Court File and Parties

COURT FILE NO.: CV-18-00600775 DATE: 20200116 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: VIVIAN BERCOVICI Plaintiff (Respondent on Appeal) – and – ATTORNEY GENERAL OF CANADA Defendant (Appellant on Appeal)

Counsel: Natalie MacDonald and Kathryn Marshall, counsel for the Defendant (Appellant on Appeal) Barney Brucker and Ani Mamikon, counsel for the Plaintiff (Respondent on Appeal)

HEARD: DECEMBER 9, 2019

G. DOW, J.

Reasons for Decision

[1] The Attorney General of Canada seeks to overturn the finding by Master Graham, Reasons released on April 29, 2019, that the claims for damages by Vivian Bercovici arising from her dismissal as Canada’s Ambassador to Israel effective June 30, 2016 could proceed against Katie Telford, the Chief of Staff of the Prime Minister.

[2] The decision by Master Graham was part of a larger motion to include Katie Telford, as well as four other Canadian government officials, as defendants. These individuals were not identified in the Notice of Action Vivian Bercovici issued on June 29, 2018 against only the Attorney General of Canada, as her employer. The Statement of Claim, drafted in accordance with Rule 14.03(3), was served July 31, 2018, and set out claims against these individuals, all employed by the Government of Canada. The claims against Katie Telford are contained in paragraph 6, and involve the tort of intentional infliction of mental suffering or “such further and other relief as this Honourable Court may deem just”.

[3] Master Graham found the claim against the individuals employed by the Government of Canada, aside from Katie Telford, were not adequately described in the Notice of Action. As a result, they were barred by application of the Limitations Act, S.O. 2002, c. 24, Sched. B, s. 4.

[4] The factual matrix pleaded, (and thus presumed to be proven and true) included a letter dated December 14, 2016 addressed to the Deputy Minister of Global Affairs and sought an immediate response to an ongoing issue as to the payment of pension plan contributions back to Vivian Bercovici and a detailed accounting from the Government of Canada with regard to allegations of over-payments to Vivian Bercovici. The letter was copied to Katie Telford and no response from her was ever received. This inaction appears to be the substance of the cause of action, within the employment duties of Katie Telford, and for which bad faith damages are sought against her.

[5] Master Graham addressed whether any of the claims against Katie Telford, not within the two years following Vivian Bercovici’s termination, could continue and concluded such claims were out of time.

[6] One actionable conduct pleaded was the tort of intentional infliction of mental suffering. This was addressed by Master Graham. The Master applied the three part test noted in Prinzo v Baycrest Centre for Geriatric Care, [2002] O.J. No. 2712 (C.A.) at paragraph 43 being:

1. conduct that is flagrant and outrageous;
2. calculated to produce harm; and
3. resulting in a visible and provable injury.

[7] Master Graham rejected any prospect that Vivian Bercovici could succeed with regard to the first two elements as the only conduct pleaded was Katie Telford ignored the request for intervention and assistance. While it was possible the particulars pleaded could amount to visible and provable injury, Master Graham concluded no tenable pleading existed for the tort of intentional infliction of mental suffering and restricted the claim available to Vivian Bercovici to that of bad faith.

[8] The Statement of Claim specifically included allegations of “Bad Faith Post Termination Behaviour” contained at subparagraph 144 v) of Ms. Telford “ignoring” Vivian Bercovici’s request for “intervention and assistance”. Given its date, it was within the two years required by law. Further, the action by Vivian Bercovici against the defendants, at paragraph 141, alleges a “breach of the doctrine of the duty of good faith” with additional details in that paragraph.

[9] Master Graham applied the usual test of determining whether the proposed pleading, when read generously, could possibly succeed (at paragraph 44 of his Reasons).

[10] Master Graham restricted his analysis to damages for bad faith conduct within the request by Vivian Bercovici for “such further and other relief as this Honourable Court may deem just”.

[11] In its submissions, counsel for the Attorney General of Canada and Katie Telford indicated that Master Graham embarked on an analysis of a new cause of action against Katie Telford, one not alleged in the Statement of Claim and one upon which the Attorney General of Canada had not been given a proper opportunity to make submissions. The parties agreed that, as part of this appeal, the Attorney General of Canada and Katie Telford were given the opportunity to make such submissions. As such, it was unnecessary for me to consider an outcome whereby the result would be to refer the matter back for a rehearing on that issue.

[12] Master Graham reviewed the cause of action of “Bad Faith” in relation to the December 14, 2016 letter (paragraph 47). Master Graham concluded such action was within the two year limitation period and had been pleaded in a manner that could possibly succeed. During submissions and for greater clarity, I was directed to Honda Canada Inc. v. Keays, 2008 SCC 39 where the court addressed the obligation of the employer not to engage in conduct “during the course of the dismissal that is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive” (at paragraph 57).

[13] Counsel for the Attorney General of Canada submitted Vivian Bercovici had made only “bald allegations void of any particulars” (at paragraph 34 of the Attorney General of Canada’s factum). This is not a sufficient reason to strike out the claim.

[14] Alternatively, the Attorney General submitted actions for bad faith cannot be brought against an employee but only the employer. The Attorney General of Canada relied on a statement in the Supreme Court of Canada’s decision of Honda Canada Inc. v. Keays, 2008 SCC 39, supra (at paragraph 57) which states the damages for “the manner of dismissal” may be available “where the employer engages in conduct during the course of the dismissal”. However, actions of the employer must be conducted by individuals. In this matter, that individual is Katie Telford and the conduct (or an action) has been identified. While there may be situations where the employee conducts herself or himself outside the scope of their employment, that has not been alleged (and assumed to be proven) here.

[15] Counsel for Vivian Bercovici confirmed the absence of any direct authority that the duty of good faith applies between employees but submitted the reasons in Honda Canada Inc. v. Keays, 2008 SCC 39, supra did not address same. Counsel for Vivian Bercovici relied on the decision of Bhasin v. Hrynew, 2014 SCC 71 to submit that same existed. While that case did address and develop the Canadian common law on the duty of good faith in contract law (as summarized at paragraph 93 of that decision) and noted it applied to all contracts, it did not specifically address whether employees could be independently liable to other employees.

[16] The duty of good faith in employment contracts and the decision in Honda Canada Inc. v. Keays, 2008 SCC 39, supra was considered (at paragraph 54). However, there was no statement addressing the issue presenting itself before me. I conclude the current state of the law in Ontario is only employers can be liable for bad faith conduct committed by theirs employees within the scope of their employment with regard to employment contracts.

[17] As a result, I conclude the action against Katie Telford personally cannot stand. The claim for bad faith post termination is dismissed.

[18] Vivian Bercovici is granted leave to further amend her Statement of Claim if she wishes to plead Katie Telford’s conduct (or inaction) was beyond the scope of her employment for which she is independently liable to the plaintiff for damages. I specifically am not deciding if this is a tenable cause of action as it has not been pleaded and, as such, is not before me.

Costs

[19] The appellant-defendants had partial success in this appeal and tendered a Costs Outline claiming $16,000.00 in fees plus $345.72 for disbursements. The fees claimed were in excess of their actual hourly rates of $195.27 charged to the Government of Canada by Department of Justice Counsel. That figure reduces the fees to $11,716.20.

[20] Counsel for the respondent-plaintiff submitted that the amount of time claimed, particularly the 40 hours by associate counsel to prepare the appeal material was excessive. I agree. I am reinforced in this conclusion by the Costs Outline of the respondent-plaintiff seeking $11,812.00 for substantial indemnity or $6,465.00 for partial indemnity costs using considerably higher hourly rates. I accept it would take longer to prepare the appeal than respond to it.

[21] It also remains to be seen whether the plaintiff will exercise the leave granted to her given the further restrictions imposed.

[22] To that end, and mindful of the principles set out in Rule 57.01 and the discretion afforded to me under Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, I fix costs in the amount of $10,000.00 inclusive of fees, HST and disbursements payable by the plaintiff to the defendants in any event of the cause.

Mr. Justice G. Dow Released: January 16, 2020