COURT FILE NO.: CV16-228
DATE: 20180405
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Jim Quigley
John A. Tamming, for the Plaintiff
Plaintiff
- and -
Greyfair Flooring Inc.
Erroll G. Treslan, for the Defendant
Defendant
HEARD: March 28 & 29, 2018
REASONS FOR JUDGMENT
Conlan J.
I. Introduction
The Legal Issues
[1] Was the Plaintiff, Jim Quigley (“Quigley”), constructively dismissed by his employer, the Defendant, Greyfair Flooring Inc. (“Greyfair”)?
[2] If so, what are Quigley’s damages? More specifically, the reasonable notice period? Damages for mental distress?
[3] Note that mitigation of damages is not an issue in this case.
The Onus and the Standard of Proof
[4] The civil standard of proof is on a balance of probabilities (more likely than not). Quigley carries the legal burden to prove both liability and damages.
The Litigants
[5] Quigley is currently 63 years old. He has a grade 12 education. He started with Greyfair in 1982; he left voluntarily in 1988; he returned in September 1993; his last day worked was August 13, 2016.
[6] Currently, he works part-time at an automotive parts business in Owen Sound.
[7] Greyfair is a flooring company with locations in Owen Sound, Port Elgin and Wiarton, Ontario.
The Positions of the Parties
[8] In his Amended Claim, Quigley sought a declaration that he was constructively dismissed by Greyfair, damages equal to thirty (30) months’ pay in lieu of notice, plus $75,000.00 in unpaid wages, plus $75,000.00 for mental distress, plus $75,000.00 for aggravated and punitive damages, plus interest and costs.
[9] The 30 months’ pay in lieu of notice has now been reduced to 23 months. And the total damages being sought have been calculated by Quigley’s counsel to be either $90,000.00 or $97,000.00, approximately, depending on which method is used to deal with mitigation earnings, plus whatever the Court deems appropriate for mental distress and moral damages.
[10] On the latter point of damages for mental distress, in closing argument, Mr. Tamming suggested $20,000.00 in favour of Quigley.
[11] The Amended Claim alleged that Quigley was a salesman for Greyfair for 23 years. He was Greyfair’s best salesperson. In 2015, he earned $62,400.00, with his remuneration being exclusively commission-based.
[12] The pleading alleged that Greyfair, in unilaterally altering Quigley’s commission rate, his level of seniority, his vacation pay and his compensation package generally, constructively dismissed him. That was done in June 2016.
[13] In closing arguments, Mr. Tamming focused on two words: “fundamental” and “unilateral”. In June 2016, by way of a letter to Quigley from its counsel, Greyfair unilaterally altered the terms of his employment. And those changes were fundamental in that they involved Quigley’s compensation and his level of seniority.
[14] In its most recent Amended Defence, Greyfair raised a limitation period issue. It denied any constructive dismissal. It alleged that Quigley voluntarily resigned on January 18, 2017 and received a payment from Greyfair the next day.
[15] The limitation period issue was not pressed at all in oral submissions by Mr. Treslan. In fact, he stated that it is unnecessary for the Court to rule on the point, likely because the “with prejudice” payment that Greyfair has already made to Quigley, on account of alleged unpaid commissions, takes care of the matter.
The Disputed Facts
[16] In order to decide the legal issues in this case, there are three major factual points that this Court must resolve.
[17] First, there is a dispute between the parties as to the length of Quigley’s service, 23 years (Quigley) or 16 years (Greyfair).
[18] Second, the parties have conflicting positions on whether Quigley was ever supposed to be paid or was in fact paid commission on the sales of flooring underpads (Quigley says yes, and Greyfair says no). In closing submissions, Mr. Treslan argued that it is unnecessary for the Court to decide that point. I disagree. In order to gauge whether correspondence sent to Quigley by counsel for Greyfair in June 2016 amounted to constructive dismissal, and more specifically in order to determine whether the said letter sought to reduce Quigley’s compensation, it is required that the issue regarding commissions actually paid to Quigley on underpad sales be determined. Otherwise, there is a factual vacuum as to whether the said correspondence set out a term about commissions on underpad sales that was better, the same or worse for Quigley than what had preceded the said letter.
[19] Third, the parties do not agree on whether Quigley was ever supposed to be paid or was in fact paid commission on the sales of accessories (Quigley says yes, while Greyfair says no).
The Meaning of Constructive Dismissal
[20] “The doctrine of constructive dismissal holds that an employer who radically changes the nature of an employee’s work may, in appropriate circumstances, be held to have ‘constructively’ dismissed the employee”. Canada Safeway Ltd. v. RWDSU, Local 454, [1998] 1 S.C.R. 1079, 1998 780 (S.C.C.), at paragraph 79.
[21] More recently, the Supreme Court of Canada summarized the law regarding constructive dismissal at paragraphs 30 through 43 of its decision in Potter v. New Brunswick Legal Aid Services Commission, [2015] 1 S.C.R. 500, 2015 SCC 10:
[30] When an employer’s conduct evinces an intention no longer to be bound by the employment contract, the employee has the choice of either accepting that conduct or changes made by the employer, or treating the conduct or changes as a repudiation of the contract by the employer and suing for wrongful dismissal. This was clearly stated in Farber, at para. 33, the leading case on the law of constructive dismissal in Canada. See also In re Rubel Bronze and Metal Co. and Vos, [1918] 1 K.B. 315, at p. 322. Since the employee has not been formally dismissed, the employer’s act is referred to as “constructive dismissal”. The word “constructive” indicates that the dismissal is a legal construct: the employer’s act is treated as a dismissal because of the way it is characterized by the law (J. A. Yogis and C. Cotter, Barron’s Canadian Law Dictionary (6th ed. 2009), at p. 61; B. A. Garner, ed., Black’s Law Dictionary (10th ed. 2014), at p. 380).
[31] The burden rests on the employee to establish that he or she has been constructively dismissed. If the employee is successful, he or she is then entitled to damages in lieu of reasonable notice of termination. In Farber, the Court surveyed both the common law and the civil law jurisprudence in this regard. The solutions adopted and principles applied in the two legal systems are very similar. In both, the purpose of the inquiry is to determine whether the employer’s act evinced an intention no longer to be bound by the contract.
[32] Given that employment contracts are dynamic in comparison with commercial contracts, courts have properly taken a flexible approach in determining whether the employer’s conduct evinced an intention no longer to be bound by the contract. There are two branches of the test that have emerged. Most often, the court must first identify an express or implied contract term that has been breached, and then determine whether that breach was sufficiently serious to constitute constructive dismissal: J. R. Sproat, Wrongful Dismissal Handbook (6th ed. 2012), at p. 5-5; P. Barnacle, Employment Law in Canada (4th ed. (loose-leaf)), at §§13.36 and 13.70. Typically, the breach in question involves changes to the employee’s compensation, work assignments or place of work that are both unilateral and substantial: see, e.g., G. England, Individual Employment Law (2nd ed. 2008), at pp. 348-56. In the words of McCardie J. in Rubel Bronze, at p. 323, “The question is ever one of degree.”
[33] However, an employer’s conduct will also constitute constructive dismissal if it more generally shows that the employer intended not to be bound by the contract. In applying Farber, courts have held that an employee can be found to have been constructively dismissed without identifying a specific term that was breached if the employer’s treatment of the employee made continued employment intolerable: see, e.g., Shah v. Xerox Canada Ltd. (2000), 2000 2317 (ON CA), 131 O.A.C. 44; Whiting v. Winnipeg River Brokenhead Community Futures Development Corp. (1998), 1998 19422 (MB CA), 159 D.L.R. (4th) 18 (Man. C.A.). This approach is necessarily retrospective, as it requires consideration of the cumulative effect of past acts by the employer and the determination of whether those acts evinced an intention no longer to be bound by the contract.
[34] The first branch of the test for constructive dismissal, the one that requires a review of specific terms of the contract, has two steps: first, the employer’s unilateral change must be found to constitute a breach of the employment contract and, second, if it does constitute such a breach, it must be found to substantially alter an essential term of the contract (see Sproat, at p. 5-5). Often, the first step of the test will require little analysis, as the breach will be obvious. Where the breach is less obvious, however, as is often the case with suspensions, a more careful analysis may be required.
[35] In Farber, Gonthier J. identified such a change as a “fundamental breach”. The term “fundamental breach” has taken on a specific meaning in the context of exclusionary or exculpatory clauses: see, e.g., Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69, at paras. 104-23. To avoid confusion, I will therefore use the term “substantial breach” to refer to breaches of this nature. The standard nevertheless remains unchanged — a finding of constructive dismissal requires that the employer’s acts and conduct “evince an intention no longer to be bound by the contract”: Rubel Bronze, at p. 322, citing General Billposting Co. v. Atkinson, [1909] A.C. 118 (H.L.), at p. 122, per Lord Collins, quoting Freeth v. Burr (1874), L.R. 9 C.P. 208, at p. 213.
[36] The two-step approach to the first branch of the test for constructive dismissal is not a departure from the approach adopted in Farber. Rather, the situation in Farber was one in which the identification of a breach required only a cursory analysis. The emphasis in Farber was on the second step of this branch, as the evidentiary foundation for the perceived magnitude of the breach was the key issue in that case. However, the identification of a unilateral act that amounted to a breach of the contract was implicit in the Court’s reasoning. In many cases, this will be sufficient. The case at bar, however, is one in which the claim can be properly resolved only after both steps of the analysis have been completed.
[37] At the first step of the analysis, the court must determine objectively whether a breach has occurred. To do so, it must ascertain whether the employer has unilaterally changed the contract. If an express or an implied term gives the employer the authority to make the change, or if the employee consents to or acquiesces in it, the change is not a unilateral act and therefore will not constitute a breach. If so, it does not amount to constructive dismissal. Moreover, to qualify as a breach, the change must be detrimental to the employee.
[38] This first step of the analysis involves a distinct inquiry from the one that must be carried out to determine whether the breach is substantial, although the two have often been conflated by courts in the constructive dismissal context. Gonthier J. conducted this inquiry in Farber, in which an employee had been offered a new position that was found to constitute a demotion. He stated that “the issue of whether there has been a demotion must be determined objectively by comparing the positions in question and their attributes”: Farber, at para. 46.
[39] Once it has been objectively established that a breach has occurred, the court must turn to the second step of the analysis and ask whether, “at the time the [breach occurred], 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” (Farber, at para. 26). A breach that is minor in that it could not be perceived as having substantially changed an essential term of the contract does not amount to constructive dismissal.
[40] The kinds of changes that meet these criteria will depend on the facts of the case being considered, so “one cannot generalize”: Sproat, at p. 5-6.5. In each case, determining whether an employee has been constructively dismissed is a “highly fact-driven exercise” in which the court must determine whether the changes are reasonable and whether they are within the scope of the employee’s job description or employment contract: R. S. Echlin and J. M. Fantini, Quitting for Good Reason: The Law of Constructive Dismissal in Canada (2001), at pp. 4-5. Although the test for constructive dismissal does not vary depending on the nature of the alleged breach, how it is applied will nevertheless reflect the distinct factual circumstances of each claim.
[41] The uniqueness of the application of this first branch of the test is evident in cases involving administrative suspensions. In all cases, the primary burden will be on the employee to establish constructive dismissal, but where an administrative suspension is at issue, the burden will necessarily shift to the employer, which must then show that the suspension is justified. If the employer cannot do so, a breach will have been established, and the burden will shift back to the employee at the second step of the analysis.
[42] The second branch of the test for constructive dismissal necessarily requires a different approach. In cases in which this branch of the test applies, constructive dismissal consists of conduct that, when viewed in the light of all the circumstances, would lead a reasonable person to conclude that the employer no longer intended to be bound by the terms of the contract. The employee is not required to point to an actual specific substantial change in compensation, work assignments, or so on, that on its own constitutes a substantial breach. The focus is on whether a course of conduct pursued by the employer “evince[s] an intention no longer to be bound by the contract”: Rubel Bronze, at p. 322. A course of conduct that does evince such an intention amounts cumulatively to an actual breach. Gonthier J. said the following in this regard in Farber:
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. [para. 33]
[43] Thus, constructive dismissal can take two forms: that of a single unilateral act that breaches an essential term of the contract, or that of a series of acts that, taken together, show that the employer no longer intended to be bound by the contract. The distinction between these two forms of constructive dismissal was clearly expressed by Lord Denning M.R. in a leading English case, Western Excavating (ECC) Ltd. v. Sharp, [1978] 1 All E.R. 713 (C.A.). First of all, an employer’s conduct may amount to constructive dismissal if it “shows that [he] no longer intends to be bound by one or more of the essential terms of the contract”: p. 717. But the employer’s conduct may also amount to constructive dismissal if it constitutes “a significant breach going to the root of the contract of employment”: ibid. In either case, the employer’s perceived intention no longer to be bound by the contract is taken to give rise to a breach.
The Trial
[22] This trial was heard over two days in Owen Sound in late March 2018. For the Plaintiff, I heard testimony from just Quigley. For the Defendant, I heard testimony from Ony Rahemtulla (“Ony”) and Marilyn Mackinnon (Greyfair’s “bookkeeper”).
[23] Ony, 79 years-old, is the President of Greyfair. He was at all material times the effective boss of Quigley. The bookkeeper, 69 years old, has more than four decades of experience in the industry.
II. Analysis
An Unusual Case
[24] In many ways, this case is a mess. How could both the worker and the employer not realize that the worker, supposed to be strictly on commission, seemed to be getting paid each year based on something that was not a percentage of gross sales? It is inexplicable.
[25] How could the bookkeeper not know that Quigley was not on a salary but receiving a draw towards anticipated commission income? It is absurd.
[26] Yet, on the evidence, both of the above notions are true.
[27] Why do we have internal Greyfair documents (Exhibit 11, page 3) that show a commission rate for Quigley of 5.05% when the rate was supposed to be 5.5%? Especially when Ony testified that he has no memory of Quigley ever agreeing to a 5.05% commission rate. It is bizarre.
[28] How can Ony testify that Quigley always knew or understood that he would not be paid on underpads when Ony testified that he cannot recall a single discussion that he ever had with Quigley about commissions on underpad sales? It makes no sense.
[29] In any event, let us move on from the mess, analyze what is not in dispute and resolve what is.
The Facts Not in Dispute
[30] There is no dispute that Quigley’s pay was 100 per cent commission-based. His draw was increased over the years of his service with Greyfair and was $1200.00 per week by the time that his service ended.
[31] It is undisputed that Quigley was a good salesman. Greyfair’s best, actually. He often had gross sales in excess of one million dollars. It is also common ground that Quigley and Ony were very close.
[32] There is no dispute that, in 2015 (the last full year worked), Quigley’s gross employment income from Greyfair was $62,400.00.
[33] It is undisputed that, when Quigley returned to Greyfair in 1993, he was hired as an independent contractor (not an employee). In 1999, a Contract for Services was entered into (Exhibit 4). Quigley continued as an independent contractor.
[34] That Contract was never amended. Besides a later change in Quigley’s status with Greyfair, referred to below, and changes to his commission rate, Exhibit 4 remained intact until Quigley’s service with Greyfair ended in 2016. Those admissions were made by Quigley in cross-examination at trial. In addition, we know from the face of Exhibit 4, clause 12, that any amendments to the Contract were required to be in writing, and no such writing exists.
[35] There is no dispute that, in 2000, Quigley’s status changed from an independent contractor to an employee. The change was at the instance of Greyfair and had something to do with government legislation that required that persons who worked in the store, like Quigley, be classified as employees. Other than the official change in status, things carried on as they had previously.
The First Disputed Item – Length of Service
[36] Thus, between 2000 and 2016, Quigley was officially described as an employee. That is agreed between the parties. What is not agreed is the total length of his service. Twenty-three years, starting in 1993, as suggested by Quigley? Or 16 years, starting in 2000, as suggested by Greyfair?
[37] There was an important admission made by Ony during his cross-examination at trial. He agreed with the suggestion by Mr. Tamming that the official change of Quigley’s status to an employee in the year 2000 was, at least in part, a reflection of the fact that Quigley had always been an employee for all intents and purposes, except in title.
[38] On the other hand, in closing submissions, Mr. Treslan pointed out clause 4, on page 2, of Exhibit 4 (the Contract for Services):
- Prior Agreements
The parties acknowledge that this Agreement replaces and supercedes any and all previous Agreements. Both parties upon signing this document agree that arrangements prior to January 1, 1999 have been fulfilled and both parties agree to release and save harmless the other party from any and all claims or demands arising under agreements for periods prior to January 1, 1999.
[39] Mr. Treslan submits that the said clause essentially wiped-out Quigley’s former years of service, enabling Greyfair to treat him as a 16-year worker.
[40] On the length of Quigley’s service, I agree with the Plaintiff. He ought to be treated as having 23 years of employment.
[41] There are two reasons for that conclusion. First, Ony’s own evidence suggests that Quigley was, in all respects except official title, an employee of Greyfair since 1993. But for an official change in status to an employee in 2000, nothing changed for Quigley. Nothing. His duties remained as they had since 1993. He continued to work exclusively for Greyfair, as he had since 1993. He continued to work mainly at the Owen Sound store, as he had since 1993. Greyfair continued to supply Quigley with all of the necessary tools and equipment, as it had since 1993.
[42] To adopt the position of Greyfair would result in an injustice. It would effectively ignore Ony’s own evidence that, for all intents and purposes, Quigley had always been an employee of the company. It would rob Quigley of six years of service based on a technicality of official employment status for government purposes.
[43] Second, clause 4 of Exhibit 4 does not assist Greyfair. Its wording is not clear enough to amount to a waiver by Quigley of six years of service with the company. Besides, seniority is not, by itself, a “claim or demand” arising from any prior agreement between the parties. Finally, it would be highly inequitable and unreasonable to hold that clause against Quigley while granting immunity to Greyfair for never having complied with clause 12 of the same Contract for Services. That provision required that any amendment to Exhibit 4 be in writing, which term the employer never addressed after 1999 despite changes having occurred.
The Second Disputed Item - Compensation, including Commissions on Underpad Sales
[44] Quigley acknowledges that, even though his pay was commission-based and he knew that his weekly draws were not intended to be exact forecasts of what his annual income would be, he never kept his sales records and never tried to reconcile his sales with his annual draws over the years. Further, before the Spring of 2016, although he knew where they were kept, Quigley never asked anyone at Greyfair to see his sales records.
[45] It is common ground that Quigley did, at one time, calculate his own commissions. For some reason, he stopped doing that.
[46] Quigley testified that, when he received his T4s over the years, it never occurred to him as strange or unusual that his pay always reflected his annual draws, plus bonuses, plus vacation pay (as opposed to some other figure that represented a percentage of gross sales).
[47] Ony testified that Greyfair never performed reconciliations either. I accept that evidence. But for 2001 and 2002, when the bookkeeper did them at Ony’s request, no reconciliations were done until 2016. The 2001 and 2002 reconciliations (Exhibit 28) show that Quigley was actually overpaid in both years.
[48] According to Quigley, he started to become concerned about the accuracy of his pay when it came time to do his taxes in the Spring of 2016. He could not understand why his pay seemed to be going down even though his sales were strong. He eventually spoke with the bookkeeper. She told him that he had not been paid for underpad (which goes underneath flooring products). That surprised him, as he thought that he had. He always believed that his deal with Greyfair included being paid commission on underpad sales.
[49] I pause here to note that the bookkeeper was asked about that alleged discussion with Quigley. She had no recollection of it.
[50] Later, Quigley discovered that, in fact, he had been paid for underpad sales between 2000 and 2008. Ony, in his testimony, agreed with that, except that Ony was adamant in saying that Quigley was never intended to be paid for underpad sales.
[51] It turns out that both Quigley and Ony are mistaken about Quigley having actually been paid anything for underpad sales, ever.
[52] We must take note of what Quigley’s T4s show, notwithstanding Ony’s seeming admission that Quigley was paid commissions on underpad sales up until and including 2008. No reconciliations were done for most of those years. And, as alluded to earlier in these Reasons, the T4s show incomes for Quigley that are simply tallies of his annual draws, bonuses and vacation pay. The income figures on the T4s are not percentages of gross sales. They cannot be. It is impossible that Quigley’s draws over the years exactly matched what his commissions on gross sales actually were.
[53] In cross-examination at trial, Quigley acknowledged that he has no documentation that states that he was ever to be paid for underpad sales.
[54] On the disputed issue of whether Quigley was in fact ever paid for underpad sales, I agree with Greyfair. He was not. The tax documents speak for themselves. Quigley’s gross annual income was always calculated on the bases of his draws, bonuses and vacation pay.
[55] It is unnecessary to address the query of whether Quigley ought to have been paid for underpad sales. If Quigley is correct that a part of the deal was that he be paid for underpad sales, that is not relevant to whether he was constructively dismissed. Why not? Because the issue is whether the letter from Greyfair’s counsel to Quigley in June 2016 (Exhibit 10) amounted to a substantial (or fundamental) change in the terms of Quigley’s employment, which terms obviously include compensation and, hence, include commissions on the sales of underpads. Assuming without deciding that Quigley was supposed to be earning more than 3% commission on underpad sales before June 2016, it matters not that Exhibit 10 cut that commission rate to 3% as the said cut in no way reduced Quigley’s actual pay in that he never did, in fact, get paid for underpad sales.
[56] It might be different if Quigley could not reasonably have been expected to know that he was not getting paid for underpad sales. That is not our situation. He ought to have known all along. One cursory look at any T4 over the many years would have clearly shown any reasonable reader that the employee was getting paid without any regard for actual gross sales in any given year.
The Third Disputed Item - Constructive Dismissal: “the letter”
[57] Things deteriorated between Quigley and Greyfair throughout 2016. In or about late March of that year, there was a meeting at Ony’s office. There was a major disagreement between the parties about whether Quigley was supposed to have ever been paid for underpad sales.
[58] In any event, Quigley remained with Greyfair. In June 2016, Greyfair’s lawyer sent a letter to Quigley (Exhibit 10). That letter forms the basis of Quigley’s argument that he was constructively dismissed. He perceived the letter as changing his employment terms adversely, in three respects.
[59] First, he was to be paid 3% (rather than 6.5%) commission on underpad sales.
[60] Second, he was to be paid nothing for sales of accessories (which, presumably, would include things like sealers, mortar, and floor registers for heating, as examples). Quigley estimated that he brought home between $2000.00 and $8000.00 per year on sales of accessories, something highly doubted by Ony. Besides, Ony testified that Quigley was never to be paid commission on sales of accessories, although for some unknown reason he was, in fact, wrongly paid such commissions for some period of time (that Quigley was paid some commissions on sales of accessories was confirmed by the bookkeeper in her trial testimony).
[61] Third, in the event that his employment was terminated, his seniority would be taken at 16 years (not 23 years).
[62] On the penultimate issue of whether Quigley was constructively dismissed by Greyfair, I agree with the company.
[63] The issue of underpad sales has already been addressed above. Exhibit 10 did not result in any adverse change in what Quigley would get paid on the sales of underpads, never mind a material adverse change.
[64] On the issue of commissions on the sales of accessories, Quigley’s evidence at trial was too uncertain on what he had been getting paid on the sales of accessories. He has no records of any kind that are relevant to the determination. His estimate of what he earned per year was vague and loose.
[65] Thus, I am not able to safely determine whether Exhibit 10 amounted to much of a change at all in Quigley’s income from the sales of accessories.
[66] On the issue of Quigley’s length of service, Exhibit 10 fundamentally changed Quigley’s seniority from 23 to 16 years. That was a marked reduction. A significant reduction. As Justice Wagner put it in Potter, supra, a substantial change.
[67] Besides money, few if any things in the context of an employment relationship are more essential, more important, than the worker’s seniority. Length of service is a badge of honour in many workplaces. It is perceived, and often is in fact, relevant to other aspects of employment like pay, responsibilities, decision-making authority, preferences for vacation time, amount of vacation time, and so on. It is also relevant to most workers on a more personal level in that it can contribute to a sense of self-worth and accomplishment.
[68] We see this across various jobs/professions. We all know of workers who have received gifts or formal recognition for their length of service, as an example. We all know of professions where seniority is recognized in even the smallest of ways, such as how the list of names is organized on the page when a memo comes out from headquarters.
[69] Most important, however, seniority is directly linked to what a worker can reasonably expect to receive in notice or pay in lieu of notice in the event of dismissal. In that sense, seniority is inextricably linked with job security. It is only common sense that, all other things equal, an employer will be less willing to dismiss a more senior employee than a more junior one because the former is very likely a more expensive proposition.
[70] Here, Greyfair’s change to Quigley’s effective seniority was all the more substantial because it not only stripped him of six years but also appeared to make the change permanent for as long as Quigley remained employed with the company. One has to read clause 4 on page 3 of Exhibit 10 carefully. There is no time-limit on the termination. It could, on its face, mean that, for instance, Quigley works for another ten years but is still only entitled to 16 months of notice or pay in lieu of notice at the time of termination.
[71] Now, common sense may dictate that the clause was not intended to operate that way and would not be interpreted that way down the road. But who knows. And why would Quigley necessarily have known that when he received Exhibit 10?
[72] It is clear that the length of his service with the company was a significant issue for Quigley. We know that, for example, from Exhibit 11, the letter from his then counsel (not Mr. Tamming) in response to Exhibit 10. There is an express reference in Exhibit 11 (at page 2) to the length of service being 23 and not 16 years. Quigley’s testimony at trial reinforced the importance of his seniority to him.
[73] Objectively, any reasonable person in his shoes at the time would have considered clause 4 on page 3 of Exhibit 10 to have substantially (or fundamentally) altered, adversely, the terms of his or her employment.
[74] The problem for Quigley, however, is that, although I see the reduction in his length of service as being fundamental, I do not see it as constituting a unilateral change. Counsel for Quigley fairly acknowledged in closing argument that, to succeed in his claim for constructive dismissal, any change had to be both fundamental and unilateral. Counsel for both sides spent more time on the first ingredient, but the second is an equally important part of the recipe. And it is lacking here when one looks at the entire context.
[75] The context is this. Exhibit 10 outlined certain employment terms that “will” be implemented by Greyfair approximately two weeks hence. “Will” connotes something mandatory. But the concluding sentence of Exhibit 10 clearly invites a response from Quigley if he felt that the terms were to his detriment. There was a response on behalf of Quigley – Exhibit 11. And that response, as alluded to above, did address the specific issue of the length of Quigley’s service with the company. Then there was a reply to Exhibit 11 from Greyfair’s counsel – Exhibit 17 (note that all of these lawyer letters were entered at trial on the express consent of both sides). In that reply, certain things proposed in Exhibit 11 were expressly and unequivocally rejected by the employer, such as the provision to Quigley of a company vehicle. But the suggestion of Quigley having 23 rather than 16 years of service was not rejected by the employer. Set out below is the entire middle paragraph on page 2 of Exhibit 17:
Greyfair will not be changing the existing terms of Mr. Quigley’s employment to pay him an hourly wage or provide him with the use of a company vehicle. Effective July 2, 2016, Greyfair has implemented the terms of employment described in my June 20, 2016 letter to Mr. Quigley (with the exception that no commission will be payable on LVT sales to Barry’s Construction – we are advised that Mr. Quigley has already agreed to this). If Mr. Quigley is suggesting that any of those terms are less generous than the existing unwritten terms of his employment immediately prior to July 2, 2016, please let us know. Your letter suggested that Mr. Quigley was hired in 1993 and not in 2000. This is contrary to what Mr. Quigley told our client during a meeting several weeks ago. Specifically, he told them that he became an employee in 2000 and prior to 2000 he had been an independent contractor. Our client is currently looking for records to confirm the exact date on which he became an employee. Of course, Mr. Quigley’s income tax returns should clarify when he began receiving T4 income from Greyfair – could you please provide us with this information because his tenure as an employee will obviously determine his entitlement to notice in the event that his employment is terminated without cause in the future.
[76] As can be seen, Quigley’s “tenure as an employee”, and thus his “entitlement to notice”, was left open by Greyfair, for more discussion between both sides. I am not aware of Quigley or anyone on his behalf ever having pursued the issue further. Specifically, I am not aware of Quigley or anyone on his behalf ever having tried to persuade Greyfair of what this Court was asked to (and does) accept – that Quigley’s length of employment ought not to be confined strictly to the years that he was technically classified as an employee but rather should go back to the year 1993. I am not aware of Quigley or anyone on his behalf suggesting that the issue of the length of his service be referred to an arbitrator (note that arbitration was offered in Greyfair’s first letter, Exhibit 10, and was mentioned again in Exhibit 17).
[77] Rather, Quigley continued to work for Greyfair for a while, went off on sick leave in August 2016, and then resigned in January 2017.
[78] A plain interpretation of the word “unilateral” includes something that is not mutual and that is imposed by x against y. Every definition that this Court has examined supports that view, including those found in both the Oxford and Merriam-Webster online dictionaries and that found in Black’s Law Dictionary.
[79] Clause 4 of Exhibit 10, the reference by Greyfair in June 2016 to the length of Quigley’s service, was, among other things, silly. But it was not some decree of imposition. It was, unlike certain other aspects of Exhibit 10, the subject of further discussion between the parties, as made clear by Exhibit 17.
[80] I find that Greyfair did not unilaterally change, or direct a change to, Quigley’s length of service with the company, and thus, Quigley’s claim for constructive dismissal cannot succeed.
[81] A final note on this issue. The importance of the change being “unilateral”, meaning a decision by one side that imposes something on the other, is made clear in the passages referred to above in the Potter, supra decision of the Supreme Court of Canada. Even if we consider clause 4 of Exhibit 10 as being a mandatory stipulation that seeks to impose something on Quigley, we cannot ignore Exhibit 17. Clearly, Greyfair’s position on the length of Quigley’s service was not written in stone.
The End of the Employment Relationship
[82] Although strictly unnecessary to do so, I will examine the rest of the chronology of events in order to make findings for the benefit of any reviewing Court.
[83] Unfortunately, on August 15, 2016, Quigley had a nervous breakdown. He went to the hospital. He saw his family physician. He went to several counselling sessions. He even saw a psychiatrist. He was prescribed stronger medication than the mild anti-depressant that he had been taking for about 15 years up to that point.
[84] On January 18, 2017, Quigley resigned. His letter is marked Exhibit 15. He never returned to work after August 15th.
[85] Currently, Quigley is employed with KC Automotive in Owen Sound (actually, that business has recently been bought by another outfit and goes by a different name, but it was often referred to during the trial as “KC Automotive”). He earns $14.00 per hour. He started in January 2017. He works about 25 hours per week. He is currently off because of a recent surgery (unrelated to this litigation) but expects to resume his duties soon.
[86] He tried but was unsuccessful in getting another job in the flooring industry.
[87] Exhibit 26 proves Quigley’s income, in mitigation, in 2017. There is no dispute between the parties on that point.
[88] If I am wrong about whether Quigley was constructively dismissed, I would have found that he was entitled to 23 months’ notice. I would have fixed his damages at 23 months’ pay in lieu of notice, using the gross annual income figure from 2015, $62,400.00. I would have made no reduction for any failure to mitigate, but I would have made adjustments for what Quigley did earn during the 23-month notice period commencing in January 2017 (Exhibit 26). I would have awarded Quigley aggravated damages for mental distress in the range of $10,000.00, as I would have found a clear causal link between the dismissal and the hospitalization, mental health counselling and strengthened medication. I would not have awarded any punitive damages. The usual interest provisions under the Courts of Justice Act would have applied to the judgment, and I would have invited submissions from counsel on the issue of costs.
III. Conclusion
[89] For all of the above reasons, I find that Quigley has failed to prove on balance that he was constructively dismissed by Greyfair. His claim is therefore dismissed.
[90] On costs, if they are not settled between the parties, counsel may file written submissions. Each submission shall be limited to two (2) pages in length, excluding attachments. Greyfair shall file within ten (10) business days of the release of these Reasons, and Quigley shall file within five (5) business days thereafter. There shall be no reply without leave of the Court.
[91] I would encourage Greyfair to consider the reasonableness, or not, of clause 4 of Exhibit 10. That may influence the Court’s decision on costs.
Conlan J.
Released: April 5, 2018
COURT FILE NO.: CV16-228
DATE: 20180405
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Jim Quigley
Plaintiff
- and -
Greyfair Flooring Inc.
Defendant
REASONS FOR JUDGMENT
Conlan J.
Released: April 5, 2018