Court File and Parties

COURT FILE NO.: 2080/10 DATE: 2017/05/11

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Richelle Milloy, Plaintiff Margaret A. Hoy, for the Plaintiff

- and -

Complex Services Inc., Defendant Mitchell R. Smith, for the Defendant

HEARD at Welland, Ontario: January 9, 10, 11, 12, 13, 16, 17, 18, 19 & 20, 2017

The Honourable Justice T. Maddalena

REASONS FOR JUDGMENT

Motion for Leave to Amend Statement of Claim

[1] At the very beginning of the trial, the plaintiff sought leave to bring a motion to amend the Amended Statement of Claim in order to plead damages for breach of s.5(1) of the Ontario Human Rights Code.

[2] After hearing submissions of both parties, I granted leave to the plaintiff, pursuant to rule 48.04 of the Rules of Civil Procedure, to bring the requested motion. I heard the motion submissions on the second day of trial, being January 10, 2017. On January 11, 2017, I delivered my oral reasons for dismissing the plaintiff’s motion to amend the Amended Statement of Claim at trial. Costs of this motion were reserved as part of the trial costs.

Issues not Disputed in this Trial

[3] The parties agreed that the following were not disputed issues in this litigation:

• This is not a case involving dismissal for cause;
• The defendant Complex Services Inc. is not contesting the post-employment mitigation efforts of the plaintiff;
• The defendant is not contesting the right shoulder disability of the plaintiff;
• The plaintiff at the beginning of the trial conceded that accommodation by the defendant was not in issue. Later the plaintiff qualified that concession by stating that the lack of accommodation on June 3, 2010 was still at issue.

The Plaintiff’s Position

[4] The plaintiff (hereinafter referred to as “Milloy”) seeks general damages for breach of contract for wrongful dismissal.

[5] The plaintiff denies frustration of contract as pleaded by the defendant (hereinafter referred to as “Complex Services”).

[6] The plaintiff stated that at the time the contract of employment was first entered into between the plaintiff and the defendant, it was not for the position of table games dealer, but rather for the position of hostess, “with the understanding that it may evolve into other positions including that of dealer. As such, Milloy’s disability did not frustrate the original contract of employment.” [1]

[7] The plaintiff further denies that the contract of employment was frustrated when the plaintiff could no longer perform the duties of a table games dealer. The plaintiff states that if that was the case, then the plaintiff claims that the employment relationship would have severed at April 1, 2008. However, the plaintiff continued employment with the defendant in various modified positions until June 3, 2010.

The plaintiff submits that Complex Services breached its duty to her on June 3, 2010 when it ended the relationship without notice and she is, therefore, entitled to appropriate damages for wrongful dismissal.

The Defendant’s Position

[8] The defendant Complex Services submits that this is a simple case of frustration of contract due to Milloy’s permanent medical impairment of her right shoulder which prevents her from going back to her employment as a table games dealer. This permanent disability, confirmed by the plaintiff’s own physician, prevented her from carrying out the work for which she was hired, that is, table games dealer.

[9] Therefore, frustration of contract crystallized on the 1st of April 2008 when orthopedic surgeon, Dr. Ostrowski, confirmed her permanent right shoulder disability.

[10] Further, Complex Services continued to provide modified jobs to Milloy for over two years before calling the contract at an end on the basis of frustration of contract.

[11] There are no contractual terms or policies requiring Complex Services to accommodate Milloy indefinitely, especially as she could not work as a table games dealer. Further, there are no policies requiring Complex Services to find her permanent employment after Milloy became disabled.

[12] In bringing her employment to an end, Complex Services is only required to provide Milloy with notice and severance pursuant to the Employment Standards Act, 2000, S.O. 2000, c.41 (hereinafter referred to as “ESA”), which it did. Therefore, nothing further is owed to Milloy by the defendant.

Background Facts

[13] The defendant Complex Services Inc. is a corporation incorporated pursuant to the laws of the Province of Ontario, and provides human resources and staffing services to Casino Niagara and Niagara Fallsview Casino Resort.

[14] The plaintiff, according to her evidence and not contradicted, was hired as a dealer in mid-1997 mainly in the high roller VIP lounge of the casino. She continued in this role until 1998 when she resigned. At this time she was teaching table games at her business known as “Gamex”. At Gamex, she was training dealers for the two Niagara casinos.

[15] Later the casinos started to train their own dealers in-house and her Gamex school closed.

[16] The plaintiff was hired by the defendant on or about October 1999 as a part-time hostess in the fine dining restaurant known as “Farfalle’s”. This restaurant was geared towards the VIP high rollers of the casino.

[17] Later, Farfalle’s was changed to the 21 Club, which was also fine dining.

[18] The plaintiff was also a hostess in the 21 Club. For her employment at the 21 Club, the plaintiff was required to take a six week culinary course, paid for by the casino, at Niagara College of Applied Arts and Technology, which the plaintiff did.

[19] The plaintiff states that both at Farfalle’s and at the 21 Club, although classified as part-time, she did work mainly fulltime hours as a hostess.

[20] When the casino started to downsize the 21 Club, the plaintiff volunteered to go to table games as a dealer due to her experience and training in table games. In February 2001 she commenced as a part-time table games dealer, and in February 2002 this employment commenced on a fulltime basis.

[21] As a dealer, the evidence is undisputed that Milloy often worked in the high rollers VIP lounge. She would often be requested by high rollers to work at their table.

[22] Milloy remained in the position of fulltime table games dealer until February 8, 2007 when Milloy provided Complex Services with a medical note from her physician, Dr. Bassil, requesting that she be placed on modified duties due to a work-related repetitive injury to her right shoulder.

[23] On February 9, 2007 Complex Services placed Milloy on modified duties.

[24] Milloy filed a WSIB claim for benefits. Her claim for benefits was denied on or about June 4, 2007.

[25] On July 23, 2007 Milloy underwent right shoulder surgery. She was placed on short-term disability leave up until October 31, 2007.

[26] By November 9, 2007 Milloy commenced a gradual return to work program, working only part of her daily duties as a table games dealer. The goal was a gradual back to work as a fulltime table games dealer.

[27] However, on April 1, 2008, orthopedic surgeon Dr. Ostrowski confirmed Milloy’s continuing right shoulder injury was permanent and indicated that Milloy could no longer work as a table games dealer.

[28] On June 19, 2008 Milloy was provided with long-term disability coverage which continued until on or about January 2010.

[29] Therefore, as of February 2007 Milloy was on modified duties and when not in receipt of either short-term disability benefits or long-term disability benefits, Milloy was paid her regular table games dealer wages, including tips.

[30] Her modified work duties included employment in the following departments:

• Uniform department;
• Accounting department;
• Junior buyer in the Purchasing department;
• Event Planning;
• Engineering/Dispatch;
• Engineering/Escorting department to assist with escorting contractors in the casino;
• Various office jobs, including stuffing envelopes, folding cards;
• Outdoors smoking patio;
• Office administration duties, including packing books in boxes and label on packages;
• Office work in compensation and benefits.

[31] The evidence is undisputed that Milloy did whatever she was asked to do during the period of her modified work duties.

[32] Milloy has stated that she was happy with the accommodation provided to her by Complex Services.

[33] It is undisputed evidence at trial that Milloy applied for somewhere between 16 to 22 jobs in the casino in order to attempt to secure alternate employment from that of table games dealer.

[34] Some of those jobs applied for included jobs for which she had previously qualified and held at the casino such as hostess in a fine dining restaurant. She also applied for, among other jobs, employment as a theatre usher and greeter for which she felt she was eminently qualified.

[35] On June 3, 2010 Milloy was notified that her employment came to an end as a result of and due to frustration of contract.

The Law on Frustration of Contract

[36] Where the defence of frustration of contract is raised by an employer, the burden of proof is on the employer to prove frustration of contract on the balance of probabilities. [2]

[37] In the case of Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, [2001] 2 S.C.R. 943, on p. 967 the Court held that the test for frustration of contract is as follows:

Frustration occurs when a situation has arisen for which the parties made no provision in the contract and performance of the contract becomes “a thing radically different from that which was undertaken by the contract”: Peter Kiewit Sons’ Co. v. Eakins Construction Ltd., [1960] S.C.R. 361, per Judson J., at p. 368, quoting Davis Contractors Ltd. v. Fareham Urban District Council, [1956] A.C. 696 (H.L.), at p. 729.

[38] In Duoing v. Linamar Corp. (c.o.b. Eston Manufacturing), 2010 ONSC 3159, [2010] O.J. No. 2314, the court confirmed at para. 33 as follows:

Frustration of a contract occurs whenever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. See Davis Contractors Ltd. v. Fareham Urban District Council, [1956] A.C. 696 at 728, per Lord Radcliffe.

[39] In the case of Skopitz v. Intercorp. Excelle Foods Inc., the court held at para. 21 as follows:

Whether a contract of employment has been frustrated by an employee’s illness or incapacity depends on whether or not the illness or incapacity was of such a nature or likely to continue for such a period of time that either the employee would never be able to perform the duties contemplated by the original employment contract or that it would be unreasonable for the employee to wait any longer for the employee to recover. To determine if a contract has been frustrated, regard must be had to the relationship of the term of the incapacity or absence from work to the duration of the contract, and to the nature of the services to be performed (Lafreniere v. Leduc (1990), 66 D.L.R. (4th) 577 (Ont. H.C.); Yeager v. R.J. Hastings Agencies Ltd. (1984), 5 C.C.E.L. 266 (B.C. S.C.)). …

[40] Similarly, in Fraser v. UBS, 2011 ONSC 5448, the court held in paras. 12-15 as follows:

[12] The issue of whether the termination of the employment contract of a disabled employee is the product of a wrongful dismissal or the frustration of the employment contract depends on the facts of the case. In many cases relied on by the plaintiff, the dismissal of a disabled employee has been held to have been a wrongful dismissal entitling the employee to damages, rather than a frustration of contract which would disentitle the employee to damages.

[13] However, not every dismissal based on a disability constitutes a wrongful dismissal. Particularly where the disability is permanent within the meaning of the caselaw, the court may determine that the circumstances amount to frustration of contract.

[14] The doctrine of frustration of contract is said to occur when “a situation has arisen for which the parties made no provision in the contract and the performance of the contract becomes ‘a thing radically different from that which was undertaken by the contract’”. Naylor Group Inc. v. Ellis-Don Construction Ltd., [2001] S.C.R. 943; 2001 SCC 58.

[15] In relation to employment contracts, where an employee is unable to work because of a disabling illness, the doctrine applies because the permanent disability renders performance of the employment contract impossible, such that the obligations of the parties are discharged without penalty. If there is frustration of contract, the termination is said to be by law, or automatic. Nothing need be done to terminate the contract. See Fazekas v. Ault Foods Ltd., [1989] O.J. No. 913 (S.C.).

Analysis

[41] Milloy’s permanent right shoulder injury is not in dispute. This injury prevented Milloy from continuing her job as a table games dealer. Complex Services has accommodated Milloy as is its duty to do so.

[42] Milloy performed all modified duties and the evidence is that she did all that was asked of her by Complex Services. The defendant’s own witness referenced Milloy as “a good employee”.

[43] I find Milloy to be a very credible witness and the evidence supports that she was an exemplary employee. However, this case does not turn so much on the credibility of witnesses as it does on whether the facts herein properly support the defence of frustration of contract raised by Complex Services.

[44] Milloy, in doing everything that was asked of her, updated her online profile with the defendant. She applied for some 16 to 22 jobs within the organization, while on modified duties. It is undisputed in evidence that she was only given three interviews and none of these resulted in job offers to her.

[45] Some of the jobs she applied for were jobs that she had previously held with the employer and received excellent reviews.

[46] For example, she applied for a hostess position in the fine dining restaurant, called Ponte Vecchio, or as a theatre usher or greeter, among others. Her evidence is that she felt very well qualified for many of the jobs for which she applied. Further, given her exceptional customer service experience and her stellar past performance, her evidence is she had every expectation that she would find alternate employment with Complex Services.

[47] I find that her disability need not have ended the employee/employer relationship in this instance and based on these facts. The court is permitted to consider the conduct of the employer. I do not agree that this is a straight forward case of frustration of contract.

[48] Ultimately, I find Milloy could perform other jobs that were advertised within the organization. She was not given the opportunity for reasons unknown to her or the court other than “there must have been someone more qualified”.

[49] I find this conduct on behalf of Complex Services to be a type of “self-induced frustration” on the part of the employer. Complex Services cannot rely on its own default or its own conduct to now justify and plead frustration of contract in law.

[50] In the case of Chilagan v. Island Lake Band No. 161, (1994), 3 C.C.E.L. (2d) 35 (Sask. Q.B.) the Saskatchewan Court of Queen’s Bench held that the doctrine of frustration cannot be applied where the party relying on the doctrine caused the event or occurrence upon which it is claimed that the contract has been terminated.

[51] At p. 45 the Saskatchewan Court of Queen’s Bench noted:

It is an established principle that the doctrine of frustration cannot be applied where the party relying on the doctrine caused the event or occurrence which he or she claims is the basis for the termination of the contract …

[52] In the case of Chilagan, the Band signed a teacher to four successive one-year contracts for a position she had already held for 10 years. After four years, the Band dismissed the teacher and hired her to be the school librarian for a one-year term. The Band later required the library space for a classroom and dismissed the teacher/librarian with seven months left in the school year. The teacher sued for wrongful dismissal. The action was allowed. The court held that the default relied upon by the Band was self-induced. The court also held that the elimination of the library space did not frustrate the librarian contract since the librarian could still have performed her duties with some minor adjustments, but the Band refused to explore any alternatives presumably due to financial considerations.

[53] During this trial, there was some clear evidence of alternate employment available to Milloy within the organization.

[54] Based on the evidence, I find, after her shoulder disability, she applied for other employment with Complex Services for which she was well-qualified, had performed in the past with this employer, and had an exemplary record, but the employer chose not to consider her.

[55] Therefore, the defence of frustration fails and, therefore, common-law reasonable notice is required.

[56] The defence of frustration fails also on a secondary ground. While on modified duties Milloy was asked to find alternate employment only within Niagara casinos. [Emphasis added.] At no time was she asked by Complex Services to seek employment outside the organization.

[57] Therefore, Milloy organized herself accordingly. As a result, all her inquiries regarding employment were within the organization. Again, Milloy believed there would be an alternate job for her within the organization.

[58] A three-month extension was given to her to assist her with more time to find employment within the organization, leading her to more clearly believe that there would be employment for her with Complex Services.

[59] Milloy believed this, in part, also because of the exceptional performance reviews she had received from Complex Services as a result of her past employment. Some of the examples of her performance reviews included the following:

• Friendly, courteous and attentive
• Good customer skills
• A role model to your fellow associates
• Went above and beyond in customer service
• Consistently works well, leads by example
• Delivers over and above expected requirements of the job
• Confident and proficient at all times
• Great customer service
• Valued member of our team
• Great team player
• Great representative of Casino Niagara
• Treats all guests with respect

[60] Further, based on the correspondence of October 30, 2009 from Complex Services to Milloy, Milloy was required to “actively participate in the work accommodation process”. According to the evidence, she complied with this. Further the correspondence noted, “If you are not successful in obtaining alternate employment by March 3, 2010 your file will be transferred to Human Resources for appropriate action in regards to your employment status.”

[61] There was no clear reference in this correspondence to her employment ending, but merely a reference to a referral to Human Resources.

[62] Milloy was making applications within the organization believing that she would have ultimately work within the organization. Further, the correspondence of February 22, 2010 confirmed the requirement that she seek employment “within Niagara Casinos”. It confirmed also a three-month extension, for her to seek within employment, to June 3, 2010.

[63] The correspondence of February 22, 2010 also stated, “If you are not successful in obtaining employment by June 3, 2010, we propose to proceed with employment cessation based on the frustration of your original employment contract with Complex Services.”

[64] This begs the question as to why Milloy was not told to look both within but also outside the organization. The correspondence does not advise her to look for employment outside the organization. It clearly led her to believe she would have employment within the organization.

[65] It is eminently unfair to Milloy to continue to advise her to look within the organization and then to tell her on June 3, 2010 that, as a result of her not obtaining alternate employment within, she was now compelled to look outside of the organization.

[66] Further, this termination occurred when she was coping with a disability and was at a vulnerable stage in her life.

[67] The employer’s action requires proper notice to her.

[68] I find that Complex Services had an obligation under the circumstances, therefore, to give reasonable common-law notice to Milloy. Under the circumstances, Complex Services cannot proceed on the defence of frustration of contract.

Reasonable Notice and Damages

[69] The test for the determination of reasonable notice is set out in the case of Bardal v. The Globe & Mail Ltd., 1960 O.J. No. 149 (ONHC). At p. 145, the court noted as follows:

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.

[70] Milloy was 46 years of age at the date of termination. Milloy had completed over 10 years of service at the date of June 3, 2010. Most of those years were in fulltime employment as a table games dealer. Milloy had received her 10-year certificate.

[71] Regarding the character of the employment at the time of Milloy’s injury, she was a table games dealer earning, with tips, approximately $835 weekly. Prior to that, she was a hostess in a fine dining restaurant.

[72] After her termination, the evidence is that Milloy applied for many positions but ultimately went back to school to retrain in order to obtain comparable paying employment. The plaintiff retrained in September 2015 by taking a medical laboratory technician course and a medical office procedures course. At the time of trial she was working in the area for which she retrained.

[73] The plaintiff seeks notice in the approximate range of 14 to 21 months. I do not agree with that assessment, and conclude that a 10-month pay in lieu of notice is appropriate under these circumstances.

[74] In the calculation of the 10-month’s pay in lieu of notice, I accept the evidence of Ms. Scaringi, the payroll manager at Complex Services who was called to give evidence on behalf of Milloy.

[75] I accept her calculations as to the plaintiff’s average weekly earnings in 2010 as at $834.37 weekly.

[76] I further accept Ms. Scaringi’s calculations that ESA termination pay and severance pay given to Milloy was $12,180.28.

[77] I further accept Ms. Scaringi’s evidence that the total average annual benefits costs for Milloy to Complex Services was $8,567.09. Therefore, a benefit accrual for 10 months is $7,139.24 and this should be added to Milloy’s damages.

Bonus

[78] Bonuses are discretionary and are paid by the employer in May of each year, but referable to the prior year. Milloy had received discretionary bonuses for the prior three years. According to the evidence, there is no issue with respect to Milloy’s work performance. In fact, there is evidence of good work performance.

[79] Milloy received the following bonus payments:

2008 Bonus (Fiscal Ending 3/31/0, paid 5/16/08) $ 750 2009 Bonus (Fiscal Ending 3/31/09, paid 5/13/09) $1,400 2010 Bonus (Fiscal Ending 3/31/10, paid 5/14/10) $1,000

[80] For 2011 she should receive a bonus of $1,050 (calculated as the average of 2008, 2009 and 2010) for fiscal ending 3/31/11.

Mitigation Earnings

[81] There are no earnings outside of the casino earnings for the year 2010. For 2011 there is only $1,157 of employment earnings. It is impossible to discern what part of the year it was earned. I conclude this is negligible and do not consider this towards mitigation earnings.

[82] Therefore, see Schedule “A” (attached) for the calculation of damages.

Judgment

[83] Judgment in favour of Milloy as calculated in Schedule “A” in the amount of $32,137.18.

Costs

[84] The parties shall make written submissions as to costs, limited to two pages, double-spaced, plus a bill of costs, together with any applicable offers to settle. The plaintiff’s costs submissions are due by May 25, 2017. The defendant’s costs submissions are due by June 8, 2017.

Maddalena J.

Released: May 11, 2017

SCHEDULE “A”

Average weekly earnings $834.37 X 4.33 = $ 3,612.82 monthly $3,612.82 monthly X 10 = $36,128.22 Less ESA paid $12,180.28 $23,947.93 Plus 10 months actual benefits value $ 7,139.24 Total $31,087.18 Plus Bonus of $1,050 $ 1,050.00

TOTAL $32,137.18

Footnotes

[1] Plaintiff’s Trial Brief, page 8

[2] Dragone v. Riva Plumbing Limited, [2007] O.J. No. 3710 (ONSC), para. 17