January 11, 2006 – he was having chest pains and felt extremely stressed out. He left to see the doctor. He had a blood pressure reading of 180 over 90. The Plaintiff remained in hospital overnight on that occasion.

[41] Since January 11, 2006, Canac has not offered the Plaintiff a return to work with modified duties, or an alternative position within the company. In cross-examination, the Plaintiff did concede that he has not been cleared to return to work at any point in time since January 11, 2006.

[42] The Plaintiff gave evidence clarifying his interactions with various doctors in the period following January 11, 2006. Since the content of the doctors’ notes and letters are in the record on consent, I will not summarize this line of questioning at length. I will add, however, that I have no doubt that the events leading up to January 11, 2006 took a serious toll on the Plaintiff’s mental and emotional well-being. The Plaintiff concluded his testimony in chief by saying that he was optimistic that he would one day work again. Hopefully, he will be able to do so.

Dale Mathews

[43] Dale Mathews worked for Canac from 1985 until its closure on December 31, 2008. During the relevant period of time, he was Pricing Manager and reported to Scott Neece, Canac’s Director of Finance. The Plaintiff initially worked for Mr. Mathews before taking over the role of Contracts Manager. Mr. Mathews and Mr. Poonawalla interacted in their roles at Canac.

[44] Mr. Mathews testified that Mr. Poonawalla asked “everyone to report on everybody”. In cross-examination, he repeated that everyone was supposed to be reporting on each other. Mr. Poonawalla asked him to report on his conversations with the Plaintiff and another employee named Mark Carradona. Mr. Mathews gave evidence that his own staff told him that Mr. Poonawalla had asked them to report on everyone’s activities. Mr. Mathews was unequivocal in his answers that he never reported the substance of his conversations with the Plaintiff to Mr. Poonawalla.

[45] Mr. Mathews also gave evidence that he spoke with Mr. Neece and with the Plaintiff about the Plaintiff’s return to work in April of 2005. Mr. Mathews was concerned that the Plaintiff was being “demoted” and asked Mr. Neece whether this was the case. He contacted the Plaintiff before he came back to work to alert him to the employment changes.

Gazan Mirza

[46] Gazan Mirza worked as an Office Administrator for Canac from 2002 until the summer of 2007. He did not report to Mr. Poonawalla but their relationship was friendly – they would go to lunch together and discuss personal issues as well as office gossip. Mr. Mirza testified that they regularly spoke about the Plaintiff. Mr. Poonawalla asserted that Kohler, Ms. Smith and Mr. Neece were “out to get” the Plaintiff because he was goofing off and only hanging around for his severance. Mr. Poonawalla called the Plaintiff a “motherfucker” and a “jerk off”.

[47] Mr. Poonawalla had asked him to report any of the Plaintiff’s activities such as goofing off and wasting time. He told Mr. Poonawalla that he was hired as an administrator, not an investigator, and that he absolutely would not comply with Mr. Poonawalla’s request. In cross-examination, Mr. Mirza asserted that Mr. Poonawalla’s request to spy on the Plaintiff made him feel that he was “being used”, that the request was a “violation” of their friendship, and that Mr. Poonawalla was “selling him out” to Mr. Sheppard.

[48] Mr. Mirza testified that on January 6, 2006, he opened a cardboard box to find a bubble-wrapped toilet seat. He gave it to Mr. Vijayakumar as a joke. There were a number of people around at the time, including the Plaintiff, Mira Stergulc, and Lois Layton. Everyone laughed and enjoyed the joke. He was called into Mr. Poonawalla’s office 20 minutes after the joke. Mr. Poonawalla told him to keep quiet about the incident because Mr. Poonawalla was “about to screw up a lot of people”. He asked Mr. Poonawalla, as a friend, not to make a big deal of it. In cross-examination, Mr. Mirza acknowledged that other employees in the credit department were disciplined for their role in the toilet seat incident.

[49] Finally, Mr. Mirza testified that Mr. Poonawalla asked him to give to Edmund Peng the master key so that he could look through the drawers in the Plaintiff’s desk. He observed Mr. Peng going through the Plaintiff’s drawers.

Aziz Poonawalla

[50] Aziz Poonawalla joined Canac in June of 2004 in the role of Credit Manager. Upon his hiring, Mr. Poonawalla reported to Scott Neece.

[51] The Plaintiff reported to him upon his return to work because the contracts department had been put under his management. The Plaintiff’s job underwent restructuring in the weeks following the Plaintiff’s return to work in 2005. This change was nothing personal. The Plaintiff was to “continue doing his role as per the job description, with newly defined duties.” This was the driving force behind Mr. Poonawalla’s creation of a new job description for the Plaintiff.

[52] He asked the Plaintiff to give him adequate notice of his doctors’ appointments. He told the Plaintiff to do what was required in an emergency, but otherwise, to provide sufficient notice. He acknowledged in cross-examination that he knew that the requirement to provide doctors’ notes upset the Plaintiff.

[53] Regarding the insurance certificates, Mr. Poonawalla requested Ms. Stergulc and the Plaintiff to help Mr. Peng in this task. These were “standard documents” which were required for all contracts.

[54] Mr. Poonawalla asserted that he was responsible for the content of the corrective actions, but that he always sent them to Human Resources for approval, as well as to Mr. Neece. The purpose of the June 2, 2005, corrective action was to make the Plaintiff aware that he was not working efficiently. He observed him talking to Dale Mathews, Herman Vijayakumar and others for long periods of time. He knew the Plaintiff had not finished his work because his entries were incomplete on the spreadsheet. He had observed the Plaintiff on non-work related websites for stretches of more than 15 minutes at a time. In that meeting, they spoke of the Plaintiff’s need to control his anger. The Plaintiff complained that the insurance certificate work was not part of his job. The Plaintiff was angry and defensive throughout the meeting. Mr. Poonawalla’s expectation in calling the meeting was that the Plaintiff would begin to act in a friendly spirit and would be respectful of his coworkers. In cross-examination, Mr. Poonawalla explained that further oral particulars of the allegations were given to the Plaintiff but were not included in the corrective action document.

[55] He called the meeting of June 3, 2005 in order to obtain the Plaintiff’s Max Performance goals for the coming year. He also spoke with the Plaintiff about the need to provide greater notice of impending doctors’ appointments. He found the Plaintiff to be a difficult employee to manage. He asked Mr. Neece if someone else in the organization could manage him. He did not provide Mr. Ciszkowski with a corrective action in relation to his unilateral decision to start work early and his unauthorized ‘banking’ of time against his doctors’ appointments because he “just wanted Kaz to start working again.”

[56] Mr. Poonawalla was cross-examined at length concerning the meeting of June 30, 2005, based on the transcript of the recording that the Plaintiff made during that meeting. His answers to these questions were, for the most part, “I don’t remember” or words to that effect.

[57] Regarding the doctors’ note issue outlined in the corrective action of January 6, 2006, Mr. Poonawalla had previously asked Mr. Neece and Ms. Smith about Canac’s policy for doctors’ notes. Both of them advised him that it was recommended to request doctors’ notes when an employee’s appointments would be more frequent than once a month. Mr. Poonawalla had 16 employees in his department at the time. He asked his other employees for doctors’ notes when the visits were more than once a month in frequency.

[58] Mr. Poonawalla found out about the toilet seat incident the same day as the corrective action against the Plaintiff – Monday, January 9, 2006. He did not witness the event, but learned about it because Herman Vijayakumar and Ejaz Chowdhury came to his office on January 9 and complained. Mr. Vijayakumar told him that he felt demoralized because he had been given a toilet seat as a plaque of recognition of his work. Mr. Poonawalla gave corrective actions to the two employees involved in the joke who worked for him – the Plaintiff and Debbie Khan. He spoke with Mr. Mirza’s supervisor, Mr. Sheppard, because Mr. Mirza did not report to him.

[59] Mr. Poonawalla claimed that Mr. Mirza spoke to him after speaking with Mr. Sheppard, at some point after January 9, 2006. Mr. Mirza asserted that it was the Plaintiff who had handed the toilet seat to Mr. Vijayakumar. He denied that Mr. Mirza informed him of the joke only 20 minutes after it had occurred and denied the veracity of Mr. Mirza’s testimony with respect to the occurrence of that meeting.

[60] Mr. Neece, Ms. Smith and Mr. Poonawalla decided together that the Plaintiff should receive a written warning on January 9, 2006. He acknowledged having also given Ms. Khan a written warning in connection with the toilet seat incident. He told the Plaintiff that the joke did not add value to the business. He said that the Plaintiff did not deny the joke. They also spoke about the fact that the Plaintiff had left work early that morning. Mr. Poonawalla knew that the Plaintiff had heart issues.

[61] He emailed Ms. Smith over the weekend of January 7-8, 2006, because the Plaintiff had been very upset in the January 6 meeting. Mr. Poonawalla sought her notes and advice. He exchanged emails with Mr. Neece that weekend as well because he wanted Mr. Neece’s help in managing the Plaintiff. In cross-examination, he reiterated that both he and the Plaintiff wanted the Plaintiff to report to Mr. Neece rather than to Mr. Poonawalla.

[62] Mr. Poonawalla flatly denied ever asking Mr. Mathews or Mr. Mirza to keep tabs on the Plaintiff and to report back to him. He denied having ever asked anyone to spy on the Plaintiff. He denied having called the Plaintiff the aforementioned expletives and denied telling Mr. Mirza that he was out to get the Plaintiff.

C) ISSUES

[63] The parties have identified the following issues:

1. Did Canac wrongfully dismiss the Plaintiff?

2. If so, what are the damages owing to the Plaintiff for this wrongful dismissal?

3. Is the Plaintiff entitled to moral damages due to the bad faith manner of his wrongful dismissal?

4. Is Canac liable to the Plaintiff for the tort of intentional infliction of mental suffering?

5. Is the Plaintiff entitled to punitive damages?

6. Are the extraordinary damages claims statute-barred by a limitation period?

7. At the time of his dismissal, was the Plaintiff’s employment frustrated such that his entitlement to damages is limited to his recovery under the Employment Standards Act?

8. If the Plaintiff is entitled to damages, should there be a proportional reduction?

D) ANALYSIS

(1) Brief Overview of my Fact Findings

[64] There is no question that neither of the two primary parties’ credibility has emerged from this trial untarnished. In my view, the Plaintiff acted insolently and insubordinately towards his superiors and coworkers on a number of occasions. He was extremely bitter about his demotion. He refused to accept responsibility for his mistakes or to alter his workplace attitude and behaviour, and was quick to accuse those around him of harassment. Mr. Poonawalla was a demanding manager who cultivated an office atmosphere of mistrust, one in which the employees were expected to report on each other. Finally, Canac’s constructive dismissal of the Plaintiff upon his return to work from heart surgery precipitated a serious erosion in the working relationship. Rather than allowing the relationship to grow increasingly acrimonious, the employer could and should have put a formal end to the employment relationship much earlier than they did. They did not do so because they did not want to give the Plaintiff a severance package. At the same time, the Plaintiff had no intention of leaving Canac without first receiving his severance. However, he never acquiesced in or accepted his demotion.

(2) Credibility

[65] The resolution of the issues before me turns largely on the credibility of the various parties and witnesses in this case. I will address in turn each of the four witnesses who testified at trial. Neither of the two primary witnesses in this action – the Plaintiff and Mr. Poonawalla – was an impressive witness whose testimony can be believed and relied upon to any large degree. Where conflicts have arisen and key facts were in dispute, I have relied as much as possible on supporting, contemporaneous documentation in order to sift through the competing versions and to determine what actually occurred. I am also mindful that the Plaintiff has the burden of proof for his claims. Other than his constructive dismissal claim, his assertions of harassment, bad faith, and his perspective on a poisonous work environment were largely not credible.

(3) Plaintiff

[66] The Plaintiff’s answers during his evidence in chief were sometimes rambling. He often lost his train of thought and had difficulty remembering what had been asked of him. The manner in which he answered questions did not inspire much confidence in his testimony. In saying that, I fully appreciate the nature of the Plaintiff’s serious health issues, but even in accounting for those disabilities, they do not compensate for the significant flaws in his testimony and credibility.

[67] The shift in the Plaintiff’s demeanour and presentation between examination-in-chief and cross-examination was palpable. In examination-in-chief, the Plaintiff came across as a man with an introverted personality who was at times confused, upset, and occasionally histrionic. He played the innocent victim to Canac’s aggressor, the David to their Goliath.

[68] In cross-examination, the Plaintiff’s tone and demeanour changed perceptibly. He no longer seemed as confused by the questions, nor did he become as visibly emotional in answering them. He sometimes anticipated the thrust of the defence counsel’s questions and parried them in a cunning manner. His memory, which so often failed him during examination-in-chief, was noticeably sharper. He was readily able to refute the factual underpinnings of Canac’s questions. An exchange regarding whether the Plaintiff received a pay raise in April of 2002 is one example. Another was when the Plaintiff said to Canac’s counsel “may I jog your memory” and proceeded to recite precise dates and factual details. In short, he came across as intelligent, thoughtful, pugnacious, and even hostile at times in cross-examination. The contrast in his demeanour and presentation between his examination-in-chief and his cross-examination was so striking that it undermined significantly any positive perspective I may have had concerning his credibility. His testimony was as if two different witnesses had given evidence.

[69] I would equally add that the Plaintiff’s combative approach in cross-examination was closer to, and often mirrored the tone of his workplace emails, which were often insolent, insubordinate, and impertinent. For example, the emails exchanged between the Plaintiff and Mr. Peng with respect to the insurance certificates reflected a grudging participation in the project and a lack of cooperation and respect on the part of the Plaintiff. An email sent by the Plaintiff to Mr. Poonawalla on November 15, 2005, in which the Plaintiff wrote to Mr. Poonawalla that “[i]t appears you may be unfamiliar with the functions and duties of the Contract Department” is another example of his impertinent and insolent behaviour. His insubordinate attitude undercut his assertions that he was an earnest worker who was unlawfully harassed in the workplace.

[70] My reading of the Plaintiff’s transcript of the June 30, 2005 meeting also confirms my conclusion that the Plaintiff, while feeling aggrieved, sometimes escalated the tension. At various points in that meeting, he deliberately antagonized Mr. Poonawalla and Ms. Smith. In contrast, Mr. Poonawalla and Ms. Smith often responded professionally in the face of an increasingly agitated Plaintiff.

[71] In summary, I have placed little weight on the Plaintiff’s testimony in general. In light of the testimony of other witnesses, and the documents tendered as evidence, I have concluded that the Plaintiff was easily offended and was often insolent in response, took exception to legitimate managerial efforts to correct his workplace comportment, and presented a one-sided, myopic version of the events leading up to his termination. I have no doubt that the Plaintiff felt harassed and persecuted on a subjective basis, but I am not convinced that he was harassed to the extent that his testimony would have me believe.

(4) Dale Mathews

[72] Dale Mathews was a credible witness. His testimony was candid. He testified without an axe to grind against any particular person or party. His story did not change in any substantial manner between examination-in-chief and cross-examination. I see no reason to doubt the answers that he gave and have relied on them in coming to certain conclusions.

(5) Gazan Mirza

[73] I have viewed Gazan Mirza’s testimony with a grain of salt. Mr. Fletcher argued in closing submissions that Mr. Mirza’s testimony was highly credible and should be preferred where it conflicted with that of Mr. Poonawalla. I do not agree. Mr. Mirza struck me as having a palpable bias against both Canac and Mr. Poonawalla. Furthermore, he testified that he had been friends with Mr. Poonawalla but felt that his friendship had been used and betrayed by Mr. Poonawalla. His testimony presented certain logical inconsistencies and given his animus towards Mr. Poonawalla and Canac, I have not relied on it to any large degree.

(6) Aziz Poonawalla

[74] Aziz Poonawalla was not a very credible or reliable witness. His answers to questions during examination-in-chief and cross-examination were, more often than not, along the lines of “I don’t remember” or “that was too long ago”. Moreover, Mr. Poonawalla flatly denied all allegations having to do with the subject matter of whether he asked his employees to report on each other. He denied the specifics of conversations with Mr. Mathews and Mr. Mirza, and indeed, denied ever having had those conversations in the first place. I find these denials and his significant lack of recollection troubling. They have deleteriously impacted upon my assessment of his credibility.

(7) Factual findings with respect to “spying” and the “toilet seat prank”

[75] There are two discrete points upon which the testimony given at trial differed substantially: the issue of whether Mr. Poonawalla asked other employees to keep an eye on the Plaintiff; and the incident whereby Herman Vijayakumar was handed a toilet seat as a joke Canac spirit award. A determination of the facts pertaining to these two issues is essential since a significant portion of the Plaintiff’s case with respect to moral and punitive damages turns on both of them. I turn first to the issue of “spying”, for lack of a better word, before turning my attention to the “toilet seat incident”.

[76] The evidence before me does not support the conclusion that Mr. Poonawalla instigated a campaign of spying that targeted the Plaintiff. Mr. Poonawalla’s testimony that he did not ask Mr. Mathews or Mr. Mirza to keep tabs on the Plaintiff is simply not credible in the face of the testimony from those two witnesses. Mr. Mirza’s testimony is somewhat corroborated by his written statement dated June 1, 2005. The contemporaneity of Mr. Mirza’s statement is support for the fact that, at the very least, Mr. Poonawalla asked the employees, whether they reported to him or not, to spy on each other. I accept as a fact that Mr. Poonawalla instituted or encouraged an office culture whereby employees were asked and expected to report on each other. However, it is uncontested that neither Mr. Mathews nor Mr. Mirza actually reported the Plaintiff’s workplace activities and conversations to Mr. Poonawalla. Both witnesses were unequivocal in their answers in this regard. To that extent, no spying or surveillance upon the Plaintiff actually occurred.

[77] I accept Mr. Mathews’ testimony, consistent in both examination-in-chief and cross-examination, as an accurate reflection. At multiple times during his testimony, Mr. Mathews said that under Mr. Poonawalla’s watch, everyone was expected to report on everyone else. I find that there was a culture, instilled or encouraged by Mr. Poonawalla, of employees being asked to report on the workplace activities of one another. This is certainly not healthy nor normal for any functioning workplace, and this behaviour should be wholeheartedly denounced by all employers. But I do not conclude that it constituted a campaign of surveillance targeting the Plaintiff. Rather, it was a campaign targeting all employees.

[78] With respect to the toilet seat incident, I find that the Plaintiff was the one who handed the toilet seat to Mr. Vijayakumar. The corrective action that ensued was not premised, as the Plaintiff asserted, on false or trumped-up accusations, but was a legitimate response.

[79] Mr. Mirza testified that he was the one who handed the toilet seat to Mr. Vijayakumar, a story which the Plaintiff corroborated. On the other hand, Mr. Poonawalla testified that Mr. Vijayakumar came to his office around January 9, 2006, and told him that it was the Plaintiff who had given him the toilet seat. Mr. Poonawalla also testified that Mr. Mirza came to his office sometime after January 9, 2006, and claimed that it was the Plaintiff who handed the toilet seat to Mr. Vijayakumar.

[80] There is a serious divergence in these narratives; moreover, neither party called Mr. Vijayakumar to clarify the matter. I have concluded that Mr. Poonawalla’s version of events is more accurate for two reasons. First, Mr. Vijayakumar sent the Plaintiff an email at 4:15 PM on January 6, stating that he was disappointed in the joke the Plaintiff had played on him. This email would make little sense if it were in fact Mr. Mirza who had handed the toilet seat to Mr. Vijayakumar. Equally, the toilet seat incident is not mentioned in the emails exchanged between Mr. Poonawalla and Mr. Neece between January 8 and 9, 2006. It strains credulity to believe that if Mr. Poonawalla had known about the event on January 6 – as Mr. Mirza alleges he did – that he would not have included that information in his subsequent emails. Mr. Poonawalla’s testimony – that Mr. Vijayakumar met with him on January 9 and expressed his displeasure with the joke, which had been instigated by the Plaintiff – makes significantly more sense in the context of all of the evidence.

[81] Furthermore, I find that the Plaintiff was not singled out or selectively disciplined for his role in this incident. The Plaintiff, Mr. Mirza, and Mr. Poonawalla all testified that Debbie Khan was also disciplined for taking part in the joke. Mr. Poonawalla viewed this incident as yet another example of the employees wasting time and disciplined those who reported to him. It is also significant that he did not discipline Mr. Vijayakumar, who reported to him as well. This supports the conclusion that Mr. Vijayakumar did not appreciate the joke, and undermines the version told by the Plaintiff and Mr. Mirza, namely that all parties – including Mr. Vijayakumar – laughed at the joke.

[82] I turn now to the issues identified by the parties.

E) Wrongful Dismissal

(1) Positions of the parties

[83] In closing submissions, on consent of the parties, the statement of claim was amended to include a pleading that, in the alternative, the Plaintiff was constructively dismissed as of his return to work in April of 2005. Canac was not prejudiced by the timing of this amendment, as it reflected the evidence tendered at trial and the theory of the case as it was put before me. In addition and importantly, Mr. McKechnie did not argue that the Plaintiff acquiesced in his demotion in 2005 by remaining in his employment with Canac and not resigning and suing for constructive dismissal at that juncture.

[84] Mr. Fletcher took the position that Mr. Ciszkowski had been constructively dismissed upon his return to work in April of 2005, as evidenced by the change in job functions and responsibilities, reporting structure, budgetary control and attendance at meetings. In the alternative, the Plaintiff was subjected to an ongoing campaign of harassment that created a hostile or poisoned workplace, resulting in his constructive dismissal in early January of 2006. In the further alternative, Canac’s failure to adequately respond to an email from the Plaintiff to Kathryn Scott on November 19, 2007, in which the Plaintiff requested his return to work, amounted to constructive dismissal as of that date.

[85] Mr. McKechnie took the obverse position that the changes in the Plaintiff’s role and duties with Canac upon his return to work in April of 2005 were so minor that they did not amount to constructive dismissal. Canac’s counsel denied that Canac or its employees committed any single act or course of conduct that constituted a campaign of harassment against the Plaintiff that would have amounted to constructive dismissal. Finally, the Plaintiff was not medically cleared to return to work in November of 2007, and he cannot therefore have been constructively dismissed at that time.

(2) Law

[86] Mr. Fletcher relied on a series of cases involving workplaces “poisoned” as a result of harassment or discrimination to make the case for constructive dismissal. He cited the test as set out in General Motors of Canada Ltd. v. Johnson, 2013 ONCA 502 at para. 66, 116 O.R. (3d) 457 [General Motors]:

Workplaces become poisoned for the purpose of constructive dismissal only where serious wrongful behaviour is demonstrated. The plaintiff bears the onus of establishing a claim of a poisoned workplace. As the trial judge recognized, the test is an objective one. A plaintiff’s subjective feelings or even genuinely-held beliefs are insufficient to discharge this onus. There must be evidence that, to the objective reasonable bystander, would support the conclusion that a poisoned workplace environment had been created.

[87] In General Motors, the Court also set out the general test to be applied to constructive dismissal, at para. 68:

The test for establishing constructive dismissal is no less stringent. In Farber v. Royal Trust Co., 1997 CanLII 387 (SCC), [1997] 1 S.C.R. 846, Gonthier J. explained, at para. 26, that an objective test governs; the issue is whether “a reasonable person in the same situation as the employee would have felt that the essential terms of the employment contract were being substantially changed”. Justice Gonthier elaborated, at para. 33:

In cases of constructive dismissal, the courts in the common law provinces have applied the general principle that where one party to a contract demonstrates an intention no longer to be bound by it, that party is committing a fundamental breach of the contract that results in its termination.

[88] A slightly different formulation of the test for constructive dismissal is found in Smith v. Viking Helicopter Ltd. (1989), 1989 CanLII 4368 (ON CA), 68 O.R. (2d) 228 at p. 231 (C.A.) [Smith v. Viking]:

...a damage action for constructive dismissal must be founded on conduct by the employer and not simply on the perception of that conduct by this employee. The employer must be responsible for some objective conduct which constitutes a fundamental change in employment or unilateral change of a significant term of that employment.

[89] Mr. Fletcher also relied on Shah v. Xerox Canada Ltd., 1998 CanLII 14747 (ON SC), [1998] O.J. No. 4349 at para. 38 (Gen. Div.), 83 A.C.W.S. (3d) 227, to support the Plaintiff’s claim that Canac’s actions and those of its employees were calculated to cause the Plaintiff’s resignation, and that they therefore amounted to a constructive dismissal:

Where the conduct of management personnel is calculated to cause an employee to withdraw from the employment, it may, in my judgment, amount to constructive dismissal. The test, I believe, is objective: it is whether the conduct of the manager was such that a reasonable person in the circumstances should not be expected to persevere in the employment. As the particular circumstances are crucial, each case must be decided on its own facts. The test should not be lightly applied. An employer is entitled to be critical of the unsatisfactory work of its employees and, in general, to take such measures - disciplinary or otherwise - as it believes to be appropriate to remedy the situation. There is, however, a limit. If the employer’s conduct in the particular circumstances passes so far beyond the bounds of reasonableness that the employee reasonably finds continued employment to be intolerable, there will, in my view, be constructive dismissal whether or not the employee purports to resign.

[90] Mr. McKechnie relied on jurisprudence in which it was held that an employee’s reaction to poor performance reviews did not amount to constructive dismissal: Ata-Ayi v. Pepsi Bottling Group (Canada) Co., 2006 CanLII 37418 (ON SC), [2006] O.J. No. 4440 at paras. 46-54 (S.C.). He also relied on Chartrand v. R.W. Travel Ltd., 2011 ONSC 2148 at paras. 130-136, [2011] O.J. No. 6420, to establish that a stressful workplace coupled with a manager’s brash management style did not necessarily create an atmosphere of workplace harassment amounting to constructive dismissal.

(3) Analysis

[91] I am satisfied that the Plaintiff was constructively dismissed upon his return to work in April of 2005. At that time, the Plaintiff no longer reported to Canac’s Director of Finance. There is some evidence that he was asked to report to Edmund Peng, the Contract Supervisor. In any event, the Plaintiff reported to Mr. Poonawalla, Credit Manager, from his return in April of 2005 until his LTD leave in January of 2006. The change in reporting structure from Director of Finance to Credit Manager was significant. It is clear that the Plaintiff rightly viewed this as a demotion.

[92] Other changes unilaterally imposed upon the Plaintiff also lead me to conclude that he was constructively dismissed. The Plaintiff no longer had an employee, Mira Stergulc, reporting to him. He lost control over a small office budget that he had previously had the discretion to spend. He was no longer invited to attend certain managerial meetings. Finally, and significantly, the Plaintiff no longer received and processed new contracts – that task was given to Edmund Peng. He was cut out of the informational loop and, most importantly, his role had become more clerical and administrative in scope than managerial.

[93] Dale Mathews’ testimony was particularly clear on this point. Mr. Mathews testified that upon learning of the Plaintiff’s altered reporting structure, he spoke with Scott Neece. He asked Mr. Neece whether the Plaintiff was demoted. Mr. Mathews testified that he spoke with the Plaintiff prior to his return to work, to alert him to the fact that he was returning to a “hostile work environment” and that he would henceforth be reporting to Mr. Poonawalla.

[94] The changes imposed by Canac were unilateral and significant. They were not minor in scope as Canac’s counsel has argued. Both the Plaintiff’s and Mr. Mathews’ use of the word “demotion” was apt, since that is what the changes clearly amounted to.

[95] It is also clear to me that the Plaintiff never accepted or acquiesced in the changes to his reporting structure and job responsibilities. He felt demoted and he repeatedly sought information as to the reasons for these changes. The Plaintiff continued to work at Canac but never once accepted his post-surgery roles and responsibilities. His behaviour, at times insubordinate and insolent, in part derives from this fact. I emphasize that Mr. McKechnie did not argue that if I were to find that the Plaintiff had been constructively dismissed in April of 2005 then the Plaintiff had accepted his demotion by remaining at work until January 2006. Mr. McKechnie did not suggest to me that the Plaintiff could not sue for constructive dismissal based upon these unilateral changes because of acquiescence. He argued instead that the Plaintiff was not constructively dismissed.

[96] In light of the significant changes to the Plaintiff’s employment, I am satisfied that this was “objective conduct which constitutes a fundamental change in employment or unilateral change of a significant term of that employment”: Smith v. Viking at p. 231. There is no doubt that he was constructively dismissed on that date, and that he elected to treat his employment as at an end by commencing this lawsuit in January of 2008.

[97] Based on the factual findings I have made and which are more fully discussed below, neither Canac nor its employees created a poisoned work environment that resulted in the Plaintiff’s constructive dismissal on that basis at any time following his return to work in April of 2005. My finding of constructive dismissal is founded on the objective changes to the Plaintiff’s responsibilities which were unilaterally imposed. These changes are significant enough that they constitute a fundamental change in his employment.

F) Wrongful Dismissal Damages

(1) Positions of the parties

[98] Plaintiff’s counsel took the position that the Plaintiff was entitled to 18 months’ notice or pay in lieu thereof, given the Plaintiff’s position, age at the time of dismissal, and length of tenure with Canac. The Plaintiff had received 26 weeks’ pay, his ESA minimum, in January of 2014. The Plaintiff was therefore seeking a further 12 months’ pay in lieu of notice.

[99] Canac’s counsel conceded that the appropriate range, if damages were awarded and having regard to the Plaintiff’s age, position, and length of tenure, was 14 to 18 months.

(2) Law

[100] The factors to be considered in cases of wrongful dismissal are set out in the vintage case of Bardal v. the Globe and Mail, 1960 CanLII 294 (ON SC), [1960] O.J. No. 149 at para. 21, 24 D.L.R. (2d) 140 (H.C.J.) [Bardal]:

21 There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.

[101] The Supreme Court adopted the use of the Bardal factors in Machtinger v. HOJ Industries Ltd., 1992 CanLII 102 (SCC), [1992] 1 S.C.R. 986, and the factors continue to be applied by the courts: Honda Canada Inc. v. Keays, 2008 SCC 39 at paras. 28-29, [2008] 2 S.C.R. 362 [Keays].

(3) Analysis

[102] I am satisfied, having regard to the factors in Bardal and the overlap between what was sought by the Plaintiff and what Canac’s counsel conceded was appropriate, that a notice period of 18 months was warranted in the circumstances. Since the Plaintiff has already received 26 weeks’ pay, which is approximately 6 months, he is entitled to a further 12 months’ pay in lieu of notice.

[103] The Plaintiff was employed with Canac for 18 years. His official title was Contract Project Manager, and he had been in that role since at least February, 2000. Before his constructive dismissal, he reported directly to Canac’s Director of Finance, attended managerial meetings, and supervised at least one employee. He was, in my view, a mid-level manager and was in his mid-fifties at the time. The evidence indicates that the Plaintiff’s annual salary upon termination was $53,248. The Plaintiff is therefore entitled to recover this sum from Canac.

G) Moral Damages for Bad Faith Dismissal

(1) Positions of the parties

[104] The Plaintiff seeks moral damages for the bad faith manner of his dismissal – commonly known as Wallace damages – in the range of $75,000 - $100,000. His counsel conceded during closing submissions that these damages were largely, if not entirely, coextensive with the damages that the Plaintiff might recover under the tort of intentional infliction of mental suffering. To the extent that an award of damages under both would result in the type of double recovery that the Supreme Court cautioned against in Keays, counsel quite correctly conceded that recovery ought to be limited to one or the other, though he noted that plaintiffs have sometimes received both.

[105] Mr. Fletcher took the position that Canac and its employees had an agenda – to force the Plaintiff from his position with Canac without providing any ‘package’. He placed great emphasis on the alleged spying which Mr. Poonawalla attempted to carry out and on the erosion of trust that ensued. He also emphasized that according to Mr. Mirza’s testimony, Mr. Poonawalla called the Plaintiff a number of horrible expletives.

[106] The spying was but one element in a host of wrongdoing. Counsel made the point that the repeated suggestion by Canac employees that the Plaintiff should quit if he was not happy was a veiled threat and an attempt to force the Plaintiff out without terminating him and paying severance. Mr. Fletcher also argued that the requirement that the Plaintiff must provide a doctor’s note for each appointment during work hours was harassing behaviour. It was evidence that Canac viewed the Plaintiff with skepticism and suspicion.

[107] Finally, Mr. Fletcher contended that the Plaintiff was disciplined on trumped-up and fabricated charges with respect to the toilet seat incident on January 9, 2006. This was the last straw, and the Plaintiff went on LTD leave on January 11, 2006. In summary, the severity of Canac’s actions, from the Plaintiff’s return to work up to and including the corrective action of January 9, 2006, forced the Plaintiff into LTD leave. This was a course of conduct aimed at forcing the Plaintiff to leave his employment with Canac while entitling the Plaintiff to moral damages for the bad faith manner of his dismissal.

[108] Mr. McKechnie argued that there was no evidence of a concerted effort by Canac or any of its employees to force the Plaintiff out. He took the position that Mr. Poonawalla’s evidence was clear and unequivocal: he wanted to fix the work relationship and to encourage the Plaintiff to be a productive, contributing team member. He also noted that the Plaintiff had a proclivity to allege harassment. Mr. Poonawalla’s requests for adequate notice and proof of attendance at doctors’ appointments were legitimate business practices and were not discriminatory or harassing in any manner. In short, while the Plaintiff may have felt harassed, the actions and behaviours complained of were not objectively harassing.

[109] With respect to the allegations of spying, Canac’s counsel noted that no actual spying ever occurred. Both Mr. Mirza and Mr. Mathews testified that they refused to comply with Mr. Poonawalla’s request. According to Mr. Poonawalla’s evidence, there were concerns with how the Plaintiff spent his time at work. Mr. Poonawalla simply asked Mr. Mirza and Mr. Mathews to keep an eye on the Plaintiff and to report any shortcomings.

[110] In summary, the confirmation of verbal discussion on June 2, 2005, the meeting of June 30, 2006, and the corrective actions of January 6 and 9, 2006, were legitimately founded and were intended to correct the Plaintiff’s behaviour and workplace demeanour.

(2) Law

[111] I am mindful of the Supreme Court’s distinction between compensatory moral damages and punitive damages in the context of actions for wrongful dismissal. At para. 62 of Keays, Bastarache J. wrote the following:

Damages for conduct in the manner of dismissal are compensatory; punitive damages are restricted to advertent wrongful acts that are so malicious and outrageous that they are deserving of punishment on their own. This distinction must guide judges in their analysis.

[112] The test for damages arising out of the manner of dismissal was synthesized in Keays. The Supreme Court reviewed its own jurisprudence on the matter and concluded the following, at paras. 57-58:

57 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).

58 The application of Fidler makes it unnecessary to pursue an extended analysis of the scope of any implied duty of good faith in an employment contract. Fidler provides that “as long as the promise in relation to state of mind is a part of the bargain in the reasonable contemplation of the contracting parties, mental distress damages arising from its breach are recoverable” (para. 48). In Wallace, the Court held employers “to an obligation of good faith and fair dealing in the manner of dismissal” (para. 95) and created the expectation that, in the course of dismissal, employers would be “candid, reasonable, honest and forthright with their employees” (para. 98). At least since that time, then, there has been expectation by both parties to the contract that employers will act in good faith in the manner of dismissal. Failure to do so can lead to foreseeable, compensable damages.

(3) Analysis

[113] The Plaintiff is not entitled to compensatory moral damages for the bad faith manner of his dismissal. I do not find that Canac or its employees engaged in a protracted campaign of harassment against the Plaintiff that was aimed at forcing him to quit. While it is unfortunate that Canac constructively dismissed the Plaintiff and did not formally terminate his employment even as the work relationship soured, this alone is not enough to ground Wallace damages. The actions of Canac’s employees in the months following the Plaintiff’s return to work do not constitute a form of harassment nor comprise bad faith in the manner of the Plaintiff’s dismissal, and do not give rise to Wallace damages.

[114] Mr. Poonawalla’s repeated requests for adequate notice and proof of attendance at doctors’ appointments did not amount to harassing behaviour. Mr. Poonawalla sought assurances from Ms. Smith and Mr. Neece that this was standard company policy. I accept his testimony on this point, as it is confirmed by emails between Mr. Poonawalla, Mr. Neece and Ms. Smith. He also testified that he asked other employees for notes when their absences were more frequent than once a month. The Plaintiff would often present Mr. Poonawalla with very little notice of his impending doctors’ appointments. In those circumstances, Mr. Poonawalla’s reaction to that lack of notice was not unreasonable.

[115] There is no evidence that Dale Mathews or Gazan Mirza ever reported the Plaintiff’s activities to Mr. Poonawalla. I have already determined that the culture under Mr. Poonawalla, as per Mr. Mathews’ evidence, was one in which everyone was expected to report on everyone else. There was no particularized, targeted campaign of surveillance against the Plaintiff alone.

[116] I asked counsel to provide me with case law pertinent to circumstances in which an employer may have spied on an employee. Counsel jointly directed my attention to Colwell v. Cornerstone Properties Inc., [2008] O.J. No. 5092 (S.C.) [Colwell]. In that case, Ms. Colwell’s employer had secretly installed a camera in her office without her knowledge. When she found out about it and confronted the employer, the employer gave her “a totally implausible explanation”. The Court found that this “amounted to more than merely ‘bad faith’ and ‘unfair dealing’” and that this created a poisoned atmosphere resulting in constructive dismissal.

[117] The facts in Colwell are distinguishable from the present case. The placement of a video camera in an employee’s office without his or her knowledge is a serious and intrusive violation of the employee’s privacy. In Colwell, the Court determined that the placement of the camera, coupled with the subsequent lies, constituted conduct so egregious as to have eroded all trust in the employment relationship and amounted to constructive dismissal: Colwell at paras. 30, 35. However, the Court did not find that the conduct entitled Ms. Colwell to aggravated, moral, or punitive damages: Colwell at paras. 44-49.

[118] Nothing nearly so violating occurred with respect to the Plaintiff. No video camera was installed. There is no evidence that Mr. Mathews or Mr. Mirza in fact reported the Plaintiff’s activities to Mr. Poonawalla. While Mr. Mirza testified that he gave Mr. Peng the master key to enable a search through the Plaintiff’s desk, there was no evidence presented as to the reasons for this request and as a consequence, I do not draw any negative inferences from it. Furthermore, there is no evidence that the Plaintiff knew that Mr. Peng had gone through his desk. The general culture of employee-on-employee surveillance under Mr. Poonawalla was unfortunate and inappropriate, but it is not comparable to the individualized violation of privacy that occurred in Colwell.

[119] In addition, the corrective action that the Plaintiff received for the toilet seat prank was not given on false or trumped-up charges. For the reasons previously articulated, the versions of events given by the Plaintiff and Mr. Mirza are not credible. Nor was the corrective action on this occasion targeted at the Plaintiff; Debbie Khan was also reprimanded for her role in that incident.

[120] All of the corrective actions in their overall context were not unreasonable and were not persecutorial in nature. They were valid attempts by the employer to deal with the Plaintiff’s lack of motivation. The corrective actions, while gradually increasing in their severity, were legitimately given by a manager who was attempting to manage a difficult employee. This was Mr. Poonawalla’s testimony and it is confirmed by the emails exchanged between Mr. Poonawalla, Mr. Neece, and Ms. Smith over the weekend of January 7-8, 2006.

[121] In conclusion, the employees’ actions, taken individually and collectively, do not constitute bad faith in the manner of the Plaintiff’s dismissal that would entitle Mr. Ciszkowski to Wallace damages.

H) Intentional Infliction of Mental Suffering

(1) Positions of the parties

[122] Based on the same conduct that grounds the claim for moral damages for the manner of bad faith dismissal, Mr. Fletcher contended that the actions of Canac and its employees were flagrant and outrageous, calculated to cause harm to the Plaintiff, and caused the Plaintiff’s visible and provable illness. Counsel reiterated the list of actions that, according to him, constituted flagrant and outrageous conduct: the insistence that the Plaintiff provide medical notes; the spying on the Plaintiff; the making of false and trivial complaints against the Plaintiff; the lying about the Plaintiff’s role in the toilet seat incident; Ms. Smith’s encouragement of the Plaintiff to quit; the persistence of the corrective actions; and Canac’s refusal to provide particulars regarding complaints made against the Plaintiff for which he was disciplined.

[123] Mr. McKechnie contended that the Plaintiff has not demonstrated a pattern of conduct that was flagrant and outrageous. He also noted that the legal test requires that the actor intends to produce the type of harm that actually occurs. Mr. Poonawalla’s conduct would have to have been aimed at producing a lasting and sustained major depressive illness in order for the Plaintiff’s claim to satisfy the second branch of the legal test.

(2) Law

[124] The three-part test to establish the tort of intentional infliction of mental suffering was most recently set out by Laskin J.A. in Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419 at para. 41, [2014] O.J. No. 2452 [Boucher]:

The tort of intentional infliction of mental suffering has three elements. The plaintiff must prove:

• The defendant's conduct was flagrant and outrageous;

• The defendant's conduct was calculated to harm the plaintiff;

• The defendant's conduct caused the plaintiff to suffer a visible and provable illness.

[125] The first and third branches of the test are objective, whereas the second branch is subjective; that is, the defendant “must desire to produce the consequences that follow, or the consequences must be known by the actor to be substantially certain to follow”: Prinzo v. Baycrest Centre for Geriatric Care (2002), 2002 CanLII 45005 (ON CA), 60 O.R. (3d) 474 (C.A.) at para. 61; Piresferreira v. Ayotte, 2010 ONCA 384 at para. 75, 319 D.L.R. (4th) 665, leave to appeal to S.C.C. refused, [2010] S.C.C.A. No. 283.

(3) Analysis

[126] Based on my factual findings above, the Plaintiff is not entitled to damages for the intentional infliction of mental suffering because the actions of Canac and its employees do not rise to the level of “flagrant and outrageous” conduct, nor were they calculated to cause the type of harm that the Plaintiff suffered.

[127] Canac’s conduct and that of its employees were not flagrant and outrageous. Without repeating the findings of fact and analysis set out above, Mr. Poonawalla’s requests for sufficient notice and doctors’ notes do not constitute harassing behaviour. Furthermore, I do not find that Ms. Smith or any other Canac employees repeatedly badgered the Plaintiff to quit. I acknowledge that Canac took the position that the Plaintiff would not receive a ‘package’ from Canac. However, Mr. Poonawalla’s testimony was that the repeated meetings and corrective actions were aimed at ameliorating the workplace atmosphere and getting the Plaintiff to be a positive, productive member of the Canac team. Based upon the corrective action documents and the overall evidence, I accept Mr. Poonawalla’s evidence on this point. The transcript of the June 30, 2005 meeting indicates that Ms. Smith and Mr. Poonawalla tried to correct the Plaintiff’s behavioural shortcomings and stipulated that if he did not wish to do so, he was welcome to find employment elsewhere. They also responded to most of the Plaintiff’s complaints, albeit not always in writing.

[128] I also find that the Plaintiff was prone to feeling harassed in the workplace even where no harassment existed. In an email exchange regarding the Plaintiff’s continued refusal to sign an employment agreement, the Plaintiff accused Kohler of choosing to “punish, harass and demoralize an honest employee”. This exchange occurred prior to the Plaintiff’s heart surgery and his constructive dismissal upon his return to work. This email highlights the reality that the Plaintiff was subjectively prone to making allegations of harassment against his employer. As such, I do not put weight on the Plaintiff’s contentions.

I) Punitive Damages

(1) Positions of the parties

[129] Plaintiff’s counsel acknowledged that any punitive damages awarded would arise out of the same factual matrix as those giving rise to the moral damages for the manner of dismissal or the tort of intentional infliction of mental suffering. This was a case which exemplified the power imbalance between employees and employer. There must be real and serious consequences for employers who violate remedial minimum standards legislation. To this effect, Canac’s failure to pay the Plaintiff his ESA minimums until January of 2014 was a factor in favour of awarding punitive damages as against Canac.

[130] Canac’s counsel reiterated that the corrective actions were well-founded and intended to correct the Plaintiff’s workplace comportment; they were not, assessed objectively, harsh, vindictive, reprehensible or malicious. There was no evidence before the Court regarding the reason that the Plaintiff’s ESA payments were not made until January of 2014. It would be inappropriate for me to make a finding of punitive damages on that basis alone.

(2) Law

[131] In Keays, at para. 68, the standard for awarding punitive damages and the type of conduct that would attract such an award in the employment law context were clarified:

… this Court has stated that punitive damages should “receive the most careful consideration and the discretion to award them should be most cautiously exercised” (Vorvis, at pp. 1104-5). Courts should only resort to punitive damages in exceptional cases (Whiten, at para. 69). The independent actionable wrong requirement is but one of many factors that merit careful consideration by the courts in allocating punitive damages. Another important thing to be considered is that conduct meriting punitive damages awards must be “harsh, vindictive, reprehensible and malicious”, as well as “extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment” (Vorvis, at p. 1108).

[132] Mr. Fletcher also relied on Altman v. Steve’s Music Store Inc., 2011 ONSC 1480 at para. 136, [2011] O.J. No. 1136 [Altman], for the proposition that the refusal to pay statutory minimums upon termination is conduct punishable by an award of punitive damages.

(3) Analysis

[133] For the reasons set out above and the findings of fact I have already made, I do not assess punitive damages against Canac for its conduct or that of its employees. None of the actions of Canac or its employees, individually or collectively, were harsh, vindictive, reprehensible or malicious, such that they would warrant the assessment of punitive damages. In my view, it is self-evident that if the conduct in this case does not satisfy the test for Wallace damages arising out of the manner of dismissal, nor meet the “flagrant and outrageous” standard as set out in Boucher, it will not meet the high threshold for the assessment of punitive damages. Further, there is no evidence before me as to why the Plaintiff’s ESA entitlements were not paid until January of 2014, and in any event, such conduct is not in and of itself enough to ground an award of punitive damages.

[134] The culture of surveillance under Mr. Poonawalla was regrettable and no doubt failed to promote a healthy and productive workplace. However, it was not targeted at the Plaintiff and neither Mr. Mathews nor Mr. Mirza actually spied and reported on the Plaintiff. For the sake of completeness, I emphasize that the Court in Colwell did not award moral, aggravated or punitive damages on the basis of a video camera installed in an employee’s office without her knowledge and for which an implausible explanation was later given. In my view, Canac’s generalized culture of suspicion and informant encouragement, without more, cannot form the basis for punitive damages.

J) Limitation Period

(1) Positions of the parties

[135] Mr. McKechnie argued that the extraordinary damages that the Plaintiff seeks are statute-barred. He acknowledged that the Plaintiff’s claim for constructive dismissal would not be statute-barred since, in the case of constructive dismissal, the limitation period does not run until the employee elects to resign. He also did not argue that the Plaintiff acquiesced in his constructive dismissal by remaining employed with Canac. The Notice of Action was filed January 7, 2008; however, Mr. McKechnie argued that any award of moral or punitive damages founded on actions that occurred more than two years prior to that date would be statute-barred.

[136] Mr. Fletcher noted that the Plaintiff was not diagnosed with a major depressive disorder until March of 2006. This made the Plaintiff’s claim for the tort of intentional infliction of mental suffering discoverable only at that time, since before that time, he would not have known that the third branch of the Boucher test had been made out.

(2) Law

[137] Mr. McKechnie relied on s. 5 of the Limitations Act, 2002, S.O. 2002, c. 24, as well as Bagnulo v. Complex Services Inc., 2011 ONSC 5506, 2011 CarswellOnt 15438 [Bagnulo], for the proposition that the Plaintiff’s claim to extraordinary damages is statute-barred. In that case, a plaintiff who was aware that her employment status would be changing as of January 16, 2007, did not bring a claim until August 21, 2009. The Court found that the claim was brought outside the limitation period.

[138] In response, Mr. Fletcher cited Saltsov v. Rolnick, 2010 ONSC 914, [2010] O.J. No. 1632 (Div. Ct.) [Saltsov]. The Divisional Court panel in Saltsov, at paras. 28-29, held that the cause of action for constructive dismissal arises when the employee elects to treat the contract of employment as at an end:

[28] The established jurisprudence makes it clear that a cause of action for constructive dismissal arises when the employee elects to resign from his employment. A cause of action for constructive dismissal does not arise when an employer acts unilaterally in a manner which gives rise to the right of an employee to resign but where the employee does not resign.

[29] There would be some very significant practical problems if the courts accepted that a cause of action of constructive dismissal can be discovered before acceptance by the employee of the repudiation of the contract by the employer, that is, before the employee resigns. When an employee suffers interference in the performance of his/her job duties and a concomitant diminution of responsibilities, there may be multiple opportunities for such an employee to resign on the basis that he or she has been constructively dismissed. However, in many circumstances the employee, for perfectly valid reasons, may elect to carry on and see if he/she can work it out. If the respondent is correct about when the limitation period is triggered, it is possible that a plaintiff/employee could resign after being interfered with for two years, having finally had enough (the straw that broke the plaintiff's back), only to be told that the limitation period has expired because she/he could have “accepted the repudiation” of the contract more than two years ago, i.e., the claim was discoverable. This is neither workable nor fair. Neither is such an approach consistent with the jurisprudence.

(3) Analysis

[139] The Plaintiff’s claim for constructive dismissal as of April of 2005 is not statute-barred. Mr. McKechnie does not disagree with this point. The Plaintiff never accepted the changes to his employment duties and reporting structure upon his return to work in April of 2005. I agree with the policy rationale behind the Divisional Court’s reasoning in Saltsov. Furthermore, the facts in this case as they pertain to constructive dismissal are distinguishable from those in Bagnulo. In that case, the plaintiff had been given notice as of November 1, 2006, that her employment with the defendant would be changing. She signed a letter on January 16, 2007, indicating her knowledge and acceptance of her new work conditions. The trial judge found that “[i]t was quite clear that she was reverting to a fixed time employment contract. It was spelled out in the letter signed by her on January 16, 2007”: Bagnulo at para. 47. There are sound policy reasons for enforcing limitation periods where an employee has accepted or acquiesced in his or her altered employment conditions. However, the Plaintiff never accepted the changes to his position upon his return to work, and Bagnulo is therefore distinguishable.

[140] Since I have not awarded any additional damages, I need not decide the issue of whether the Plaintiff’s claims for extraordinary damages are statute-barred. However, in the event that I am wrong, I would add that the claim for the intentional infliction of mental suffering was not statute-barred, as the visible and provable illness was not diagnosed until March of 2006. With respect to the claim for intentional infliction of mental suffering, the full cause of action would not have been discovered or discoverable until the visible and provable illness was known to the Plaintiff: Boucher at para. 41. This did not occur until Dr. Baker’s diagnosis on March 27, 2006. Furthermore, had I agreed with the version of events presented by the Plaintiff, the employer’s actions would have constituted one continuous course of conduct rather than a discrete act. The limitation period would not have begun until the final act in that course of conduct.

K) Frustration of the Plaintiff’s Employment

[141] Frustration of employment was not pleaded as a defence in the original statement of defence. However, on consent, the parties agreed in closing arguments to amend the statement of defence to reflect a pleading based upon frustration. The Plaintiff suffered no prejudice through this late amendment because Plaintiff’s counsel had notice that this defence would be pleaded and had the opportunity to provide the Court with case law and materials relating to the doctrine of frustration. The parties agreed that they would not have tendered or elicited evidence differently had frustration been pleaded as a defence from the outset. Indeed, the various doctors’ letters were admitted on consent of the parties, thereby dispensing with the need to call the doctors to testify.

(1) Positions of the parties

[142] Mr. McKechnie took the position that upon the Plaintiff’s termination on May 29, 2008, the Plaintiff’s permanent disability had frustrated the contract of employment. Therefore, Canac was entitled to terminate him without providing reasonable notice or pay in lieu thereof. Canac was entitled to rely on the post-termination evidence of the extent and nature of the Plaintiff’s disability in order to advance its claim that the employment contract was frustrated in May 2008.

[143] Mr. Fletcher took the position that the existence of LTD benefits is always relevant to determining whether and when frustration of the employment contract occurs. If an employee and employer have agreed to an LTD benefits plan, the employment relationship contemplates LTD leave. Post-termination evidence of the disability is not relevant or admissible. The question is what the employer knew at the time when they terminated the employee. If Canac wanted to rely on the doctrine of frustration, it should have terminated the Plaintiff on that basis.

(2) Law

[144] Canac’s counsel relied on British Columbia and Ontario jurisprudence to establish that an employee’s disability can lead to frustration of the employment contract and can entitle the employer to terminate the employee without providing reasonable notice or pay in lieu thereof.

[145] In Demuynck v. Agentis Information Services Inc., 2003 BCSC 96, [2003] B.C.J. No. 113, the Court held that “a defendant employer may rely on any ‘just cause’ or frustration due to disability discovered up to the time of trial, but unknown at the time of termination”: Demuynck at para. 24. The Court came to the same conclusion in Trevitt v. Blanche Equipment Rentals Ltd., 2006 BCSC 94 at para. 37, [2006] B.C.J. No. 93.

[146] In Duong v. Linamar Corp., 2010 ONSC 3159, [2010] O.J. No. 2314 [Duong], the doctrine of frustration as it applied to employment contracts was canvassed. While citing Marshall v. Harland & Wolff Ltd., [1972] 2 All E.R. 715 (N.I.R.C.), the Court held that the question to be asked is: “was the employee’s incapacity, looked at before the purported dismissal, of such a nature, or did it appear likely to continue for such a period, that further performance of his obligations in the future would either be impossible or would be a thing radically different from that undertaken by him and agreed to be accepted by the employer under the agreed terms of his employment?”: Duong at para. 35.

[147] In Duong, at para. 41, the proposition that the existence of LTD benefits disentitled the employer from relying on frustration to put an end to the contract of employment was rejected:

Mr. Wright contended that if an employee is permanently disabled, the fact that there was an LTD policy available as part of the employment terms means the employer cannot rely on frustration. I do not accept such a broad statement. In this case, the parties did not provide that the contractual relationship would continue in spite of permanent disability. The fact that there is long term disability coverage made available to the employees of Eston, and paid for by them, does not mean that Eston agreed to employ someone with long term disability indefinitely in spite of the employee’s inability to work. The policy itself contemplated LTD benefits after severance. It certainly did not provide that employment would continue throughout long term disability, nor could it as it was a policy between employees and Co-operators and Eston was not a party to it.

[148] Finally, Mr. McKechnie relied on Fraser v. UBS Global Asset Management, 2011 ONSC 5448, [2011] O.J. No. 6167 [Fraser]. In that case, it was held that frustration, once established, terminated a contract by operation of law and that nothing more need be done: Fraser at para. 15. The Court held that an employer is entitled to rely on evidence disclosed subsequent to the termination to establish frustration of the employment contract at the time of termination: Fraser at para. 30.

[149] Mr. Fletcher relied on Dragone v. Riva Plumbing Ltd., [2007] O.J. No. 3710 (S.C.), 2007 CanLII 40543 [Dragone]. At paras. 22-25, the relationship between frustration of an employment contract and the existence of LTD benefits was addressed:

22 The presence of long-term sick leave and disability benefits indicates a greater tolerance for the duration of an employee's absence before frustration occurs. Indeed, it has been suggested that contracting for these benefits may postpone the time of frustration because it may be inferred that the contracting parties anticipated that the employee might take leave for illness. See: Antonacci v. Great Atlantic & Pacific Co. of Canada, 1998 CanLII 14734 (ON SC), [1998] O.J. No. 876 (Gen. Div.), affd. in part [2000] O.J. No. 280 (C.A.); E.E. Mole and M.J. Stendon, Wrongful Dismissal Handbook (3rd ed.) (Markham: LexisNexis Canada Ltd., 2004), chapter B-4.

23 In this regard, Geoff England, Employment Law in Canada (4th ed.) (Markham: LexisNexis Canada Ltd., loose leaf), at para. 18.22 states:

It is strongly arguable that if the employee is entitled to and is in receipt of long term disability benefits under his or her employment contract which covers his or her sickness or disability, the doctrine of frustration is inapplicable because the parties will have foreseen the alleged frustrating event and will have allocated its risk accordingly. Indeed, it would appear to fly in the face of the parties' factual intentions if the employer could release a sick or disabled employee and deprive him or her of those very benefits by arguing that the employment contract has been frustrated.

24 Riva Plumbing argued that enough time had passed that Ms. Dragone’s contract was frustrated, and Ms. Dragone’s counsel conceded that there might come a time when her contract of employment could be frustrated, but he argued that the time had not yet arrived. There was a debate during the argument about whether it would be appropriate for the Court to declare how long Ms. Dragone might have to return to work. However, upon reflection, I think that approach is neither possible nor appropriate.

25 At the present time, it cannot now be said that the contract of employment has been frustrated. Although there has been 14 months of absence from work, there is no evidence that Ms. Dragone’s protracted absence is harmful to the company and the presence of long-term disability insurance suggests, at least, that a much longer period than 14 months was anticipated before it could be said that frustration had occurred, and it is arguable that given the long-term disability arrangements, frustration may never occur. I conclude that in the circumstances of the immediate case that Ms. Dragone’s contract of employment has not yet been frustrated.

[150] Additionally, Plaintiff’s counsel relied on Altman, at para. 65, for the proposition that an employee’s disability and its effect on frustration must be assessed at the time of dismissal.

(3) Analysis

[151] I do not find that the Plaintiff’s contract of employment was frustrated at the time of his termination such that Canac was not obligated to provide anything more than the ESA minimums. In the first place, the Plaintiff was constructively dismissed and entitled to treat his employment as at an end upon his return to work in 2005. At that date, his employment contract was not frustrated. The doctrine of frustration is simply inapplicable as the Plaintiff continued to work for Canac following his constructive dismissal. His last day of work was January 11, 2006. He subsequently began to receive long term disability benefits from Manulife. Based upon my finding of constructive dismissal premised upon the diminution in his employment responsibilities as of April 2005, the doctrine of frustration is neither relevant nor applicable. That is my conclusion and ends this matter as far as I am concerned, but I will address Canac’s other arguments out of prudence.

[152] If, however, the date that the Plaintiff brought suit for constructive dismissal – January 7, 2008 – is taken as the effective date of termination, I am not persuaded that the Plaintiff’s employment contract was frustrated as of that date. Finally, if the date of termination was May 29, 2008, as Canac has argued, I also do not find that the Plaintiff’s employment contract was frustrated as of that date. With respect to the alternative dates of January 7, 2008, and May 29, 2008, the breadth and nature of the Plaintiff’s disability were not known at those times such that his employment could be said to be frustrated on those dates. Furthermore, the subsequent doctors’ reports do not clearly claim that he was permanently disabled as of those dates.

[153] I cannot agree with Canac’s counsel that evidence of the post-termination extent of an employee’s disability can always be used as a matter of course in support of a pleading of frustration. The test as set out in Duong makes reference to “the employee’s incapacity, looked at before the purported dismissal” (emphasis added). It does not expressly allow for the use of evidence of the post-termination extent of the employee’s disability as justification for the frustration of the contract without exception in every case.

[154] Nor am I of the view that Fraser supports Canac’s counsel’s position. Paragraph 30 of that decision reads as follows:

30 In my view, the plaintiff cannot simply rely on a medical report dated over two years prior to termination, and ignore the other facts known to her employer at the time of the dismissal. While additional medical reports were disclosed after termination, they relate to the time of termination, as well as to subsequent periods of time. The caselaw in any event supports the reliance on evidence subsequently disclosed: see Dartmouth, supra, at pp. 374-5, Trevitt v. Blanche Equipment Rentals Ltd., 2006 BCSC 94 (B.C. S.C. [In Chambers]) at para. 37; 2006 BCSC 94 (B.C. S.C. [In Chambers]) and MacLellan v. H.B. Contracting Ltd., [1990] B.C.J. No. 935 (B.C. S.C.), at pp. 9-10; (1990), 32 C.C.E.L. 103 (B.C. S.C.). (emphasis added)

[155] I do not think that this paragraph stands for the unequivocal proposition that an employer is always entitled to rely on evidence of the post-termination extent of an employee’s disability to support a pleading of frustration if that evidence does not relate back to the time of termination. Rather, the legal rationale behind frustration and its application in Fraser are captured in paragraphs 32-33 of Fraser:

[32] In Naccarato, supra, Pollak J. stated that frustration is established if at the time of termination there is no reasonable likelihood of the employee being able to return to work within a reasonable time. I agree.

[33] As of June 5, 2009 [the date of Ms. Fraser’s termination] Ms. Fraser had been off work for 3 ½ years. By that date, Dr. Kerin’s prognosis had proven to be incorrect. No positive change had occurred. Ms. Fraser was totally disabled at that date and there was nothing to indicate any likelihood of being able to return to work within a reasonable time.

[156] Frustration of an employee’s contract is always established with reference to the time of dismissal. In pleading frustration, an employer is entitled to rely on post-termination evidence not in its possession at the time of dismissal so long as it relates to the nature and extent of an employee’s disability at the time of dismissal. The “evidence subsequently disclosed” should shed light on the nature and extent of the employee’s disability at the time of an employee’s dismissal. An employer is not entitled to rely on evidence that relates to the post-termination nature and extent of an employee’s disability if that evidence is not relevant to the dismissal date. To allow an employer to succeed in pleading frustration on the basis of such evidence would be neither fair nor reasonable.

[157] The breadth and nature of the Plaintiff’s disability, as diagnosed either before or after May 29, 2008, were not such that Canac is entitled to rely on the doctrine of frustration. The pertinent medical evidence is as follows:

a. A letter from Dr. Brian Baker, psychiatrist, to Dr. Richmond, the Plaintiff’s cardiologist, dated March 27, 2006, diagnosed the Plaintiff with “a major depressive disorder with a marked anxiety component and suppressed anger is suspected.” The letter indicated that the Plaintiff was not currently able to work and that psychiatric intervention was warranted.

b. A note from Dr. Baker dated April 13, 2006, indicated that the Plaintiff was “not fit to return to work and will remain off until further notice.”

c. A note from Dr. Baker dated May 8, 2006, indicated that “[t]here has been improvement in patient’s clinical state. He is showing emotional stabilisation. He is far less reactive than he was before.”

d. A letter from Dr. Baker to Human Resources Development Canada dated March 14, 2007, outlined the Plaintiff’s course of treatment and indicated that there had been some improvement, though Dr. Baker noted that the “disorder had persisted since he was originally evaluated and thus can be considered prolonged.”

e. On April 3, 2007, Dr. Baker re-evaluated the Plaintiff. Dr. Baker reaffirmed the diagnosis of major depressive disorder and found that the Plaintiff “appears disabled to work.”

f. A letter from Dr. Baker to the Plaintiff’s case manager at Manulife dated November 22, 2007, indicated that the Plaintiff “continues to show evidence of major depressive disorder with a prominent anger component.” Dr. Baker concluded that the Plaintiff “is not able to return to work” and that “given his current psychiatric state, he is also not suitable to participate in a rehabilitation program.”

g. The Plaintiff attended an Independent Medical Examination at the request of Manulife. It was conducted by Dr. Bruun-Meyer on July 28, 2008. Dr. Bruun-Meyer concurred in Dr. Baker’s diagnosis that the Plaintiff has major depressive disorder. Dr. Bruun-Meyer concluded that “[i]t is likely that he [the Plaintiff] will resist interventions. Engaging in a psychiatric day program focusing on activation and reintegration, followed by a work-focused program are necessary for his recovery, as this current state can continue indefinitely and will not simply be reversed by medication changes.”

h. A letter from Dr. Kasra Khorasani dated May 13, 2009, indicated that the Plaintiff’s “prognosis at the present is at best guarded.”

i. A letter from Dr. Khorasani dated June 9, 2009, indicated that the Plaintiff’s “illness is not a simple mild situational crisis and unfortunately the depressive illness that has occurred will continue and complicate his medical condition further. The depression is severe and prolonged and prevents him from working.”

[158] There is no post-termination medical evidence that establishes that the Plaintiff was totally disabled and would have been unable to return to work within a reasonable period of time as of May 29, 2008, or at any time prior to that date. The Plaintiff’s disability was clearly prolonged, but doctors treating and diagnosing the Plaintiff continued to recommend various courses of treatment and to express varying degrees of optimism regarding the Plaintiff’s prospects for recovery. I make these findings in obiter since the Plaintiff’s recovery is founded on his constructive dismissal in 2005 and at that time, his contract of employment was not frustrated by a disability.

[159] Finally, I am of the opinion that Perell J.’s reasoning in Dragone may apply to the present situation. The Plaintiff received LTD benefits up to and following May 29, 2008. Long-term disability was therefore contemplated by the parties, and Manulife rather than Canac bore the costs of the Plaintiff’s LTD benefits. The contracting for and reception of these benefits may well postpone the time of frustration past May 29, 2008. This point, too, is made in obiter, since my conclusion on the inapplicability of the doctrine of frustration is founded on the Plaintiff’s constructive dismissal upon his return to work in 2005.

L) Proportional Reduction

(1) Positions of the parties

[160] Canac took the position that since the Plaintiff has received LTD benefits for some or all of the period during which he would receive wrongful dismissal damages, there would need to be some proportional reduction in those damages. He noted that the Plaintiff and Canac contributed equally to the insurance coverage that resulted in the LTD benefits being paid, and so Canac should be entitled to a set-off of 50%. He could not provide any case law directly supporting this proposition, but argued from logic and the Supreme Court’s broad observations in Sylvester. Although counsel made this submission, he did not press it.

[161] The Plaintiff’s counsel argued that any issue of double recovery is between the Plaintiff and Manulife but should not factor into the award of damages against Canac.

(2) Law

[162] Canac relied on Sylvester v. British Columbia, 1997 CanLII 353 (SCC), [1997] 2 S.C.R. 315, [1997] S.C.J. No. 58 [Sylvester]. In Sylvester, at paras. 20-21, the Court wrote the following with respect to the possibility of “double collection”:

The parties to an employment contract can obviously agree that the employee is to receive both disability benefits and damages for wrongful dismissal. There may also be cases in which this intention can be inferred. However, absent an intention by the parties to provide otherwise, an employee who is dismissed while not working but receiving disability benefits and an employee who is dismissed while working should be treated equally.

If disability benefits are paid in addition to damages for wrongful dismissal, the employee collecting disability benefits receives more compensation than the employee who is dismissed while working. Deducting disability benefits ensures that all affected employees receive equal damages, i.e., the salary the employee would have earned had the employee worked during the notice period. If disability benefits are not deductible, employers who set up disability benefits plans will be required to pay more to employees upon termination than employers who do not set up plans. This deterrent to establishing disability benefit plans is not desirable.

[163] Mr. Fletcher relied on a number of cases in support of the proposition that where employees pay out of pocket for STD and LTD benefits from a private insurer, there should be no set-off when assessing damages owed in lieu of notice for an employee who was collecting STD or LTD benefits at the time of dismissal: Contreras v. Canac Kitchens, a Division of Kohler Canada Co., 2010 ONSC 849 at paras. 35-36, [2010] O.J. No. 528, [Contreras]; Brito v. Canac Kitchens, a Division of Kohler Canada Co., 2011 ONSC 1011 at para. 16, [2011] O.J. No. 1117; Sills v. Children’s Aid Society of Belleville (City) (2001), 2001 CanLII 8524 (ON CA), 53 O.R. (3d) 577 at paras. 44-45 (C.A.), [2001] O.J. No. 1577; Piresferrieria v. Ayotte, 2008 CanLII 67418 (ON SC), [2008] O.J. No. 5187 at para. 251 (S.C.), rev’d in part on other grounds at 2010 ONCA 384, 319 D.L.R. (4th) 665.

(3) Analysis

[164] Canac is not entitled to a proportional reduction of the damages it owes to the Plaintiff. The evidence before me was that both the Plaintiff and Canac mutually paid for his STD and LTD insurance benefits. The Plaintiff’s contract with Manulife may provide for a clawback, but that is strictly between the Plaintiff and Manulife.

[165] The Plaintiff testified that as of 2004, when Manulife became the Plaintiff’s insurer, employees contributed towards STD and LTD benefits. Both counsel agreed that the evidence before me is that the benefit premiums for the LTD benefits were shared between the employer and the employee and that this is also the case with respect to the STD premiums. The Plaintiff paid some or all of his STD and LTD premiums to a third-party insurer, Manulife, as of 2004.

[166] On this issue, the reasoning of Patillo J. in Contreras, at paras. 34-35, is highly persuasive:

34 Following Sylvester, supra, the issue of whether an employer is relieved from its obligation to pay damages for wrongful dismissal has been considered by our Court of Appeal. In the Sills v. Children's Aid Society of Belleville (City), Hastings (County) and Trenton (City), (2001), 2001 CanLII 8524 (ON CA), 53 O.R. (3d) 577 (C.A.), the court held that Sylvester does not stand for the proposition that an employer is relieved from its obligation to pay damages from dismissal by virtue of the existence of the disability plan. It merely provides that disability benefits are deductible from the damages payable in certain circumstances. The question of deductibility is to be decided based on the terms of the employment contract and the intention of the parties. At paragraph 45, Simmons J.A., on behalf of the court, stated:

[45] Absent an express provision precluding double recovery, in my view, the principles enunciated in Cunningham [Cooper], 1994 CanLII 120 (SCC), [1994] 1 S.C.R. 359, assist in determining whether an intention that there would be double recovery in the event of a wrongful dismissal can be inferred. I consider it reasonable to assume that an employee would not willingly negotiate and pay for a benefit that would allow her employer to avoid responsibility for a wrongful act. I consider it reasonable to infer that parties would agree that an employee should retain disability benefits in addition to damages for wrongful dismissal where the employee has effectively paid for the benefits in question.

See too: McNamara v. Alexander Centre Industries Ltd. (2001), 2001 CanLII 3871 (ON CA), 53 O.R. (3d) 481 (C.A.).

35 In this case there is no evidence of any express provision in the employment agreement preventing double recovery. In my view, because Mr. Contreras contributed through payroll deduction to his long-term disability plan and it was paid by Manulife directly to Mr. Contreras, it is reasonable to infer that it was part of the agreement between the parties that Mr. Contreras would retain disability payments in the event of a wrongful dismissal.

[167] Furthermore, Sylvester is distinguishable from the facts in this case. The Court in Sylvester acknowledged that its analysis might be different if the benefits accruing to the employee were “benefits from a private insurance plan for which the employee has provided consideration. […] The issue whether disability benefits should be deducted from damages for wrongful dismissal where the employee has contributed to the disability benefits plan was not before the Court”: Sylvester at para. 22. The reasoning in Sylvester does not extend to the present situation, where the Plaintiff has paid for or contributed to his STD and LTD benefits.

M) Overall Conclusion

[168] For the reasons set out above, I find Canac liable to the Plaintiff for 12 months’ pay in lieu of notice, after subtraction of the ESA minimums already paid out. That amount is $53,248.00. With pre-judgment interest calculated as of January 7, 2008 – the date on which the Plaintiff elected to treat his employment as at an end and sue for damages – the total amount owing is $59,085.09. None of the defences pleaded bar the Plaintiff’s recovery of these damages.

[169] However, for the reasons set out above and based on the factual findings I have made, I do not find Canac liable to the Plaintiff, either directly or vicariously, for the intentional infliction of mental suffering, for damages in compensation of the bad faith manner of his dismissal, or for punitive damages.

[170] The parties have jointly agreed that costs in the amount of $60,000.00, inclusive of HST and disbursements, shall be awarded to the successful party. On this basis, the Plaintiff is entitled to his costs in this action in the amount set out above.

Archibald J.

Released: January 7, 2015

CITATION: Ciszkowski v. Canac Kitchens, 2015 ONSC 73

COURT FILE NO.: CV-08-346585PD3

DATE: 20150107

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Kazimierz Ciszkowski

Plaintiff

– and –

Canac Kitchens, a division of Kohler Canada Co.

Defendant

REASONS FOR JUDGMENT

Archibald J.

Released: January 7, 2015