Court File and Parties
COURT FILE NO.: CV-16-554743 DATE: 20200424 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Richard Hefkey, Plaintiff AND: Blanchfield Roofing Company Limited, Defendant
BEFORE: Justice Peter Bawden
COUNSEL: Jordan Reiner, for the Plaintiff William A. Chalmers, for the Defendant
HEARD: November 28, 2018; April 5, 2019 and November 15, 2019
Endorsement
1Mr. Blanchfield is the president and owner of the Blanchfield Roofing Company of North Bay, Ontario. Richard Hefkey is his brother-in-law.
2Richard Hefkey (hereinafter “Mr. Hefkey”) began to work as a roofer for the Blanchfield Roofing Company (hereinafter “Blanchfield Roofing”) in April 2003. He left the company in April 2009 for another job but returned four months later and worked continuously until he was laid off on December 25th, 2015. This was the first time that Mr. Hefkey had ever been laid off.
3Mr. Hefkey was called back to work three months later but, in order to resume his employment, he was told that he would have to sign a new employment contract. Mr. Hefkey’s existing agreement was verbal and, in his view, the terms of the proposed contract were very different.
4Mr. Hefkey alleges that his employment contract did not permit the company to lay him off. He submits that the layoff constituted a wrongful dismissal.
5If he fails in that argument, Mr. Hefkey claims that he was constructively dismissed when the company told him that he would have to sign a completely different employment contract in order to return to work.
6Blanchfield Roofing resists Mr. Hefkey’s claims. The company maintains that Mr. Hefkey’s employment contract had always included the possibility of layoff. The only reason that Mr. Hefkey had not been laid off in prior years was that he was a member of the family. That indulgence was not possible in 2015 due to poor economic conditions.
7The company further maintains that the employment contract offered in March 2016 did not materially alter Mr. Hefkey’s existing employment contract. It only formalized the oral agreement which had been in place for years.
8Mr. Hefkey seeks summary judgment. Blanchfield Roofing maintains that a full trial is required in order to determine the facts of the case.
9In my view, the case gives rise to the following factual and legal issues:
a. Is there a genuine issue which requires a trial? b. Can the genuine issue be resolved by using r. 20.04 fact-finding powers? c. Did the verbal employment agreement permit Blanchfield to lay off Mr. Hefkey? d. Did the new contract so substantially alter the terms of Mr. Hefkey’s employment that he was constructively dismissed? e. What was Mr. Hefkey’s position with the company at the time of termination? f. What was his length of service? g. What is the appropriate notice period given all the circumstances? h. Is Mr. Hefkey entitled to a bonus during the notice period? i. What is the quantum of damages?
A. Is there a genuine issue which requires a trial?
10There is no genuine issue requiring a trial when the judge is able to reach a fair and just determination of the merits of the case using the summary judgment process. This will be the case when the process allows the judge to make the necessary findings of fact, to apply the law to those facts, and the summary proceeding is proportionate given all the circumstances of the case. The decision is based solely on the record provided by the parties.
11Mr. Chalmers contends that there are nine factual questions which lie at the heart of this dispute which can only be resolved by making findings of credibility. He submits that the documentary evidence does not provide a satisfactory basis to make such findings and, accordingly, the matter should either be set down for a full trial or the court should hear oral testimony.
12In my view, there are only three questions which could be significantly impacted by findings of credibility. Those questions are:
a. Did Mr. Hefkey’s employment contract in December 2015 include a layoff provision? b. Was there any agreement between the parties as to whether Mr. Hefkey’s period of employment would be treated as continuous when he returned to work in July 2009? c. Was there an agreement between the parties that Mr. Hefkey was not entitled to any annual bonus and any bonus that he did receive was solely because he was a member of the Blanchfield family?
13These facts are material to the outcome of the litigation. I find that they do give rise to a genuine issue.
B. Can the genuine issue be resolved by using the r. 20.04 fact-finding powers?
14The fact that there is a genuine issue arising from questions of credibility does not mean that there must be a full trial. The court must consider if the need for a trial can be avoided by employing the fact-finding powers under r. 20.04(2.1). Under that rule, the court may weigh the evidence provided by the parties, evaluate the credibility of deponents and draw reasonable inferences from the evidence. The court has the further discretion under r. 20.04(2.2) to order that oral evidence be presented to assist in finding facts.
15The powers provided under r. 20.04(2.1) should only be exercised if it is in the interests of justice to do so. The interests of justice will be served if the summary judgment process will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality.
16There is abundant authority for the proposition that actions concerning wrongful dismissal and reasonable notice are well suited to summary proceedings. The facts which drive the outcome of these cases such as age, salary, position, length of tenure, seniority, and job duties are generally not in issue. The question is not whether the summary process is as exhaustive as a trial would be, but rather whether the process gives the trial judge confidence that he or she can find the necessary facts and apply the relevant legal principles to resolve the dispute: See Andros v. Colliers Macaulay Nicolls Inc., 2018 ONSC 1256 at paragraphs 8-12.
17The court is entitled to assume that the documentary record contains all the evidence that the parties would present if the matter was to go to trial. In this case, that includes:
a. Affidavits from Richard Hefkey, David Blanchfield and Megan Delorme, (Mr. Blanchfield’s daughter and the vice-president of the company in December 2015); b. Transcripts of the cross-examinations of all three witnesses; and c. Documents setting out Richard Hefkey’s employment history, records of his remuneration and communications between the parties.
18Neither party has suggested that it would introduce any additional evidence if the matter were to proceed to a full trial. Both parties relied heavily on the transcripts in making their submissions and no one suggested that the evidence was incomplete, inaccurate or suspect for any reason.
19Mr. Chalmers has provided me with several cases in which the Court of Appeal has found that judges erred in proceeding by way of summary judgment where important facts were disputed, and credibility was in issue. For instance, in Baywood Homes, 2014 ONCA 450, the court stated:
44… Evidence by affidavit, prepared by a party’s legal counsel, which may include voluminous exhibits, can obscure the affiant’s authentic voice. This makes the motion judge’s task of assessing credibility and reliability especially difficult in a summary judgment and mini-trial context. Great care must be taken by the motion judge to ensure that decontextualized affidavit and transcript evidence does not become the means by which substantive unfairness enters, in a way that would not likely occur in a full trial where the trial judge sees and hears it all.
20The court gave a similar caution in Trotter, 2014 ONCA 841:
55It is not always a simple task to assess credibility on a written record. If it cannot be done, that should be a sign that oral evidence or a trial is required. The motion judge did not engage in a credibility analysis or attempt to provide conclusions on credibility. Where important issues turn on credibility, failure to make credibility findings amounts to reversible error; see Sagi v. Cosburn, Griffiths & Brandham Insurance Brokers Ltd., 2009 ONCA 388, at paras. 98-100.
21Despite these cautions, I have concluded that I am able to make the necessary credibility findings and to explain those findings based on the documentary record.
The authentic voice of the witnesses is evident in the record
22Blanchfield Roofing is a small, family run business. David Blanchfield (hereinafter “Mr. Blanchfield”) is Mr. Hefkey’s brother-in-law and Megan Delorme (hereinafter “Ms. Delorme”) is his niece. They readily acknowledged in their testimony that Mr. Hefkey was a good and reliable worker. When he left the company in 2009, they wished him well. When his new venture didn't work out, they rehired him at the same salary and on the same terms. When Mr. Hefkey developed knee problems, they accommodated him. Mr. Blanchfield and Ms. Delorme both admitted facts in their testimony which were not helpful to their position in this litigation.
23Mr. Hefkey, for his part, readily acknowledged that the company had treated him well. He agreed that he had been prepared to do any job which was assigned to him and, most remarkably, that he would accept whatever payment the company offered him in return for his work. He never once asked for a raise in 13 years.
24Even within the stilted confines of cross-examination, the good nature and fundamental honesty of these witnesses is apparent in the transcripts. They have different recollections of conversations which may or may not have taken place at the outset of Mr. Hefkey’s employment, but their evidence with respect to what actually occurred over the ensuing 13 years is virtually identical. There is nothing in the record that suggests that any witness is lying for the purposes of gaining an advantage in the litigation. Credibility assessments based on viva voce testimony are of limited assistance when all the witnesses are quite obviously doing their best to tell the truth.
Credibility plays only a small part in determining the facts in this case
25The object of any legal proceeding is to arrive at a fair and just decision based on reliable factual findings. The viva voce testimony of witnesses occupies the centre stage in most trials and this can lead to the mistaken impression that determinations of credibility are the most important consideration in deciding the facts of a case. In practice, testimonial credibility is only one factor to consider and, in many cases, it is a lesser consideration.
26In my view, there are three disputed facts in this case which arguably depend on findings of credibility. For ease of reference, I will repeat them here:
a. Did Mr. Hefkey’s employment contract in December 2015 include a layoff provision? b. Was there any agreement between the parties as to whether Mr. Hefkey’s period of employment would be treated as continuous when he returned to work in July 2009? c. Was there an agreement between the parties that Mr. Hefkey was not entitled to any annual bonus and any bonus that he did receive was solely because he was a member of the Blanchfield family?
27It is certainly possible that when Mr. Hefkey was hired in 2003, his brother-in-law told him, “We may have to lay you off if there is no work in the winter”. That would not be an unusual statement for the owner of a roofing company in North Bay to make. If the statement was made, there is no reason to expect that it would be repeated in the ensuing 12 years. Over those years, the practice developed that Mr. Hefkey was not laid off. Mr. Blanchfield had no cause to remind his brother-in-law that he could be laid off and Mr. Hefkey had no reason to ask.
28Mr. Hefkey left the company for four months in 2009. Both parties agree that when he returned, he stepped right back into his old job. Neither party recalls any discussion as to whether his tenure at the company would be considered interrupted for the purposes of determining reasonable notice. No one foresaw this litigation.
29Mr. Hefkey received a bonus every year. Mr. Blanchfield testified that Mr. Hefkey received a more generous bonus than other employees because he was a member of the family. Mr. Blanchfield never suggested either in his affidavit or his testimony that he told Mr. Hefkey that this was the reason for his generous bonus; from Mr. Blanchfield’s perspective, perhaps it was obvious. But there is no evidence that Mr. Hefkey knew and agreed that his annual bonus was solely dependent on the fact that he was a member of the family. On the contrary, Mr. Hefkey testified that he understood that his bonus was intended to compensate him for overtime. Ms. Delorme had the same understanding. [1]
30On these key factual questions, the factual findings will turn on the reliability of the testimony, not the credibility of the witnesses. There is a vast and undisputed body of evidence concerning Mr. Hefkey’s employment which permits the court to draw strong factual inferences. Findings of credibility based on performance in the witness stand would be of negligible value in comparison.
Proportionality
31The proportionality assessment strongly favours proceeding by way of summary judgment.
32The amount in issue between the parties is small. If Mr. Hefkey were to succeed in all of his claims and establish that a 12-month notice period was required, he would recover roughly $28,000. If he succeeds to the extent of establishing a 7 month notice period, he would recover $17,000. These awards would be offset by the $10,000 settlement offer which was paid by Blanchfield in July 2016. Apart from a rather fanciful claim for $150,000 in aggravated damages, this case might well have been litigated in the Small Claims Court.
33If the case were to proceed to a full trial, it would inevitably delay the result and substantially increase the cost of the litigation. Depending on the length of that trial, it is a virtual certainty that the costs of the proceedings would exceed the total amount in dispute.
34The benefits of a full trial would be negligible. There is no reason to believe that the evidence at trial would be any different from the evidence which has been presented on this motion.
35Proceeding by way of summary judgment is entirely proportional to the size of the claim, the facts in issue and the benefit to both parties in bringing this dispute to its conclusion.
C. Did the verbal employment agreement permit Blanchfield to lay off Mr. Hefkey?
36Mr. Reiner submits that I should accept Mr. Hefkey's evidence that there was never any discussion between himself and Mr. Blanchfield as to whether or not he could be laid off. In the absence of an explicit agreement, he submits that I should find that there was an implied term that Mr. Hefkey could not be laid off based on the practice that developed over 13 years. Mr. Reiner relies on Chea v. CIMA Canada Inc., 2016 ONSC 1937 for the proposition that if a layoff provision is to be implied as part of an employment agreement, the provision must be notorious or even obvious.
37Mr. Chalmers urges me to accept the evidence of Mr. Blanchfield that there was an express agreement at the outset of Mr. Hefkey's employment that he could be laid off during the winter if there was no work for him to do.
38Clearly, if the court is able to find that the parties had an express agreement on the issues that is the end of the matter. The court cannot imply terms which are contrary to the actual agreement of the parties no matter how well established the practices may have been.
39Mr. Reiner submits that the onus is on the defendant employer to prove that there was an express or implied term in the contract that permitted layoffs. He relies on the decision of Kennedy J. in Gust v. Beaver Foods, 1997 Carswell 5376 at para. 21.
40Mullins J. found the opposite in Jamshidi v. Dependable Mechanical Systems, 2018 ONSC 7101. Relying on the decision of Schluessel v Marriotta, 2018 ABQB 615, the court stated:
... as a general rule of contractual formation, there must be a meeting of the minds in all the essential terms. Determination of the terms requires consideration of the nature of the transactions and the context. The burden of proof rests upon the plaintiff to establish there was consensus. An objective, reasonable person test is applicable. The inward, secret beliefs of a person are not relevant.
41I agree with Mullin J.’s statement of the law. Mr. Hefkey does bear the onus of establishing that the contract prohibited layoffs.
42Blanchfield Roofing conducts its business in Northern Ontario. It is self-evident that business slows during the winter months. According to Mr. Blanchfield, Mr. Hefkey knew from the outset of his employment that he, like every other employee of the company, was subject to layoff when there was no work available. As a matter of practice, he was not laid off because he was married to Mr. Blanchfield's sister.
43Mr. Blanchfield testified that he told Mr. Hefkey in October 2015 that business had been slow, and he would be laid off during the winter. When he was laid off, Mr. Hefkey did not directly complain to Mr. Blanchfield. Although the Record of Employment (hereinafter “ROE”) did not specify a recall date, it was understood that Mr. Hefkey would be called back in the spring.
44Mr. Hefkey denies that he had ever been told that he could be laid off. He was a foreman at the company, received a weekly salary and had been employed every winter since 2003. There always had been work for him to do and the winter of 2016 did not appear to be any different. When he received his ROE from Ms. Delorme, he pointed out to her that there was work to be done and she responded that the company would be relying on other employees to do it. He told her that he believed that the company was acting illegally. He subsequently attended an Ontario Works office to prepare his resume and came across literature which alerted him to his rights. He retained counsel and on January 25th, 2016, his counsel sent a letter to Blanchfield Roofing alleging that Mr. Hefkey had been terminated.
45When he was cross-examined on his affidavit, Mr. Hefkey testified with certainty that he had never discussed the possibility of being laid off with Blanchfield Roofing. Although I do not doubt the sincerity of his evidence, his actions in the fall of 2015 do not substantiate his recollection.
46Mr. Hefkey denies that Mr. Blanchfield told him directly in October that he was going to be laid off but admits that he was aware that the company was contemplating layoffs. Mr. Hefkey learned from other workers that Mr. Blanchfield intended to lay off his own two brothers in the fall of 2015. When Mr. Hefkey heard this, he spoke to Ms. Delorme and asked her if he would also be laid off. The fact that he made this inquiry suggests that he recognized, at least at that time, that the company could lay him off. [2]
47When he received his layoff notice, Mr. Hefkey did not immediately go to Mr. Blanchfield to protest. Given the length of his service and the fact that the two men were related by marriage, one might have expected Mr. Hefkey to have approached his brother-in-law and said, ‘hey, what about our agreement that I could never be laid off?’ To be fair, there may have been many reasons why Mr. Hefkey did not make that immediate personal protest; the absence of protest is by no means determinative of the issue. It is, however, a factor which suggests that the terms of the agreement were not as clear as Mr. Hefkey presently recalls them to have been.
48Mr. Hefkey was cross-examined concerning his use of the company benefits after being laid off. He testified that he was entitled to use the benefits plan "until the call back". This led to the following exchange: [3]
Q. But you were prepared to go back whenever they called you back? A. Well, to go back to the same job? Yes.
49This was a telling answer. It demonstrates that Mr. Hefkey realized that he would be called back and, as far as he was concerned, his existing employment agreement would still be in effect when he returned. If the layoff was a clear violation of an express agreement that Mr. Hefkey had with the company, it seems unlikely that he would have been so willing to return to work for the company.
50Mr. Hefkey has the onus of establishing that his employment contract did not include a layoff provision. He has not met his onus. Based on the nature of the industry, the size of the company and the layoff practices for other employees, it seems most likely that Mr. Hefkey could be laid off if necessary. I accept Mr. Blanchfield’s evidence that Mr. Hefkey’s employment contract permitted layoff.
D. Did the new contract so substantially alter the terms of Mr. Hefkey’s employment that he was constructively dismissed?
51Constructive dismissal is made out where there has been a series of acts which, when considered cumulatively, demonstrate that the employer no longer intended to be bound by the terms of the employment contract. The test is whether the employer's actions would have caused a reasonable person in the circumstances of the employee to have concluded that the employer no longer intended to be bound. This determination is made based on the information which was known to the employee or which he could reasonably have foreseen at the time. The employee is not obliged to prove that the employer actually intended to be free from the contract; he need only prove that a reasonable person would have come to that conclusion: Chapman v. GPM Investment Management, 2017 ONCA 227 at paragraphs 13-17.
52Mr. Hefkey was hired as a sheet metal worker in April 2003 and paid an hourly wage. He received increases in both his hourly wage and bonus in the following years. In September 2007, he was promoted to foreman and in January 2008, he was put on an annual salary. During the time that he was on salary, Mr. Hefkey worked between 30 to 50 hours per week. [4] He also received an annual bonus which was intended (at least in part) to compensate him for his overtime work. [5]
53In 2015, Mr. Hefkey’s knee problems prevented him from spending an entire day working on a roof. He continued to do some roofing, but he also fabricated sheet metal and did other tasks for the company. He spent several months repairing Mr. Blanchfield’s camping trailer. His bonus and total income that year were the lowest that they had been since 2008.
54Mr. Hefkey was not provided with any return date when he was laid off. On January 25, 2016 he asked the company for a letter of reference and a subsidy for retraining services. The company did not provide either and, more importantly, did not offer any assurance to Mr. Hefkey that he would soon be called back to work.
55On March 7, 2016, Mr. Hefkey accepted a job with a competing roofing company, J.G. Fitzgerald and Sons (hereinafter “J.G. Fitzgerald”). Ms. Delorme learned of his new employment and sent Mr. Hefkey a letter dated March 18, 2016 inviting him to return to Blanchfield Roofing. Ms. Delorme’s letter included an employment agreement which she described as a mandatory policy for all employees. The new employment agreement included the following terms:
a. Hefkey would be paid based solely on an hourly wage. He would receive $26 per hour for regular duties but only $13 per hour while driving to a job site and $11.25 when he was a passenger. b. Hefkey would return to the company as a "Sheet Metal Worker along with any other roofing labour duties required". The job title “Sheet Metal Worker” was underlined, (apparently for emphasis), and there was no reference to his earlier job title of foreman. c. Hefkey would be required to use a time card to record his hours. The proposed agreement did not guarantee a minimum number of hours. d. Blanchfield would be permitted under the new contract to discharge Hefkey at any time without cause "subject to provincial and federal Canadian laws."
56Ms. Delorme’s letter was clear that the proposed terms were mandatory and not subject to negotiation.
57Mr. Hefkey refused to sign the agreement and continued in his new employment with J.G. Fitzgerald. He submits that Blanchfield Roofing constructively dismissed him when it required him, as a term of resuming employment, to sign an agreement which substantially altered the terms of his existing employment contract.
58Blanchfield’s response appears at paragraph 25 of the defendant's factum:
Hefkey was not required to sign a new employment agreement, rather he was required to acknowledge the existing terms of his employment that included, as a letter states, “...a new mandatory policy for all employees…” [sic].
59In my view, the terms of the new mandatory agreement did differ from the existing understanding with respect to remuneration, job description and entitlement upon termination.
Remuneration
60Mr. Hefkey had been receiving $1,300 per week since 2008 no matter how many hours he worked. His annual income based on salary alone varied from $70,304 to $75,712 for those seven years. If he accepted the new proposal, he would be compensated strictly on an hourly basis with some of his hours being paid at or near minimum wage. Ms. Delorme acknowledged that this constituted a change to Mr. Hefkey’s employment contract. [6]
61There was nothing in the proposal that guaranteed a minimum number of hours and Mr. Blanchfield confirmed in his testimony that no such guarantee was contemplated. The proposal made no reference to bonus income which Mr. Hefkey had received in each of the twelve years that he had worked for the company.
62Mr. Reiner argues that Mr. Hefkey would have been justified in rejecting the proposal solely based on the obvious changes to his compensation. In response, Mr. Chalmers points to the following admission made by Mr. Hefkey:
Q. Do you agree that you agreed to work for Blanchfield Roofing based on the amount of money that Mr. Blanchfield as the president agreed to pay you? A. That’s correct. Q. In some years you got more money and some years you got less money, correct? A. Correct. Q. And you are content – content to proceed with your employment on that basis? A. Yes. [7]
63Mr. Chalmers submits that if Mr. Hefkey was prepared to accept whatever the company offered to pay him, it follows that compensation was not a term of his existing employment agreement. The company could alter the terms or the amount of his compensation at any time without Mr. Hefkey’s consent because Mr. Hefkey had agreed to accept whatever he received.
64This submission calls into play the court’s fact-finding powers under r. 20.04. Mr. Chalmers submits that the court should accept this single answer from an unsophisticated litigant and find as a fact that compensation was not a term of his employment contract. Such a finding would be contrary to common sense and ignore 13 years of undisputed practice between the parties.
65Mr. Hefkey did not suddenly become a salaried foreman at Blanchfield. He began as a paid-by-the-hour sheet metal worker and worked his way up. Each progression in his employment reflected an amendment in the employment contract which rewarded Mr. Hefkey for his good work and increasing value to the company.
66At the time of his termination, Mr. Hefkey was employed in a supervisory capacity and had earned $70,000 - $75,000 in salary for seven consecutive years. This history establishes that there was a common understanding that Mr. Hefkey's salary in an ordinary business year was in the range of $70,000. Variations in his income based on his performance and the success of the company were addressed through his bonus. Mr. Hefkey would have rightly viewed a significant and unexplained drop in his salary to be a breach of the agreement.
67Mr. Hefkey's statement that he was prepared to accept whatever he was paid is more reflective of his trusting nature than it is an accurate characterization of the employment contract. No employee is completely disinterested in his compensation.
68Mr. Chalmers argues that if Mr. Hefkey had elected to sign the agreement and return to the company, he would have earned as much or more in salary than he did in the preceding years. He relies on the evidence of Ms. Delorme who calculated what Mr. Hefkey would have made if he had returned to Blanchfield Roofing based on the actual earnings of an employee who stepped into his role.
69Given that the proposed agreement would have altered Mr. Hefkey’s income to an hourly wage and did not guarantee a minimum number of hours, Mr. Hefkey would not have known until the end of the year whether his earnings in 2016 would be comparable to what he had earned in the preceding seven years. It would be unreasonable to expect Mr. Hefkey to accept the new agreement in these circumstances: See Alpert v. Carreaux Ramca Ltee, 1992 CarswellOnt 903 at paragraph 35.
Job Description
70Ms. Delorme underscored the job description “sheet metal worker” in the employment agreement. There is no dispute that Mr. Hefkey had previously held the title of foreman and had not done anything to disentitle himself to that designation. He did develop knee problems which limited his ability to act as a supervisor in 2015 but he continued to do some foreman’s work in 2015 and Mr. Blanchfield agreed that he could return to be a foreman once his knees healed. If Mr. Hefkey had signed the proposal, he would have foregone any claim to his former job title.
Entitlement Upon Termination
71The proposal included a provision that Blanchfield Roofing would be permitted to discharge Mr. Hefkey at any time for no reason "subject to provincial and federal Canadian laws". It is not at all clear what this term was intended to establish but a reasonable person in Mr. Hefkey's position would have read this provision in context with the sentence which immediately followed it:
"Likewise, the employee may terminate employment for any reason upon providing Blanchfield Roofing two weeks written notice."
72Read in its entirety, the provision at least conveys that Mr. Hefkey would be entitled to only minimal legal protections if the company elected to discharge him without cause. It could also sustain the interpretation that the company, like the employee, needed to provide only two weeks’ notice to terminate the employment relationship.
73It is preposterous to suggest that this provision was in keeping with Mr. Hefkey’s existing employment contract. Neither Mr. Blanchfield nor Ms. Delorme ever suggested in their testimony that Blanchfield Roofing and Mr. Hefkey had agreed that he could be fired without cause at any time and that, upon termination, he would receive only the barest compensation offered in Canadian law. Such a term would have been entirely contrary to their emphatic evidence that Mr. Hefkey was always treated generously because he was a member of the family.
Conclusion
74Any reasonable person presented with this new, mandatory employment policy would have recognized that it was vastly different than Mr. Hefkey’s existing agreement with Blanchfield. A reasonable person would also conclude, based on the fact that this the company described these as “mandatory” terms of employment, that Blanchfield Roofing no longer intended to be bound by the existing employment agreement.
75A reasonable person in Mr. Hefkey’s circumstances would also take into account that he had just been laid off for the first time in 13 years. The company did not provide a recall date and, when Mr. Hefkey requested a reference letter, did nothing to assure him that his job was safe. All these circumstances would cause any reasonable person to conclude that Blanchfield had decided that it intended to change its arrangement with Mr. Hefkey. Mr. Hefkey was constructively dismissed.
E. What was Mr. Hefkey’s position with the company at the time of termination?
76The issue of whether or not Mr. Hefkey was a foreman or a sheet metal worker at the time that he was laid off is a modest consideration in resolving the litigation.
77The title of "foreman" has to be considered in context. A foreman at Blanchfield Roofing was an experienced roofer who could spend the day on a roof installing materials while supervising the work of less experienced hands. The foreman did all of the same work as the other workers and, in Mr. Hefkey's case, this included quite menial work such as sweeping floors and cleaning up the shop. At Blanchfield Roofing, being a foreman was more a matter of seniority and trustworthiness rather than managerial skill.
78Mr. Hefkey was formally designated as a foreman in 2007 and he worked in that capacity until his knees prevented him from spending a full day on the roof. When he was unable to go on the roof, he fabricated sheet metal in the shop. This was less arduous work and did not involve any supervisory responsibilities. Mr. Hefkey continued to work on roofs from time to time including during his final year with the company. [8] There is no dispute that when his knees recovered sufficiently to permit him to return to working on the roof, he was welcome to resume his position as a foreman.
79Mr. Hefkey never did anything to disentitle himself to the position. I find that his job title at the time of termination was “foreman”.
F. What was his length of service?
80Mr. Hefkey maintains that reasonable notice should be based on the thirteen years that he worked for Blanchfield. The four-month hiatus when he left the company to work elsewhere should not be treated as a break in his employment. Blanchfield Roofing submits that the notice should be based only on the last 6-½ years of employment.
Law Regarding Length of Service
81The law does not precisely define what constitutes a break in employment. It is a factual determination which must be made based on all of the evidence.
82The plaintiff relies on several decisions from British Columbia, all of which are dated and none of which provide a good match to the facts before this court. Those authorities do, however, provide a series of factors which courts have considered in deciding whether the employment should be treated as continuous despite a hiatus. They include:
- The length of the break;
- Whether the employee was induced by the employer to return;
- Whether a distinct, new employment agreement was negotiated upon returning to work;
- Whether the employee's vacation or other work benefits continued upon returning to the company as if there had been no interruption in the employment relationship;
- The treatment of pension entitlements upon resuming employment;
- The number of occasions when there was a break in employment over the course of the entire employment relationship.
83The Ontario Court of Appeal recently considered a break in employment in Theberge-Lindsay v. 3395022 Canada Inc., 2019 ONCA 469. The employee gave notice of her intention to resign her position with the defendant. The defendant advertised to fill the position and began to interview candidates. Prior to the position being filled, the plaintiff retracted her resignation and the defendant agreed to continue her employment. The plaintiff was wrongfully dismissed several years later and submitted that in assessing the length of her service, the unfulfilled resignation did not constitute a break in employment. The Court of Appeal found that it did. When the plaintiff withdrew her resignation, a new employment contract commenced. The consideration for that contract was the fact that the plaintiff was allowed to return to work despite her resignation.
The Evidence
84Mr. Hefkey resigned from Blanchfield Roofing in April in order take up what he expected to be a permanent new position. When that job failed, he was permitted to return to his former position at the same pay. It is not alleged that Blanchfield induced him to return.
85Mr. Blanchfield was asked in cross-examination if Mr. Hefkey was "starting fresh" when he returned. Blanchfield said that the conversation never occurred. Mr. Hefkey wasn't penalized for leaving and there was no discussion of whether his seniority with the company had been affected. The company simply put him back to work.
86The ROE which Mr. Hefkey received when he was laid off indicated that his start date with the company was in April 2003. Ms. Delorme testified that this was an administrative error. The date had been entered onto the firm's accounting software at the outset of his employment and had not been changed when he returned to the company in 2009. I accept her evidence. No one contemplated the significance of Mr. Hefkey's start date when the ROE was issued, and I do not ascribe any significance to the information which appears on the form.
Conclusion
87The parties did not turn their minds to the continuity of Mr. Hefkey's employment when he resumed work in July 2009. In the absence of any agreement between the parties, the court must determine if the employment was continuous based on all of the evidence.
88The Theberge-Lindsay case is very persuasive on this point. In that case, the Court of Appeal found that the employment had been broken even though the employee worked continuously for her employer. Mr. Hefkey not only broke his employment but assumed a permanent position elsewhere for four months. Blanchfield was under no obligation to re-hire Mr. Hefkey when his new venture failed. Mr. Hefkey received an important consideration from Blanchfield Roofing insofar as he was permitted to return to his old job without penalty. The evidence of a break is far more compelling here than in Theberge-Lindsay.
89I find that there was a break in employment. Mr. Hefkey's first day of work for the purposes of determining reasonable notice is July 20, 2009.
G. What is the appropriate notice period given all of the circumstances?
90Mr. Reiner submits that Mr. Hefkey would have been entitled to 9-12 months of notice as an employee of 6-½ years’ experience. He provided three authorities for this range, none of which were factually analogous.
91Mr. Hefkey worked as a foreman for 6 ½ years. The work was not highly skilled, but it did involve some supervisory responsibilities. Managerial function is not a significant factor in this case: See Honda Canada Inc. v. Keays, 2008 SCC 39 at paragraphs 27 and 30.
92He was 51 years old at the time that he was dismissed and, apart from recent, temporary problems with his knees, was in good health. There is no evidence of any impediment to Mr. Hefkey finding similar work quickly. The roofing industry was not in decline and, in fact, Mr. Hefkey was able to find comparable employment in less than two months.
93In my view, a reasonable notice period given all of these circumstances would have been seven months.
H. Is Mr. Hefkey entitled to a bonus during the notice period?
94Mr. Hefkey was paid a bonus in each of the 13 years that he worked for Blanchfield Roofing. His highest bonus was $27,815 paid in 2008 and the lowest was $1,000 in 2015. Mr. Hefkey submits that he had a reasonable expectation that he would have received bonus income if he had not been wrongfully dismissed in 2015.
95Blanchfield Roofing does not dispute that a bonus, even a strictly discretionary bonus, may be payable during the notice period. The company submits, however, that this is only the case where the bonus is an integral part of the compensation package and in this case, it was not. According to Blanchfield Roofing, there was an explicit agreement between the parties that Mr. Hefkey's generous annual bonus was only paid because he was a member of the Blanchfield family. Payment of the bonus was in the absolute discretion of the company and Mr. Hefkey had no entitlement to it. Blanchfield Roofing again places great stress on Mr. Hefkey's admission that he was prepared to accept whatever he was paid by the company.
Was there an explicit agreement that payment of a bonus was within the absolute discretion of the company and therefore not integral to Mr. Hefkey's compensation?
96Mr. Hefkey testified that, to the best of his knowledge, the bonus was based on his performance. He agreed that the amount of the bonus was entirely within the discretion of Blanchfield Roofing and he was not entitled to a bonus. [9] If the amount of the bonus was greater because he was related to Blanchfield, Mr. Hefkey was not aware of it.
97Mr. Blanchfield agreed that Mr. Hefkey's bonus depended on how he performed and the financial shape of the company. He acknowledged that other workers also received bonuses but insisted that Mr. Hefkey's bonuses were much greater because he was a member of the family. [10]
98Ms. Delorme testified that Mr. Hefkey's annual bonus was intended to reward him for overtime work which was not covered by his salary. She also recalled that Mr. Hefkey's bonus was larger than other workers because he was family. [11]
99Blanchfield Roofing submits the following at paragraph 46 of its factum:
The facts in this proceeding clearly demonstrate that a bonus was not an integral part of Hefkey’s compensation package. Blanchfield’s and Delorme’s uncontradicted evidence is that Hefkey knew, understood and acknowledged that solely because he is married to David's sister, he may, at BRCL's sole and absolute discretion, receive discretion discretionary bonuses, unlike all other non-family member employees, and that these bonuses were not an entitlement and were not based on merit, but rather was a way for BRCL to “help out” Hefkey because he was “family”.
100This submission is simply not supported by the evidence. Neither Mr. Blanchfield nor Ms. Delorme testified that he or she explicitly discussed the terms of the bonus with Mr. Hefkey. They may well have thought it was obvious that Mr. Hefkey’s generous bonus was because he was a member of the family but there is no evidence that there was a tangible agreement to that effect.
101There are other circumstances which suggest that there was no such explicit agreement between the parties:
- The alleged agreement lacks the specificity that one would expect of an explicit, enforceable provision in a contract. Was the agreement that Mr. Hefkey would always get the largest bonus of any employee, or that he would simply get a generous bonus every year? If Mr. Hefkey learned that another employee received a greater bonus than he did, would that be a breach of his employment agreement? How was the provision enforceable from Mr. Hefkey's perspective?
- If this was an explicit part of Mr. Hefkey's employment agreement at the time that he was laid off, why wasn't it included in the March 18th proposal which purportedly crystallized Mr. Hefkey's existing oral employment agreement?
102Mr. Hefkey did acknowledge that the bonus was within the absolute discretion of the company but in doing so, he only acknowledged what is true of every discretionary bonus. He was not asked if he considered the bonus to be "integral" to his overall compensation package. Given that it represented at least 10% of his total income over the preceding seven years, it is hard to imagine he would not have described this as "integral".
103I accept that Mr. Blanchfield believed that Mr. Hefkey's bonus was primarily based on the fact that he was family. In deciding the terms of an oral contract, however, the inward beliefs of a party are not relevant. (See Jamshidi v. Dependable Mechanical Systems, 2018 ONSC 7101 at paragraph 4.) The question is whether the defendant has established on an objectively reasonable basis that there was an explicit term of the employment agreement that Mr. Hefkey's bonus was solely attributable to the fact that he was family. In my view, the defendant has not met that test.
Compensation for Lost Bonuses
104In determining damages for wrongful dismissal, courts will typically include all of the compensation and benefits that an employee would have earned during the notice period. This can be the case even when the bonus is described as discretionary: See Paulette v. Terrago Networks Inc., 2016 ONCA 618 at paragraph 17.
105In Wolfman v. Rocktenn-Container Canada, 2015 ONSC 1432, Faieta J. set out four factors to be considered in determining whether compensation for lost bonuses should form part of the plaintiff’s damages claim. Those factors are:
a. The bonus is received each year although in different amounts; b. Bonuses are required to remain competitive with other employers; c. Bonuses were historically awarded, and the employer had never exercised its discretion against the employee; and d. The bonus constituted a significant component of the employee’s overall compensation.
106There is no evidence that the bonuses were necessary for Blanchfield Roofing to remain competitive with other employers. All the other three factors strongly favour Mr. Hefkey's claim.
107Both Mr. Blanchfield and Ms. Delorme acknowledged that the bonus was intended in part to compensate Mr. Hefkey for otherwise unpaid overtime work. There is every reason to believe that Mr. Hefkey would have continued to work overtime in 2016. In fact, Blanchfield Roofing's own projections of Mr. Hefkey's earnings in 2016 demonstrate that 2016 was a busy year for the company.
108Mr. Hefkey is entitled to be compensated for the bonus income which he would have earned over the notice period.
I. What is the quantum of damages?
109Mr. Hefkey had a weekly salary of $1,300 at the time that he was terminated. Over the seven-month notice period beginning on March 18, 2016 until October 18, 2016, he would have had 30 weeks plus four additional days of work. He would have earned $40,040 in salary.
110Mr. Hefkey mitigated his losses by accepting a job with J.F. Fitzgerald on March 7, 2016. Mr. Hefkey did not receive benefits at his new employment. His benefits at Blanchfield Roofing were valued at $200 per month. Accordingly, he is entitled to $1,400 over the notice period to compensate him for the loss of benefits.
111Mr. Hefkey received a bonus every year from 2008 to 2015 but the amount of the bonuses varied significantly. The two outliers were 2008 when he received $27,815 and 2015 when he received only $1,000. His average annual bonus in the period from 2009 until 2014 was $5,650. This is a reasonable estimate of Mr. Hefkey’s anticipated bonus in 2016. Prorated over a seven-month period, it amounts to a further $3,295.83.
112Based on these calculations, I find that Mr. Hefkey’s total anticipated income including benefits and bonus over the seven-month period beginning on the day that he was constructively dismissed is $44,735.83.
113Mr. Hefkey was obliged to mitigate his losses, and to his credit, he did so diligently. His total pay at J.F. Fitzgerald from March 19, 2016 until October 29, 2016 (a period of 32 weeks) was $27,230. This is an average of $850.94 per week. In the seven-month notice period, Mr. Hefkey earned approximately $26,208.95.
114The difference between Mr. Hefkey’s anticipated gross income at Blanchfield Roofing and his actual income at J.F. Fitzgerald is $18,526.88.
115Blanchfield Roofing sent Mr. Hefkey a cheque for $10,940.82 on July 15, 2016 in an effort to settle this dispute. This figure presupposed a finding that Mr. Hefkey was constructively dismissed by the December 25, 2015 layoff but was able to obtain alternative employment on March 7, 2016. The amount owing to the plaintiff will be reduced by the amount of the settlement offer.
116The total judgement owing to the plaintiff is $7,586.06 which represents the gross employment income owed by Blanchfield Roofing to Mr. Hefkey without consideration of taxes or other set offs. The parties may determine between themselves how those amounts are best settled.
117Based on the factual findings set out in this judgment, the plaintiff’s claim for aggravated damages is dismissed as is the counterclaim seeking repayment of $10,940.82.
118Counsel for both parties may make written submissions in respect of costs within 60 days of the release of the judgment.
Justice Peter Bawden Released: April 24, 2020
[1] Evidence of Megan Delorme at page 26 [2] Cross-Examination of Richard Hefkey at pages 34-35. [3] Cross-Examination of Richard Hefkey at page 41. [4] Evidence of David Blanchfield at page 26 [5] Evidence of Megan Delorme at page 26 [6] Evidence of Megan Delorme at page 30 [7] Evidence of Richard Hefkey at page 39, Q. 211 to 214. [8] David Blanchfield recalled that Hefkey last worked on a roof six months before the layoff, but Megan Delorme acknowledged he may have been working on a roof in his last job with the company. See Evidence of Megan Delorme at pages 7-9. [9] Evidence of Richard Hefkey at page 49 [10] Evidence of David Blanchfield at pages 6-8 [11] Evidence of Megan Delorme at pages 26-27
