COURT FILE NO.: CV-16-560177

DATE: 20210429

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Mika Nooks, Plaintiff

AND:

Toronto Transit Commission, Defendant

BEFORE: Chalmers, J.

COUNSEL: E. Guiste, for the Plaintiff

C. Townsend and A. Davidson, for the Defendant

HEARD: November 12-19, 2019 and November 9-13, 2020

REASONS FOR JUDGMENT

OVERVIEW

[1] In February 2008, Mika Nooks was hired on a full-time basis by the Toronto Transit Commission (TTC) as a transit operator. On November 11, 2014, she was promoted to route supervisor. She remained in that position until she was terminated from her employment on June 8, 2016. The TTC takes the position that Ms. Nooks committed a fraud on the TTC with respect to group health benefit claims and the termination of her employment was for just cause. Ms. Nooks denies being involved in a fraud and brings this action seeking damages for wrongful termination of her employment.

[2] The TTC’s group benefits plan was administered by the Manufacturers Life Insurance Company (Manulife). The plan provides for 100 percent reimbursement of eligible healthcare claims less a $10 deductible for the first claim filed in the year. Claims were submitted to Manulife, which reimbursed employees for the eligible amounts. Manulife invoiced the TTC for 100 percent of the claims plus an administration fee.

[3] In the spring of 2014, the TTC was advised through its whistleblower hotline that Healthy Fit Inc. was submitting fraudulent claims to Manulife for items such as orthotics, orthopedic shoes, compression hose, and braces. Healthy Fit is a Toronto-based healthcare supplier. Adam Smith was its principal and managed day-to-day operations. His father, David Smith, was the owner of S&S Executive Services Incorporated (S&S), which provided loans to some TTC employees to fund the purchase of medical devices and treatment from Healthy Fit. The Toronto police carried out an investigation. On July 21, 2015, the police executed a search warrant at Healthy Fit and arrested Adam Smith. In October 2016, he was charged in relation to the fraud. He was convicted and sentenced to two years in jail.

[4] The TTC Investigative Services investigated Healthy Fit. It was determined that the claims submitted through Healthy Fit totalled close to $6 million and involved over 600 TTC employees. One of the TTC employees who submitted Healthy Fit claims through Manulife was Ms. Nooks. Between October 2013 and July 2015, Ms. Nooks submitted claims to Manulife in the total amount of $15,815. Ms. Nooks agrees she made benefit claims for medical devices and treatment received from Healthy Fit but denies she was involved in the fraudulent scheme. She states that the devices and treatment she purchased were medically required. She also states that she repaid all loans she had received to pay for the devices and treatment.

[5] The Healthy Fit scheme generally followed an eight-step process;

1. The employee visits Healthy Fit;

2. Healthy Fit directs the employee to a medical practitioner;

3. The employee receives a prescription for various medical devices or treatment;

4. Adam Smith offers the employee a short-term loan through S&S or BYM Finance Incorporated (BYM). The employee signs a promissory note and receives the funds to pay for the medical devices or treatment;

5. The employee pays Healthy Fit to purchase the prescribed items. An invoice is generated;

6. Healthy Fit completes the benefit claim form. The form is signed by the employee and, along with the invoice, submitted to Manulife;

7. Manulife reimburses the employee for the amount claimed. The employee remits between 40-60 percent of the amount to Adam Smith; and

8. Adam Smith instructs the loan company to discharge the loan.

[6] The TTC takes the position that Ms. Nooks submitted fraudulent claims to Manulife and the proceeds were split between her and Healthy Fit. Ms. Nooks has maintained throughout that she did not participate in a fraudulent scheme.

[7] The action proceeded to trial without a jury, which started on November 12, 2019. After one week of evidence, trial counsel for the Plaintiff brought a motion to be removed as counsel of record, citing “ethical reasons”. I granted the relief sought. The trial was adjourned to allow Ms. Nooks to retain new counsel.

[8] The trial resumed on November 9, 2020 and concluded on November 13, 2020. The Plaintiff was to deliver her written submissions by December 3, 2020. She requested a brief adjournment so her current counsel could obtain the transcripts of the trial from November 2019. I granted the request. By endorsement dated December 4, 2020, I established a new timetable for delivery: the Plaintiff was to deliver her written submissions by January 15, 2021, the Defendant was to deliver its submissions by February 1, 2021, and reply submissions were to be delivered by February 8, 2021. The Plaintiff requested an additional extension to obtain the transcripts of the Defendant’s experts. I granted the adjournment and the deadline for the Plaintiff’s submissions was extended to January 29, 2021. The Plaintiff delivered her written submissions on January 29, 2021. The Defendant delivered its submissions on February 12, 2021. The Plaintiff delivered written reply submissions on February 26, 2021.

[9] For the reasons set out below, I dismiss the Plaintiff’s action and allow the Defendant’s counterclaim.

THE ISSUES

[10] The following issues are to be determined:

1. Is the Plaintiff entitled to a mistrial?

2. Did the Plaintiff engage in theft or fraud so egregious as to sever the employment relationship?

3. Was the summary termination of the Plaintiff’s employment a proportional response or were reasonable alternative means of discipline available?

4. Was the Plaintiff’s conduct so egregious as to deny her pay under the Employment Standards Act, 2000, S.O. 2000, c. 41?

5. What are the Plaintiff’s damages for the termination of her employment and emotional distress? and

6. What are the Defendant’s damages with respect to the counterclaim?

THE EVIDENCE

[11] Six witnesses testified at trial. For the Plaintiff: Ms. Nooks; her life partner, Chirysh Dupie; her family physician, Dr. Chan; and chiropractor, Dr. Laura Liu. For the Defendant: the TTC’s Director of Employee Relations, Sean Milloy, and forensic account, Ed Nagel.

The Plaintiff’s Witnesses

a. Dr. Liu

[12] Dr. Laura Liu became a licensed chiropractor in the Province of Ontario in April 2011. She worked as an independent contractor at Healthy Fit from May 2012 until the police investigation in 2015. Dr. Liu was not charged with fraud, although she is currently under investigation by her college. She denied being involved in or even aware of the fraudulent scheme. She testified that she only provided treatment or prescribed medical devices that were needed by the patient.

[13] Dr. Liu met with Ms. Nooks on October 24, 2013. She took a history: Ms. Nooks complained of pain in her neck, low back, and foot, and headaches. Dr. Liu diagnosed Ms. Nooks with low arches and prescribed orthopedic shoes and orthotics. After the initial visit, Manulife changed its procedure and, as a result, Dr. Liu was no longer able to prescribe orthotics. In July 2015, she fitted Ms. Nooks for a back brace, which had been prescribed by Dr. Chaudhi at a walk-in clinic.

b. Dr. Chan

[14] Dr. Chan has been licensed to practice family medicine in Ontario since 1974. Dr. Chan did not submit a written expert report or, initially, a Form 53. The Defendant objected to Dr. Chan providing opinion evidence. I found that Dr. Chan was qualified as a hybrid expert: see Westerhof v. Gee Estate, 2015 ONCA 206, 124 O.R. (3d) 721. Dr. Chan executed a Form 53. He was permitted to give opinion evidence with respect to matters flowing from his medical knowledge of the Plaintiff. His area of expertise is family medicine.

[15] Ms. Nooks has been Dr. Chan’s patient since she was 7 years of age – that is, 28 years. Dr. Chan testified that Ms. Nooks’ health was “not great”. She had longstanding problems with her weight and back pain. When she was 21 years of age, she had increased neck and back pain. This may have been related to large breasts, which affected her posture; she had breast reduction surgery. Even after the surgery, though, Ms. Nooks continued to have pain in her back. Dr. Chan noted that driving a bus aggravated her back pain. Dr. Chan was also aware of knee complaints. He stated that knee pain is not uncommon in patients who are overweight. Dr. Chan was not aware of any pain in the soles of Ms. Nooks’ feet. He had no record of flat feet or arch issues.

[16] From time to time, Dr. Chan would provide a doctor’s note for Ms. Nooks with respect to absences from work. There was also an application for sick benefits between December 1-4, 2012. At that time, Dr. Chan diagnosed Ms. Nooks with neck pain and prescribed physiotherapy. Ms. Nooks was absent from work between February 7-11, 2013. The diagnosis at that time was acute low back strain. The noted treatment was analgesics and chiropractic treatment.

[17] Ms. Nooks saw Dr. Chan for annual general assessments and if she had any medical issues. She saw Dr. Chan on February 7, 2013. She complained of low back pain. He ordered an x-ray, which was negative. Ms. Nooks saw Dr. Chan for her periodic health visit on September 19, 2013. No abnormalities were noted. The musculoskeletal examination was normal. No complaint was noted with respect to her feet, knees, back, neck, arms, or legs. Ms. Nooks next saw Dr. Chan on April 12, 2014. There is reference in his note to a plantar wart. Dr. Chan stated that the wart would cause pain but did not diagnose Ms. Nooks with flat feet or low arches. On October 14, 2014, Ms. Nooks complained of tenderness in the right kidney area. Dr. Chan ordered an ultrasound, which was negative for kidney issues. Dr. Chan conducted a general assessment on October 6, 2015. He noted that Ms. Nooks had a supervisory position at the TTC. She had ongoing back issues and Dr. Chan’s working diagnosis was obesity. Over this period, there was no reference to Ms. Nooks requesting any medical devices and none were prescribed by Dr. Chan.

[18] Dr. Chan saw Ms. Nooks on September 17, 2016. He notes that she had been fired by the TTC. She complained of anxiety. He prescribed antidepressant medication. Ms. Nooks saw Dr. Chan for her general assessment on December 12, 2016. Her chief complaint was pain in her right knee and low back. She was depressed because of the loss of her job. Ms. Nooks was seen by Dr. Chan on June 8 and 15, 2017. She complained of back pain and tightness and knee pain. There is reference to Ms. Nooks seeing a psychiatrist.

[19] In June 2017, Ms. Nooks told Dr. Chan that she went to a walk-in clinic in 2013 or 2014, at which time she received a prescription for braces and orthotics. She was also prescribed compression stockings and arm sleeves. Dr. Chan agreed that compression stockings and sleeves may be of assistance to Ms. Nooks, but noted that she did not make any complaint of tired legs or arm pain to him. Dr. Chan confirmed in his report dated June 19, 2018 that he first learned Ms. Nooks was using medical devices when he received the instruction letter from her lawyer.

[20] In cross-examination, Dr. Chan was taken to his clinical note of September 19, 2013. Ms. Nooks’ primary issue at that time was with respect to obesity. Her blood pressure was a little high. There is no mention of arm, knee, or foot complaints. Dr. Chan testified that if Ms. Nooks had made any complaints of this nature, he would have written it down. He did not make a recommendation for arm sleeves or stockings. Dr. Chan was also taken to his note dated April 14, 2014. There is no reference in the notes to circulation issues in Ms. Nooks’ arms or legs. Dr. Chan testified that she did not tell him she was using compression sleeves and stockings. He again confirmed that if she had made these complaints, he would have referred to it in his clinical notes. Dr. Chan confirmed on cross-examination that there is no reference to knee or other musculoskeletal issues in his general assessment on October 6, 2015.

[21] Dr. Chan completed a medical examination for the Ministry of Transportation on August 26, 2017. He took a complete health history. There is no reference to any musculoskeletal issues. The examination was normal. He notes in the report that Ms. Nooks is a “healthy woman”.

c. Mika Nooks

Employment with TTC

[22] Ms. Nooks is 35 years of age. She lives with her mother.

[23] Ms. Nooks started working at the TTC on February 4, 2008 as a bus driver. She was very happy with her job and thought she would work at the TTC for her entire career. In November 2014, she was promoted to route supervisor. She worked in that position until the termination of her employment on June 8, 2016. She testified that her work record was good. She was always punctual and volunteered for extra work.

[24] As a bus driver, Ms. Nooks was a member of Amalgamated Transit Union, Local 113. She was required to leave the union once she became a route supervisor. Ms. Nooks agreed in cross-examination that as a supervisor she was responsible for administering the policies of the TTC. She was required to take ethics training when she was promoted. She took this training in May 2015. Her employment contract provides that she is to be of “good character” and comply with the policies and code of conduct of the TTC. She agreed in cross-examination that failure to be truthful could jeopardize the employment relationship.

Medical History

[25] Ms. Nooks’ family doctor is Dr. Chan. She would see Dr. Chan for regular check-ups and if she had medical issues. She testified that she did not always tell Dr. Chan about all of her medical issues. On occasion, she would go to walk-in clinics because it took a long time to see Dr. Chan. She did not get any prescriptions for assistive devices from Dr. Chan.

[26] On February 7, 2013, Ms. Nooks saw Dr. Chan with complaints of back pain. He prescribed analgesics and chiropractic treatment. Ms. Nooks began attending physiotherapy for her neck and back. On September 19, 2013, she saw Dr. Chan for her periodic health examination. Her primary issue was obesity. Her blood pressure was slightly high. Dr. Chan noted that her musculoskeletal system was normal. There was no mention of arm, knee, or foot complaints.

[27] Ms. Nooks attended physiotherapy from February 7, 2013 to October 6, 2014. This was primarily to massage her neck and back muscles.

Healthy Fit Claims Made by Ms. Nooks

[28] At work, Ms. Nooks overheard some co-workers mention that they received orthotics from Healthy Fit. There was a sign-up sheet on the union bulletin board. She called Healthy Fit a week or two later and made an appointment. When she first went to Healthy Fit, she said she worked at the TTC. She met with the receptionist and the owner of Healthy Fit, Mr. Smith. He said she would be referred to Dr. Liu, a licensed chiropractor who worked as an independent contractor with Healthy Fit. Ms. Nooks was told that a finance company would provide loans to purchase the medical products and services prescribed.

[29] Ms. Nooks received treatment and medical devices through Healthy Fit. She testified that she used all the medical devices for which she submitted claims. To purchase the treatment and medical devices, she applied for loans through companies associated with Healthy Fit. She would have been unable to make the purchases without a loan. She did not have extra cash or savings and frequently required payday loans to cover her expenses.

[30] Ms. Nooks stated that when she received a loan, money was transferred to her account. She used the money to purchase a device or treatment from Healthy Fit. She then made a group benefits claim to Manulife. When the claim was paid by the insurer, she repaid the loan, when she picked up the medical device. Ms. Nooks testified that she repaid all the loans. The only exception is the final loan for the purchase of a back brace because, at the time she received the money, Mr. Smith had been arrested and she did not know to whom the payment was to be made.

[31] The TTC states that Ms. Nooks made ten separate claims for medical goods or services through Healthy Fit. The Defendant argues that she did not require the devices or treatment and did not fully repay the loans. It is the TTC’s position that Ms. Nooks split the insurance proceeds with Healthy Fit and/or Mr. Smith and was knowingly involved in the fraud.

1. October 24, 2013

[32] On October 24, 2013, Dr. Laura Liu prescribed orthopedic shoes and custom-made orthotics to Ms. Nooks. On November 1, 2013, Dr. William Lu prescribed compressions stockings. Ms. Nooks was also prescribed chiropractic treatment. The cost of the medical goods and services was $1,585. Dr. Lu did not testify at trial.

[33] Ms. Nooks did not have enough money to purchase the medical devices or treatment. On November 5, 2013, she applied for a loan from S&S to finance her purchase. She signed a promissory note. The same day, $1,585 was advanced by S&S and deposited into her account. Healthy Fit generated invoices in the amount of $800 for compression hose, $250 for orthopedic shoes, $500 for orthotics, and $35 for chiropractic treatment. Ms. Nooks did not keep copies of the invoices. On November 5, 2013, she transferred $1,585 to Healthy Fit. The claim form was prepared on her behalf, with the prescriptions and Healthy Fit invoices attached. Manulife paid the claim and $1,585 was deposited into Ms. Nooks’ account on November 21, 2013.

[34] Ms. Nooks was required to repay S&S for the loan. She testified that she made the payment to Mr. Smith. According to Ms. Nooks, she received an e-mail from Manulife on November 20, 2013 stating that she would receive payment the next day. On November 20, 2013, she withdrew $540 from her bank account. She states that she then withdrew $1,000 from an ATM. At that time, her maximum ATM withdrawal was $1,000 a day. She used the money to pay Mr. Smith in cash. She went into Healthy Fit to pick up the devices and repaid the loan at the same time. She did not get a receipt. She later received a letter from S&S confirming that the loan had been repaid. She did not keep a copy of this letter.

2. November 25, 2013

[35] The second claim was for compression arm sleeves. Each arm sleeve cost $495. Ms. Nooks ordered four, resulting in a total claim of $1,980. She obtained a loan in this amount from S&S. On November 25, 2013, S&S deposited $1,980 into Ms. Nooks’ account. The same day, she transferred $1,980 to Healthy Fit to pay for the arm sleeves. The claim was submitted to Manulife. It was signed by Ms. Nooks on November 25, 2013 and indicates that she had received the goods. In fact, the arm sleeves had to be ordered and she had not received the items at the time she signed the claim form.

[36] On December 12, 2013, payment from Manulife in the amount of $1,980 was deposited into Ms. Nooks’ account. She testified that she gave this to Mr. Smith to repay the loan. She withdrew $1,800 from a teller on December 12, 2013. She had no maximum withdrawal from a teller. On cross-examination, when asked why she did not withdraw the full $1,980, Ms. Nooks testified that she “did not feel like it”. She went to the ATM the next day to withdraw $202. She stated that she used the amounts withdrawn from the teller on December 12, 2013 and from the ATM on December 13, 2013 to pay the full amount of the loan in cash. She did not obtain a receipt. She said she later received a letter stating that the loan was discharged. She did not retain a copy of the letter.

3. January 28, 2014

[37] Ms. Nooks had nine chiropractic treatments at a cost of $315. She obtained a loan from S&S in this amount which was received on January 28, 2014. The next day, she paid this to Healthy Fit, which made the claim directly to Manulife on her behalf. Ms. Nooks received payment from Manulife on February 6, 2014 in the amount of $315. She testified that she withdrew $402 ($400 plus a $2 service charge) on February 6, 2014 to repay the loan. She paid cash to Mr. Smith. On February 10, 2015, she received letter confirmation that the loan had been discharged. She did not keep a copy of the letter.

4. May 13, 2014

[38] The fourth claim was with respect to chiropractic treatments in the amount of $245, plus four compression hose each costing $200. The total claim was $1,045. On May 13, 2014, Ms. Nooks obtained a loan from S&S. On May 15, 2014, Ms. Nooks made a payment to Healthy Fit of $1,045. Healthy Fit completed the claim form and she signed it. The claim was submitted on her behalf to Manulife on May 15, 2014. Ms. Nooks received payment from Manulife on May 28, 2014, in the amount of $1,035. This was the amount of the claim less the deductible of $10.

[39] On May 28, 2014, Ms. Nooks sent a text message to Mr. Smith asking how much she owed. He told her she owed $565. She replied that she would drop the money off tomorrow. On May 29, 2014, she withdrew $600 and used that money to pay $565 in cash to Mr. Smith.

[40] In cross-examination, Ms. Nooks was asked why she sent an e-mail to Mr. Smith asking how much was owing, given that she knew the loan amount was $1,045. She stated that she was asking about the amount Mr. Smith wanted to be sent by e-transfer. The balance was to be paid in cash. In this case, she did not pay the $565 by e-transfer. She stated that she was going to the clinic in any event and decided to pay $565 in cash. She later paid the balance owing on the loan in cash and the loan was discharged. There is no documentary evidence that the balance of the loan was paid.

[41] Ms. Nooks was also asked why the entire amount was not withdrawn on May 29, 2014. Manulife had deposited $1,035 into her bank account and she had sufficient funds to pay the entire amount. Ms. Nooks stated that she rolled the amount owing for the loan on the fourth claim into the fifth claim.

5. May 30, 2014

[42] Ms. Nooks made a claim on May 30, 2014 for four compression arm sleeves, at a cost of $1,980. She received a loan from S&S in this amount, which was deposited into her account on May 30, 2014. The same day, Ms. Nooks made a payment to Healthy Fit in the amount of $1,980. Healthy Fit completed the Manulife claim form. Manulife paid the claim, and $1,980 was deposited into Ms. Nooks’ account on June 13, 2014.

[43] On June 17, 2014, Ms. Nooks sent a text message to Mr. Smith asking how much was owing. The same day, he sent a response and asked to be paid $780. Ms. Nooks testified that she was going on vacation and did not have time to pay him back. She asked if she could bring the payment when she returned from vacation. He responded “nice. $780 please”. She understood this to mean that he wanted a portion of the money, so she arranged for Chirysh Dupie to make the payment. On June 17, 2014, Ms. Nooks transferred $1,600 to Ms. Dupie. According to Ms. Nooks, Ms. Dupie withdrew this amount on the same day and paid $1,600 in cash to Mr. Smith. After this payment, the balance owing on the loans for the fourth and fifth claims was $750. Ms. Nooks made an e-transfer of $780 to Healthy Fit over one month later, on July 30, 2014.

[44] In her examination in-chief, Ms. Nooks testified that she transferred $1,600 from her bank account to Ms. Dupie’s account so she could pay the balance in cash. In cross-examination, Ms. Nooks was referred to her discovery transcript. She had previously testified that she sent an e-transfer in this amount directly to Mr. Smith. At trial, she said that she had misspoken at discovery and Ms. Dupie had paid $1,600 to Mr. Smith on her behalf.

[45] Ms. Dupie testified at trial. She confirmed Ms. Nooks’ evidence that $1,600 was transferred into her bank account and that she paid Healthy Fit. She produced a document, marked as EX. 10, that she stated was a summary of her bank account. The statement shows a transfer from Ms. Nooks into Ms. Dupie’s account of $1,600 at 2:03 p.m. on June 17, 2014. The statement also shows that on the same day, Ms. Dupie withdrew $1,600 from an ATM at a CIBC branch at Dundas Street and Bloor Street. She testified that she clearly remembers that day. She drove Ms. Nooks’ car to Healthy Fit, spoke with one of the two receptionists, and gave them $1,600 in cash. She did not get a receipt. Ms. Dupie testified that she did not know why Ms. Nooks did not pay herself. This was the first and only time she was asked to make a payment to Healthy Fit on behalf of Ms. Nooks.

[46] The bank summary was not in the form of an official bank statement. Plaintiff’s counsel was directed to attend at the branch and obtain the actual statement. The actual bank statement was made EX. 16 and does not match the summary marked as EX. 10. The bank statement marked as EX. 16 shows an e-transfer on June 17, 2014. The bank summary marked as EX. 10 deleted the e-transfer and had an ATM withdrawal in its place.

[47] The actual bank statement was obtained after Ms. Dupie concluded her evidence. Ms. Dupie was not recalled as a witness for the Plaintiff when the trial resumed. Plaintiff’s counsel argued that there is no property in a witness and the Defendant could have called Ms. Dupie to provide an explanation. Although there is no property in a witness, Ms. Dupie was called by the Plaintiff and is her life partner. Ms. Nooks called Ms. Dupie as a witness to establish that the loans for the fourth and fifth claims were repaid, and therefore it was incumbent upon her to recall Ms. Dupie. I draw an adverse inference from the Plaintiff’s failure to recall Ms. Dupie to explain the differences between EX. 10 and EX. 16.

[48] Ms. Nooks testified in reply. She stated that she initially believed Ms. Dupie had withdrawn the $1,600 to pay Healthy Fit. She did not learn that Ms. Dupie had not withdrawn this amount until her evidence at trial. Ms. Nooks maintained her position that Ms. Dupie paid $1,600 to Healthy Fit. She said that she was involved in a group called a Pardner, which is a Jamaican tradition in which a group of friends pay small amounts into a pool. Each person in the pool receives a lump sum from time to time. Ms. Nooks testified that in May or June 2014, she received $2,000 from the pool, which she gave to Ms. Dupie to pay for their vacation. Ms. Nooks assumes that Ms. Dupie took $1,600 of this amount to make the cash payment to Mr. Smith.

[49] Ms. Dupie did not testify that she received $2,000 in cash from Ms. Nooks and the Pardner. She was very specific in her evidence that she withdrew $1,600 from an ATM and took the cash to Healthy Fit. Nor did Ms. Nooks refer to the Pardner pool in her evidence in-chief. Ms. Dupie was not recalled as a witness and, as a result, there is no evidence from her confirming Ms. Nooks’ claim that Healthy Fit was paid from the Pardner funds. There was no evidence from any of the persons who participated in the Pardner program. Ms. Nooks did not provide any documentary evidence to support her claim that she received $2,000 from the Pardner and then transferred this to Ms. Dupie. There is no documentary evidence that Ms. Dupie paid the amount owing to Healthy Fit for the loans. Although Ms. Nooks states that she received a letter confirming that the loans had been discharged, she did not retain a copy.

[50] The week after the $1,600 was deposited into Ms. Dupie’s account, Ms. Nooks and Ms. Dupie traveled to Mexico for a vacation.

6. October 17, 2014

[51] Healthy Fit referred Ms. Nooks to Dr. Chaudhi, who has a walk-in clinic close to the Healthy Fit offices. Ms. Nooks saw Dr. Chaudhi on September 8, 2014. Dr. Chaudhi did not testify at trial.

[52] When Ms. Nooks saw Dr. Chaudhi, she complained of bilateral knee pain. Ms. Nooks testified that she asked for knee braces because she knew that in her new supervisor job, she may be required to stand long hours. A few weeks later, on October 14, 2014, Ms. Nooks saw Dr. Chan for pain in the right kidney area. There is no reference in Dr. Chan’s notes of any knee pain or that Ms. Nooks was prescribed a knee brace. Nor is there any reference in his notes to Ms. Nooks seeing Dr. Chaudhi.

[53] Dr. Chaudhi wrote on the prescription that the “patient wants to try knee brace”. Ms. Nooks sent a text to Mr. Smith that she was concerned that the way the prescription was written might result in the claim being rejected. In his response, Mr. Smith asked her to keep the price of the knee brace from Dr. Chaudhi. In cross-examination, Ms. Nooks stated that she did not think anything of this statement from Mr. Smith.

[54] On October 16, 2014, Ms. Nooks obtained a loan from S&S in the amount of $3,600. This was deposited into her bank account on the same day. The next day, she paid this amount to Healthy Fit for the knee brace. Healthy Fit prepared a Manulife claim form. There was a delay in receiving the payment. On November 2, 2014, Ms. Nooks sent a text to Mr. Smith asking how long payment for the knee brace would take. On November 5, 2014, Ms. Nooks received payment from Manulife in the amount of $3,600.

[55] Ms. Nooks e-mailed Mr. Smith on November 5, 2014 asking how much was to be paid. Mr. Smith asked for $1,800. On November 5, 2014, Ms. Nooks sent $1,800 by e-transfer. The balance of $1,800 continued to be owing.

[56] Ms. Nooks testified that she understood from his e-mail that Mr. Smith wanted $1,800 by e-transfer and the balance in cash. She did not ask him why he wanted to be paid this way. Ms. Nooks testified that she withdrew $1,000 on November 5, 2014 to pay part of the balance owing. She withdrew $500 on November 12, 2014 but had to put $200 back because payments were coming out of her account. On November 19, 2014, she took out another $500. She went to the Healthy Fit offices on three separate occasions to pay the balance of the loan: November 5, November 12, and November 19, 2014. She did not receive a receipt evidencing payment of the amount owing. She stated that once the amount was paid, she received a letter confirming that the loan had been repaid. She testified that she threw the letter into the garbage.

7. November 28, 2014

[57] The seventh claim was in the amount of $750 for orthopedic shoes and custom orthotics. The shoes were prescribed by Dr. Towines, a chiropodist who worked at Healthy Fit. Ms. Nooks testified that she complained of foot pain to Dr. Chan. There is no reference to foot complaints in Dr. Chan’s notes, with the exception of a plantar wart on April 12, 2014. Dr. Chan did not prescribe orthotics for Ms. Nooks.

[58] Ms. Nooks obtained a loan from S&S in the amount of $750. The loan payment was received on November 24, 2014. She paid this amount to Healthy Fit on November 28, 2014. Healthy Fit prepared the Manulife claim form, which was signed by Ms. Nooks. On December 17, 2014, she received the payment from Manulife.

[59] On December 14, 2014, Ms. Nooks sent an e-mail to Mr. Smith asking how much was owing. Mr. Smith responded that she was to pay $400. On December 17, 2014, Ms. Nooks sent an e-transfer in the amount of $400 to Mr. Smith. In cross-examination, Ms. Nooks was asked why the entire amount was not transferred. She confirmed that there was no limit on her e transfers. She stated that she planned to pay the $350 balance owing in cash when she picked up the shoes.

[60] On December 18, 2014, Ms. Nooks withdrew $140. She withdrew an additional $200 on December 19, 2014. She testified that she used these amounts to pay the balance owing. She did not obtain a receipt confirming that the loan was paid in full.

8. January 12, 2015

[61] After receiving the e-mail from Mr. Smith that she was to pay $400 for the seventh claim, Ms. Nooks asked if she could do arm sleeves and compression stockings in January. Mr. Smith responded that she would need new prescriptions. She sent an e-mail asking to use “your guy on Weston by the Superstore”. This was Dr. Lu, who provided a prescription for arm sleeves on January 8, 2015 based on a diagnosis of chronic venous insufficiency. In cross-examination, Ms. Nooks was asked why she did not see Dr. Chan about her arm issues. She stated that she did not want to wait to see him.

[62] The claim for the compression stockings and sleeves was in the amount of $1,980. Ms. Nooks signed a promissory note on January 9, 2015 and obtained a loan of $1,980 from BYM. She received the funds on January 12, 2015. On the same day, she made a payment to Healthy Fit in this amount for the compression stockings and arm sleeves. The claim was submitted to Manulife and payment was made to Ms. Nooks on February 5, 2015.

[63] On February 4, 2015, Ms. Nooks sent a text message to Mr. Smith and asked what amount was to be paid to him. He responded the same day and asked for $780. On February 5, 2015, Ms. Nooks transferred $780 to Mr. Smith. $1,200 was still owing. Ms. Nooks stated that she withdrew $200 on February 12, $500 on February 13, and $700 on February 26, 2015 to pay Mr. Smith. She testified that she paid the balance on February 26, 2015. In cross-examination, Ms. Nooks was asked why only partial amounts were withdrawn when she had enough money in her account to pay the total. She testified, “that’s what I chose to do.” She did not receive any receipts with respect to the payments.

[64] In cross-examination, Ms. Nooks confirmed that she received an e-mail from Healthy Fit on February 25, 2015 stating that the promissory note of January 9, 2015 had been repaid in full. This was the day before she said she made the final payment to Healthy Fit. She did not receive any communications stating that the e-mail on February 25, 2015 was in error. There was no e mail sent after February 26, 2015 confirming that the additional payment was made.

9. February 12, 2015

[65] Ms. Nooks purchased two compression stockings on February 12, 2015. The cost was $800. She applied for a loan in this amount from BYM on February 10, 2015. The loan proceeds were paid to her on February 12, 2015. She testified that she paid this amount to Healthy Fit on February 18, 2015. The Manulife claim was submitted and $800 was deposited into her account on March 11, 2015.

[66] On March 12, 2015, Ms. Nooks sent a text message to Mr. Smith asking what was owed. He responded on the same day and asked for $320. On March 12, 2015, Ms. Nooks paid $320 to Mr. Smith. The balance of $480 was owing to repay the loan. Ms. Nooks stated that she paid the full amount when she picked up the stockings.

[67] Ms. Nooks testified that on March 13, 2015, she withdrew $600 in cash from an ATM and paid $480 in cash to Mr. Smith. Ms. Nooks received an e-mail on March 13, 2015 confirming that the loan had been paid in full. The e-mail was sent at 2:21 a.m. An e-mail was sent at 7:22 a.m. from Mr. Smith to Mr. Mayer at BYM stating that the loan was discharged. Ms. Nooks stated that Healthy Fit did not open before 7:22 a.m. She did not have an explanation for why she made a payment of $480 after the loan had been discharged.

10. July 8, 2015

[68] Ms. Nooks made a claim in the amount of $1,800 on July 8, 2015 for a custom back brace prescribed by Dr. Chaudhi. She received a loan in this amount from BYM on July 7, 2015. She paid this to Healthy Fit the following day.

[69] The claim was submitted to Manulife and $1,800 was paid to Ms. Nooks on July 21, 2015. She stated that she did not repay the $1,800 to Healthy Fit because on the same day she received this amount from Manulife, Mr. Smith was arrested, and Healthy Fit was shut down. Although she did not pay Mr. Smith, Ms. Nooks picked up the back brace, which she had at the time of trial.

[70] Ms. Nooks testified that she wanted to repay the loan but did not know who to pay. She did not contact the TTC or Manulife about it. Ms. Nooks testified that she was shocked and surprised about what had been going on at Healthy Fit.

$5,000 Loan

[71] Ms. Nooks was interested in borrowing $5,000 to pay for some things in Jamaica and to purchase a car. She approached Mr. Smith, who arranged for the loan to be provided by BYM. Ms. Nooks entered into a loan agreement with BYM on August 21, 2014. The loan was to be repaid in full by August 20, 2015 with $560 in interest. The monthly payments were $480. Ms. Nooks testified that the loan was not related to the purchase of any products or services from Healthy Fit. She repaid the loan in full.

TTC Investigation

[72] Ms. Nooks did not hear anything further about the Healthy Fit situation until October 9, 2015. She was starting her shift early in the morning when she was told that Natalie Wood wanted to see her at the Davisville office. She was taken there by her co-worker, Mr. Baldwin.

[73] Ms. Nooks met with Ms. Wood. She entered what appeared to be an interrogation room. She was not allowed to contact anyone. The interview started at 6:41 a.m. and ended at 10:56 a.m. Ms. Nooks was asked about her involvement with Healthy Fit. She said that she received all the orthotics claimed. She also stated that she repaid the loans. She felt they did not believe her. She offered to show them the medical devices and her bank records. When she tried to access her bank records, she was told by her bank that records for 2013 and 2014 were not available. According to Ms. Nooks, the questions were very repetitive. She was asked about the $5,000 loan and whether this was a kickback. She stated that the loan was private and had nothing to do with Healthy Fit.

[74] At some point, Ms. Wood left, and Ms. Nooks was alone. Greg Jensen then came into the room. She thought Mr. Jensen was from the police. He also asked her questions about Healthy Fit. Ms. Nooks stated that she was afraid. She wanted the interview to be over. She was crying. She told Mr. Jensen that she got $200 from Healthy Fit. She said that Mr. Smith would on occasion give her $50-100. She testified at trial that this was not true, but she said it to get out of the interview. She testified that she would have said anything to have the interview stop. The interview ended soon after she stated that she received $200 from Healthy Fit. She asked if she was required to come back. Mr. Jensen said no, but someone would get back to her in a week or so. She was picked up by Mr. Baldwin and returned to work.

[75] Ms. Nooks did not hear anything more until June 8, 2016, at which time she was terminated from her employment. Her dismissal letter was given to her near the end of her shift. It provides that Ms. Nooks engaged in a scheme to improperly claim benefits for custom braces, compression stockings and arm sleeves, shoes/orthotics, and knee braces. The letter also states that her employment was being terminated because she lied about her involvement in the scheme. She felt her “life was over”. She was offered a taxi home, but she declined. She gave back her security pass and keys.

[76] On September 14, 2017, Ms. Nooks withdrew the admission made during the interview that she received $200 from Healthy Fit. She stated that she was being held hostage and was willing to say anything to get out of the interview.

Post Termination

[77] Soon after the termination of her employment, Ms. Nooks began looking for a job. She also applied for Employment Insurance benefits. She was denied benefits because of the claim that she had defrauded her employer. She experienced depression and anxiety. She saw Dr. Chan on September 17, 2016 and he prescribed her Cipralex. She was referred to a psychiatrist, who she started seeing in the summer of 2018. She was diagnosed with depression and anxiety and was prescribed Zoloft.

[78] Ms. Nooks obtained new employment as a bus driver with Go Transit. She started work on May 13, 2019.

d. Chirysh Dupie

[79] Chirysh Dupie lives in Toronto. She has a B.A. from York University in social studies. She is working on her master’s degree and is currently on maternity leave. She and Ms. Nooks are having a child together. She has been in a relationship with Ms. Nooks for 11-12 years.

[80] Ms. Dupie testified that she made a claim through Healthy Fit. She saw Dr. Liu for back adjustments and purchased orthotics, orthopedic pillows, and compression stockings from Healthy Fit. She does not believe that her medical devices or treatment were paid for through Ms. Nooks’ benefit plan with the TTC. She paid cash for all her purchases. She sometimes went with Ms. Nooks to Healthy Fit and saw Ms. Nooks make cash payments to the receptionist. Ms. Dupie testified that Ms. Nooks complained of back and leg pain. She saw her use the compression stockings and arm sleeves.

[81] Ms. Dupie has a bank account with the CIBC branch at Dundas Street and Bloor Street. A document referred to as a bank summary was made EX. 10 at trial. As set out in para. 45 above, Ms. Dupie testified that she received $1,600 from Ms. Nooks on June 17, 2014. A short time later, she withdrew the same amount in cash. She took the money to Healthy Fit to repay a loan on behalf of Ms. Nooks. She drove Ms. Nooks’ car to the Healthy Fit office on Wilson Avenue and gave the money to the receptionist. She did not know who she gave the money to. She did not get a receipt.

[82] Ms. Dupie stated that Ms. Nooks was devastated when she lost her job. She loved working at the TTC.

The Defendant’s Witnesses

a. Sean Milloy

[83] Sean Milloy is the Director of Employer Relations at the TTC. He began this job in September 2017. Before he took on that position, he had been Manager of Employment Relations since January 2015 and before that, he worked as a consultant at the TTC from December 2013 to January 2015. In 2017, he oversaw the Healthy Fit fraud investigation.

[84] Mr. Milloy provided evidence with respect to TTC policies that apply to all employees. There is a code of conduct, which was approved on October 24, 2010, that provides that fraud will not be tolerated. An updated version was approved on April 13, 2015. The TTC’s conditions of employment are dated November 19, 1999 and provide that an employee may be dismissed if they fail to meet the standards of conduct and performance. The updated version is dated January 7, 2015. The update provides that it is expected that employees will not engage in any illegal conduct.

[85] In the spring of 2014, the TTC learned of a fraud through a whistleblower. The ensuing investigation revealed that hundreds of TTC employees were taking advantage of the benefit plan by attending the Healthy Fit clinic. The TTC commissioned an investigative report. As part of its investigation, Ms. Nooks was interviewed at the TTC offices at 1900 Yonge Street. There was a closed-circuit camera in the interview room. Mr. Milloy did not know whether employees were told that their interviews were videotaped and recorded. In cross-examination, he stated that employees should be told if an interview is being videotaped. Mr. Milloy noted that Ms. Nooks was a non-union employee at the time of the interview. The collective agreement provides for an advisor to be present during an investigation. He does not know whether Ms. Nooks was told about this. He did not agree that non-union employees ought to be told about representation during an interview.

[86] After the interview with Ms. Nooks, the TTC continued its investigation. The second report is dated May 25, 2016 and indicates that Ms. Nooks was not being truthful during the interview. Rachel Gerry stated that she would put the second report to Ms. Nooks to get her response, but Ms. Nooks was not re-interviewed. It was recommended that Ms. Nooks’ employment be terminated. A detailed termination letter was prepared. It is dated June 8, 2016 and was provided to Ms. Nooks by David Longley on that date. The letter provides a level of detail so Ms. Nooks would know why she was terminated. Mr. Longley read the termination script to Ms. Nooks. A taxi chit was offered but refused by Ms. Nooks.

[87] A number of TTC employees were charged as a result of the fraud; Ms. Nooks was not one of them. Mr. Milloy testified that 630 TTC employees were involved in the Healthy Fit fraud, or approximately 5 percent of the workforce. The majority of the employees involved in the scheme were terminated. In some cases, the employee paid the money back and served a suspension.

b. Ed Nagel

[88] Ed Nagel is a forensic accountant. He is a chartered accountant and obtained a specialist designation in forensic accounting in 2001. He was certified as a specialist in financial forensics in 2017. Mr. Nagel prepared the investigation report dated September 30, 2019. He followed the money between Ms. Nooks and Healthy Fit by reviewing the electronic communications and comparing that information with the financial records.

[89] The Defendant tendered Mr. Nagel as an expert to provide opinion evidence with respect to the fraud scheme. The Plaintiff objected to Mr. Nagel being qualified to provide expert opinion evidence. Plaintiff’s counsel argued that Mr. Nagel’s role was to translate certain information and he could not provide necessary opinion evidence. Counsel argued that Mr. Nagel’s evidence does not assist the court in determining the factual issue, which is whether Ms. Nooks repaid the loans. The Defendant argued that Mr. Nagel’s analysis could assist the court with respect to how the fraud scheme was structured and Ms. Nooks’ involvement in the scheme. The Defendant stated that the evidence is necessary to determine the structure of the scheme and to trace the funds.

[90] I found that Mr. Nagel has expertise in forensic accounting and, in particular, tracing funds. He was qualified as an expert in forensic accounting. Mr. Nagel, in his evidence, reviewed the steps of the fraud with respect to each of the ten claims made by Ms. Nooks. His evidence did not add much to what was revealed through the evidence of the Plaintiff’s witnesses. His testimony was in effect a summary of the evidence already provided. Although helpful in terms of organization, he provided little in the way of new evidence.

[91] In cross-examination, Mr. Nagel confirmed that he was paid approximately $96,000 for his report. He was asked about the manner in which the police and the TTC conducted the investigation. Mr. Nagel had no evidence or opinion with respect to the investigations.

[92] Mr. Nagel confirmed that hundreds of TTC employees were involved in the scheme. He did not know how many were charged by the police. On cross-examination, he confirmed that in his capacity he could not determine whether an employee had a criminal intent. He also could not provide an opinion on whether Ms. Nooks needed the medical devices and services.

[93] Mr. Nagel stated that he did not have all of Ms. Nooks’ prescriptions or all the promissory notes between her and the lenders. He also did not have all of Ms. Nooks’ bank records, and therefore could not substantiate the inflows and outflows from her account. He stated that although this information would have been helpful, he based his report on the amounts paid to Healthy Fit. He conceded that if Ms. Nooks made cash payments to Healthy Fit to repay the loans this could change his opinion.

[94] Mr. Nagel confirmed that in his investigation he did not speak with Ms. Nooks or Mr. Smith.

ANALYSIS

1. Is the Plaintiff entitled to a mistrial?

[95] The first motion for a mistrial was brought by the Plaintiff at the close of the Defendant’s evidence on November 10, 2020. I directed the parties to provide written material. I also heard oral submissions of counsel. The Plaintiff raised two issues to support her motion for a mistrial;

1. The circumstances surrounding the removal of the Plaintiff’s former lawyer on November 19, 2019; and

2. The fact that Mr. Nagel was permitted to provide expert evidence at trial.

[96] I dismissed the motion. My reasons are set out in my endorsement dated November 13, 2020. It was my view that the circumstances surrounding the adjournment of the trial on November 19, 2019 did not compromise trial fairness. I also stated that the evidentiary rulings with respect to Mr. Nagel’s evidence did not give rise to a reasonable apprehension of bias. I concluded that the Plaintiff failed to establish that a mistrial was justified.

[97] Following the reply testimony of Ms. Nooks, Plaintiff’s counsel stated that he was renewing his motion for a mistrial. He again argued that the mistrial was required because of my ruling with respect to the Defendant’s expert. He also raised a new ground: that the Plaintiff has been denied a fair trial because, on two or three occasions during his cross-examination of Ms. Nooks, counsel for the Defendant referred to Ms. Dupie as Ms. Nooks’ “girlfriend”. I stated that I was not prepared to reconsider my decision with respect to the mistrial.

[98] The Plaintiff did not raise the motion for a mistrial in the written argument. However, in her written reply, she renewed her motion for a mistrial. She argues that if the mistrial was not appropriate when first initiated, the Defendant’s written argument reopened the need for a mistrial. The Plaintiff argues that she has been denied a fair trial on account of how the trial unfolded on three points:

1. The admission of Mr. Nagel’s expert report;

2. The circumstances surrounding the motion brought by the Plaintiff’s former lawyer to be removed as solicitor of record for “ethical reasons”, and the statements he made at the time the motion was brought; and

3. Ms. Dupie’s evidence and productions.

[99] The Defendant argues that the motion for a mistrial was already argued and ruled upon and that the Plaintiff’s most recent motion is an abuse of process.

[100] The trial in this case was split in two parts. It began in November 2019. After five days of evidence, the Plaintiff’s first lawyer brought a motion to be removed as solicitor of record for “ethical reasons”. The motion was granted, and the trial was adjourned to allow Ms. Nooks an opportunity to retain new counsel. My decision with respect to the motion brought by the Plaintiff’s former lawyer to be removed as solicitor of record is set out in my endorsement dated November 19, 2019. The Plaintiff’s current counsel was retained shortly after the trial was adjourned. The circumstances surrounding the removal of counsel and the adjournment were known to the Plaintiff and her current counsel before the trial resumed in November 2020. The Plaintiff did not bring a motion for a mistrial at the resumption of the trial.

[101] The Plaintiff’s most recent motion for a mistrial relies on basically the same grounds as the motion that is the subject matter of my endorsement dated November 13, 2020. At that time, the Plaintiff argued that the circumstances surrounding the removal of her former counsel and the fact that Mr. Nagel was permitted to provide evidence at trial resulted in trial unfairness and a mistrial was required. I dismissed the motion. I find that it is an abuse of process for the Plaintiff to renew the motion on the same grounds.

[102] The Plaintiff also argues that the statements made by her former counsel at the time of his removal as solicitor of record jeopardize trial fairness. At that time, counsel stated that, as a result of the falsified bank record introduced into evidence as EX. 10 during the examination of Ms. Dupie, “the $1,600 did not go to Healthy Fit”. This ground was not argued at the time of the first motion for a mistrial.

[103] The statement attributed to former counsel is not evidence. In deciding this case, I relied on the evidence of the witnesses, particularly the testimony of Ms. Nooks and Ms. Dupie with respect to the payment of $1,600. I am not satisfied that the statement by the Plaintiff’s former counsel results in trial unfairness and justifies a mistrial.

[104] Plaintiff’s counsel also states that the TTC counsel ought not to have attended in chambers with the trial judge and Plaintiff’s former counsel on November 19, 2019. The chambers meeting was requested by the Plaintiff’s former counsel. In the chambers meeting, he stated that the actual bank record obtained from Ms. Dupie’s bank, which was later made EX. 16, did not match EX. 10. Once this information was provided, the chambers meeting was concluded and the information was disclosed in open court, in the presence of the Plaintiff.

[105] Plaintiff’s counsel also argues that the failure of the TTC to recall Ms. Dupie to explain the falsified document justifies a mistrial. Ms. Dupie was called by the Plaintiff. One of the purposes of calling her as a witness was to establish that on June 17, 2014, she made a payment of $1,600 to Healthy Fit on behalf of Ms. Nooks. The Plaintiff did not recall her as a witness after it was determined that the bank summary Ms. Dupie produced, and which was marked as EX. 10, was falsified. As counsel for the Plaintiff argued, there is no property to a witness. The Plaintiff could have recalled Ms. Dupie.

[106] Plaintiff’s counsel argues that counsel for the TTC had agreed to recall Ms. Dupie if the record from the bank was different from the record she introduced at court. I reviewed the transcript of the exchange between counsel when this issue was addressed at trial. Counsel for the Defendant did not state an intention to recall Ms. Dupie if there was an inconsistency. Instead, he took the position that he may have additional questions for Ms. Dupie in cross-examination.

[107] There is no basis for the Plaintiff’s request for a mistrial. The only new ground raised in support of the motion is the statement made by the Plaintiff’s former lawyer that “the $1,600 did not go to Healthy Fit”. I am not satisfied that this statement is an irregularity or error which results in such prejudice to the Plaintiff that she is prevented from presenting her case fully or from securing a fair adjudication on the merits: see van Ooyen v. Carruthers, 2018 SKQB 73, at paras. 7-16, quoting from Canadian Civil Procedure Law, 2d ed. (Markham: LexisNexis, 2010), at para. 16.379. A mistrial is a severe penalty to be applied only in the clearest of cases, when other remedies are not available: see van Ooyen, at para. 17.

[108] Here, the statement made by the Plaintiff’s former counsel is not evidence and I have not considered it in deciding this case. The statement does not result in such unfairness to the Plaintiff as to justify the severe penalty of a mistrial. I dismiss the Plaintiff’s motion for a mistrial.

2. Did the Plaintiff engage in theft or fraud so egregious as to sever the employment relationship?

[109] The TTC argues that Ms. Nooks was involved in a complex fraud scheme involving group benefit claims. In support of its position, the TTC states that she did not require the medical devices or treatment provided by Healthy Fit. The TTC also argues that Ms. Nooks did not repay the loans, but instead split the benefit amount with Adam Smith/Healthy Fit. Ms. Nooks takes the position that the devices were medically necessary. She states that all loans she received to pay for the medical devices and treatment were repaid in full once she was reimbursed by Manulife.

Did Ms. Nooks need the medical treatment and devices provided by Healthy Fit?

[110] Ms. Nooks’ family doctor is Dr. Chan. He has treated her since she was seven years of age. Just before becoming involved with Healthy Fit, Ms. Nooks went to Dr. Chan on September 19, 2013. She had a complete physical. There is no reference in Dr. Chan’s notes to any complaints regarding Ms. Nooks’ feet, knees, back, neck, arms, or legs. Dr. Chan checked off “normal” under musculoskeletal. He was of the view that this was a normal examination.

[111] Dr. Chan also saw the Plaintiff on April 12, 2014, October 14, 2014, and October 6, 2015. The general assessment on October 6, 2015 was normal. Dr. Chan did not prescribe any of the treatment or assistive devices Ms. Nooks claimed. His first reference to the medical devices is in the letter he prepared for the Plaintiff in this action, dated June 19, 2017. He first learned that Ms. Nooks was using the orthopedic shoes, orthotics, compression sleeves and stockings, and a back brace when he received the letter from her counsel in June 2017. Shortly after writing this report, Dr. Chan prepared a report for the Ministry of Transportation on August 26, 2017. In that report, he states that Ms. Nooks is a “healthy woman”. There is no reference to any musculoskeletal issues.

[112] The compression stockings and orthopedic shoes were prescribed by Dr. Lu. It was agreed between the parties that Dr. Lu is a doctor who worked with Healthy Fit on other claims. On November 1, 2013, he wrote a prescription for compression stockings. In his note dated November 1, 2013, he states that Ms. Nooks has “tight calves”. The prescription is dated only six weeks after Ms. Nooks’ physical with Dr. Chan, where there was no reference to any leg issues. Dr. Lu’s prescription for compression stockings and arm sleeves dated January 8, 2015 states that Ms. Nooks has “chronic venous insufficiency”. This is the first reference to any vein issue.

[113] The prescription for the knee brace was made by Dr. Chaudhi, a family doctor who operates a walk-in clinic near the Healthy Fit office. The Plaintiff saw Dr. Chaudhi on August 19, 2014. The day after the appointment, Ms. Nooks expressed some concern to Mr. Smith about the way Dr. Chaudhi worded the prescription. Ms. Nooks returned to Dr. Chaudhi on September 8, 2014. The prescription provided on that date states that Ms. Nooks has chronic right and left knee pain. Ms. Nooks saw her family doctor, Dr. Chan, about one month later, on October 14, 2014. There is no reference to knee pain in his notes. The first reference to knee complaints in Dr. Chan’s records is December 2016, after Ms. Nooks’ employment was terminated.

[114] I am satisfied that Ms. Nooks did not require the medical devices or treatment she received from Healthy Fit. If the treatment was required, Dr. Chan would have prescribed it or at least have been aware of the complaints. Although Ms. Nooks saw Dr. Chan six weeks before she was prescribed compression stockings by Dr. Lu, there is no reference to leg issues in his notes. There is no reference to any complaints of neck, back, knee, arm, or leg issues in Dr. Chan’s notes during the period she obtained medical devices and services from Healthy Fit.

Did Ms. Nooks repay the loans to purchase the medical devices and treatment?

[115] The fraud scheme had a common pattern. The employee would take out a loan with one of the loan companies associated with Healthy Fit. The amount of the loan would be paid to the employee and the money would be returned to Healthy Fit, purportedly to purchase the medical device or treatment. Healthy Fit would generate an invoice and prepare the Manulife claim form. The employee would sign the claim form. In doing so, the employee certified that the goods or treatment had been received. Manulife then paid the claim to the employee, and this money was used to pay back the loan. The loan would not be repaid in full but instead the employee would split the amount received from Manulife with Healthy Fit. The employee would retain between 40-60 percent of the amount paid by Manulife.

[116] To support her claim that she did not participate in the scheme and did not receive any benefit, Ms. Nooks states that she repaid all of the loans in full. The evidence does not support her position. I find that her explanations for how she repaid the loans are not credible.

[117] With respect to many of the claims, Ms. Nooks provided tortured explanations for how the amounts were repaid. Although the full amount of the loan was deposited into her account by Manulife, she did not immediately transfer the same amount to Mr. Smith to repay the loans. Instead, she states she made multiple withdrawals in cash, which she then paid to Mr. Smith. She did not receive any receipts. Although she received letters confirming that the loans were repaid, she did not retain them.

[118] The loans for the fourth and fifth claims are particularly problematic for Ms. Nooks. The fourth claim involved a loan of $1,045. She received payment from Manulife in this amount. After receiving payment, Ms. Nooks sent a text message to Mr. Smith asking how much was owing. This text ought not to have been necessary, as the amount owing was the amount loaned to her. Mr. Smith responds that she is to pay $565, approximately 55 percent of the total. According to Ms. Nooks, Mr. Smith was referring to the amount he wanted to be sent by e transfer, with the balance to be paid in cash. This explanation does not make sense. In fact, Ms. Nooks did not e-transfer $565 to Mr. Smith. Instead, she withdrew $600 and intended to drop off $565 cash the next day. No reasonable explanation was provided for why the entire amount was not paid at one time.

[119] The loan for the fifth claim was $1,980. When this amount was received from Manulife, Ms. Nooks wrote to Mr. Smith and asked how much was owing. He said $780, approximately 40 percent of the benefit. On discovery, Ms. Nooks testified that she withdrew $800 in cash from her bank account on June 19, 2014 to pay Mr. Smith. At trial, she testified that she did not pay Mr. Smith from the amount she withdrew on June 19, 2014 but instead e-transferred him $780 on July 30, 2014.

[120] Ms. Nooks’ evidence with respect to payment of the balance owing on the loans for claims four and five, changed as documentation was produced that contradicted her earlier testimony. Initially, Ms. Nooks testified on discovery that she sent an e-transfer of $1,600 directly to Mr. Smith. After discovery, her bank records were produced, which did not show an e-transfer to Mr. Smith. Instead there was a transfer of $1,600 to Ms. Dupie. Ms. Nooks changed her evidence at trial and testified that she transferred this amount to Ms. Dupie so she could make the payment on her behalf. When it was determined that Ms. Dupie had provided false evidence with respect to the payment to Mr. Smith and fabricated the bank summary, Ms. Nooks changed her evidence for a third time. In reply, she testified that she thought Ms. Dupie had paid Healthy Fit from the money she had transferred into her account but, based on the actual bank statement, she now knows that Ms. Dupie did not make a withdrawal. Ms. Nooks testified that she now recalled giving $2,000 in cash to Ms. Dupie a month or two prior. Ms. Nooks testified that she participates in a Pardner program with others and was the recipient of the Pardner funds in May or June 2014. Ms. Nooks stated that she had given $2,000 to Ms. Dupie from the Pardner program to pay for their vacation. Instead, Ms. Dupie must have used some of this amount to pay Healthy Fit in cash.

[121] Ms. Nooks was willing to change her sworn testimony to match the documentary evidence as it developed during the course of the proceeding. When it was determined that Ms. Dupie’s evidence was falsified, Ms. Nooks stated that the money must have been from the Pardner program. Ms. Nooks did not provide any evidence with respect to the Pardner in her initial testimony. There is no documentary evidence to establish that a significant amount of money was received from it. None of the other members of the Pardner group testified at trial. There is no credible evidence that this payment was made to cover the amounts owing on the loans for claims four and five.

[122] In the sixth, seventh, eighth, and ninth claims, there are text or e-mail messages from Ms. Nooks to Mr. Smith asking how much of the benefit payment is to be paid to him. Mr. Smith asked for between 40-60 percent of each benefit amount. Ms. Nooks transferred the amount requested, sometimes the same day. Although there is evidence that the amount requested by Mr. Smith was paid, there is no credible evidence that the balance of the amounts owing on the loans was paid. Although the full amount of the loan had been deposited into her account by Manulife, Ms. Nooks did not transfer the full amount of the loan to Mr. Smith. Ms. Nooks described going to the bank on multiple occasions to withdraw small amounts, which she then used to repay the loans. When asked why she paid him in this way, she stated that it was “because that’s what I chose to do.” It is not credible that she would make multiple trips to pay the balance of the loan.

[123] Ms. Nooks testified that she withdrew three separate amounts to repay the loan for the eighth claim. On February 25, 2015, she received an e-mail at 3:07 a.m. stating that the promissory note of January 9, 2015 had been paid in full. Although there was confirmation that no money was owed, she states that she went to her bank, withdrew $500 in cash, and went to Healthy Fit on February 26, 2014 to make the payment in cash. Ms. Nooks had no reasonable explanation for why she would have made this payment after being advised that no payment was required. Similarly, for the ninth claim, Ms. Nooks received an e-mail sent March 13, 2015 at 2:21 a.m. that the loan had been paid in full. She testified that she made a payment of $480 later that day. She did not have an explanation for why she made a payment after the loan had been discharged.

Summary

[124] I am satisfied that Ms. Nooks did not repay the full amount of the loans. She received the full amount of the loans when Manulife paid the claims. The full amount was deposited into her bank account, but she did not immediately pay this to pay off the loans. Instead, she asked Mr. Smith what was owing. He generally asked for between 40-60 percent of the benefit amount to be paid to him. She paid Mr. Smith the amount he asked for. Her explanations for how she paid the outstanding balances defy belief. With respect to the fourth and fifth claim, it is apparent that Ms. Nooks changed her evidence to meet the documentary evidence as it developed. She provided tortured explanations of making multiple withdrawals and multiple trips to Healthy Fit to pay the balances owing on the loans in cash. These explanations are not credible. I was left with the impression that Ms. Nooks was prepared to say anything to perpetuate the fraud, even in the face of clear documentary evidence to the contrary. I find that Ms. Nooks knowingly participated in the Healthy Fit fraud for the purpose of obtaining a personal benefit.

Was the summary termination of the Plaintiff’s employment a proportional response or were reasonable alternative means of discipline available?

The Test

[125] The law of employment in Canada requires employers to provide adequate notice before dismissing an employee. If the employer wishes to dismiss an employee summarily on the basis of misconduct, the onus is on the employer to establish just cause: see Plester v. PolyOne Canada Inc., 2011 ONSC 6068, at para. 32.

[126] The termination of an employment relationship without notice is generally reserved for the most extreme of cases. It has been described as the “capital punishment” of employment law. This was addressed in Carscallen v. FRI Corp., 2005 CanLII 20815 (Ont. S.C.), at para. 72:

The important factors emerging from these expressions of the principle of law include that the misconduct must be “serious”; that the misconduct must amount to “a repudiation of the contract”; that the acts “evince an intention to no longer be bound by the contract”; that dismissal is an “extreme measure”; and must not be resorted to in trifling cases. As previously observed, just cause is truly is [sic] the “capital punishment of employment law”.

[127] The test for summary dismissal for cause is whether the employee’s conduct is incompatible with the continued employment relationship. As stated in McKinley v. BC Tel, 2001 SCC 38, [2001] 2 S.C.R. 161, at para. 48:

In light of the foregoing analysis, I am of the view that whether an employer is justified in dismissing an employee on the grounds of dishonesty is a question that requires an assessment of the context of the alleged misconduct. More specifically, the test is whether the employee's dishonesty gave rise to a breakdown in the employment relationship. This test can be expressed in different ways. One could say, for example, that just cause for dismissal exists where the dishonesty violates an essential condition of the employment contract, breaches the faith inherent to the work relationship, or is fundamentally or directly inconsistent with the employee's obligations to his or her employer.

[128] In determining whether summary dismissal is appropriate, the principle of proportionality must be applied. The court must strike a balance between the severity of an employee’s misconduct and the sanction imposed: see McKinley, at para. 53. Pursuant to Plester, at para. 33, the court must:

1. Determine the nature and extent of the misconduct;

2. Consider the surrounding circumstances for both the employer and employee; and

3. Determine whether dismissal is warranted as a proportional response.

[129] The onus is on the employer to prove on a balance of probabilities that there was no other reasonable alternative to the termination of the employment for cause: see Stone v. SDS Kerr Beavers Dental, 2006 CarswellOnt 3831 (S.C.), at para. 106.

The Contextual Analysis

Conduct of Ms. Nooks

[130] The TTC has a generous benefit plan administered by Manulife. All benefits are paid by the TTC.

[131] For the reasons set out above, I find that Ms. Nooks knowingly participated in the Healthy Fit fraud. The prescriptions for the devices or treatment were not provided by her long-time family doctor, but instead by doctors introduced to her by Healthy Fit. When Ms. Nooks received payment from Manulife, she did not repay the full amount of the loans. Rather, she split the amount received with Mr. Smith. As a result of the fraud, Ms. Nooks received money from the TTC to which she was not entitled.

[132] Ms. Nooks testified that she did not know about the TTC’s policies. Her resume, prepared after the termination of her employment, was put to her in cross-examination. In the resume, she states that she has a “strong knowledge of the application of collective agreements, work rules, policies and procedures.” The November 2014 TTC offer letter for Ms. Nooks’ supervisor position states that she is to familiarize herself with the policies and procedures of non-union employees. The code of conduct in force at the time of her termination specifically states that misappropriation of employee benefits is a violation.

[133] I find that Ms. Nooks was aware of the TTC policies and knew that committing a fraud on her employer was contrary to the terms of her employment. The fraud involved ten separate claims for benefits committed over a year and a half. Although the amounts are not overly significant, Ms. Nooks’ involvement in the scheme was prolonged and required her to take several active steps to deceive the TTC and Manulife. This was not a “one-off”. Ms. Nooks’ conduct was done knowingly and for her personal benefit. I am satisfied that the fraud committed by Ms. Nooks was serious: see McKinley, at para. 51.

[134] In addition to her involvement in the Healthy Fit fraud, Ms. Nooks’ conduct in the TTC investigation was serious. She was not truthful during the interview on October 9, 2015. Although she initially admitted to receiving a small amount of money from Healthy Fit, she revoked that statement in September 2017. Ms. Nooks continued to deny her involvement in the fraudulent scheme despite the clear and overwhelming evidence to the contrary. She continued to change her story and fabricate evidence, even when testifying at trial. I find she was not candid with her employer during the investigation: see Dowling v. Ontario (Workplace Safety and Insurance Board) (2004), 2004 CanLII 43692 (ON CA), 246 D.L.R. (4th) 65 (Ont. C.A.), at para. 58.

Surrounding Circumstances

[135] Ms. Nooks argues that the surrounding circumstances do not justify summary dismissal of her employment. The Plaintiff states that the TTC denied her right to be heard when its investigative report was prepared and failed to conduct a thorough investigation. Ms. Nooks also argues that the fact that she is a Black woman and a lesbian are surrounding circumstances relevant to the analysis.

[136] There is a duty on an employer to conduct a fair and thorough investigation before it decides to terminate an employee for cause: see Francis v. Canadian Imperial Bank of Commerce, (1992) 41 C.C.E.L. 37 (Ont. C.A.); Prashad v. ICI Paints (1997), 1997 CanLII 12333 (ON SC), 30 C.C.E.L. (2d) 223 (Ont. Gen. Div.). Ms. Nooks argues that there was a failure to conduct a fair and thorough investigation. She refers to the fact that she was not given an opportunity to respond to the investigative report before her employment was terminated. In the e-mail to Matt Hopkins dated May 31, 2016, Ms. Gerry states that the TTC intended to put the findings of the supplementary investigative report to Ms. Nooks and provide her with an opportunity to respond. Ms. Nooks was not asked for her response before she was terminated.

[137] I am satisfied that Ms. Nooks was given an opportunity to explain her side of the story in the investigation. She was interviewed in October 2015. At that time, she could have provided an explanation. Instead of disclosing her involvement in the scheme, she stated that she only received $200 from Healthy Fit. She denied being involved in the fraud. Ms. Nooks argues that this was a forced confession. I find that the “confession” that she received $200 was not true. There was no admission of her true involvement in the Healthy Fit fraud. She continued to maintain her position that she was not a knowing participant in the fraudulent scheme up to and including the trial.

[138] I am also satisfied that the TTC conducted a thorough investigation. The fraudulent scheme was significant and involved 630 employees and millions of dollars. As noted by the Plaintiff in her written submissions, the investigative report prepared by Mr. Nagel was extensive. Mr. Nagel charged approximately $96,000 for the preparation of the report.

[139] The allegation that Ms. Nooks was discriminated against on the basis of her gender, race, and sexual orientation was first raised in her written submissions at the conclusion of the trial. The claim of discrimination is not pleaded in her Statement of Claim. There is no evidence that Ms. Nooks was treated any differently from other employees in the same position because of her gender, race, or sexual orientation. Mr. Milloy testified at trial that other employees involved in the fraud were disciplined. He testified that nearly all of the 630 employees involved in the fraud had been terminated. He also stated that whether the employees co-operated in the investigation and were contrite were factors to be considered. Ms. Nooks did not co-operate and did not show any contrition.

[140] Ms. Nooks argues that the TTC counsel’s use of the word “girlfriend” in reference to Ms. Dupie during the cross-examination of Ms. Nooks is confirmation that the TTC took a different view of the Plaintiff because of her sexual orientation. I am satisfied that use of the term girlfriend was inadvertent. In any event, I do not find this to be proof of discrimination on the part of the TTC; Ms. Nooks referred to Ms. Dupie as her girlfriend during her evidence in-chief.

[141] The TTC argues that a relevant surrounding factor is that Ms. Nooks was a supervisor at the time of the termination of her employment. As a supervisor, she was required to know and administer the TTC’s policies. Ms. Nooks maintained that she did not, and should not be expected to, know the policies. The TTC states that Ms. Nooks demonstrated a lack of caring, knowledge, and responsibility to this duty of her employment. As a supervisor, she was a role model to those she supervises. The TTC argues that Ms. Nooks not only enriched herself from the benefit plan, she lied about it. As a result, she was no longer in a position to administer the TTC’s policies and supervise others.

Proportionality

[142] It is necessary to determine whether summary dismissal is a proportionate response to Ms. Nooks’ conduct.

[143] The TTC takes the position that Ms. Nooks knowingly committed a fraud. Pursuant to Bruno Appliance and Furniture Inc. v Hryniak, 2014 SCC 8, [2014] 1 S.C.R. 126, at para. 21, to establish a civil fraud, the following elements must be established:

1. A false representation made by the defendant;

2. Some level of knowledge of the falsehood of the representation on the part of the defendant, either through knowledge or recklessness;

3. The false representation causes the plaintiff to act; and

4. The plaintiff’s action result in a loss.

[144] I am satisfied on the evidence that Ms. Nooks committed a fraud. She knowingly made false benefit claims. As a result of the false claims, benefits were paid to her. Instead of using the amounts received from Manulife to repay the loans, Ms. Nooks split the proceeds with Mr. Smith. The TTC paid the benefits and therefore her actions resulted in a loss to her employer.

[145] I am also satisfied that her fraudulent conduct cannot be reconciled with the employment relationship. Ms. Nooks did not make errors in judgment. She knowingly participated in a complicated scheme in ten separate claims over a year and a half. This was not an isolated incident. She made misrepresentations on the applications for benefits. She received money to which she was not entitled. During the investigation, she had an opportunity to explain her actions, but instead denied any involvement and continued to fabricate evidence. She did not show any contrition or take any responsibility for her actions.

[146] The Plaintiff argues that a number of alternative actions short of dismissal would have sufficed. She does not state what those alternative actions are. She suggests that the TTC condoned the fraud because other employees were not terminated from their employment. There is no evidence before me of condonation. Mr. Milloy testified that most of the employees involved in the fraud were terminated. In some circumstances, the employees repaid the money and served a suspension. Here, Ms. Nooks did not admit any wrongdoing and did not pay back any of the funds.

[147] Integrity and trust are important components of the employment relationship. Ms. Nooks committed a fraud on the TTC. She did not take any responsibility for her conduct. When Ms. Nooks’ conduct is considered in relation to the surrounding circumstances, I am satisfied that summary dismissal is the appropriate response.

3. Was the Plaintiff’s conduct so egregious as to deny her pay under the Employment Standards Act, 2000?

[148] An employee will be entitled to termination pay under the Employment Standards Act, 2000, unless the employer can successfully establish that the employee is guilty of willful misconduct that is not trivial and has not been condoned by the employer: see Plester. For the reasons set out above, I am satisfied that Ms. Nooks was engaged in willful misconduct in her involvement in the fraudulent scheme. The conduct was serious and was not condoned. I conclude that she is not entitled to payments under the Employment Standards Act, 2000.

4. What are the Plaintiff’s damages for the termination of her employment and emotional distress?

[149] The Plaintiff, in her closing argument, states that if there is a finding that she was terminated without just cause, she is entitled to common law severance in the amount of eight months at $10,000 per month. The Defendant did not make any submissions as to the appropriate notice period.

[150] Had I found that Ms. Nooks had been dismissed without just cause, I would have assessed her damages for common law severance in the amount of $80,000.

5. What are the Defendant’s damages with respect to the counterclaim?

[151] The TTC brings a counterclaim for reimbursement of the amounts Ms. Nooks defrauded the benefit plan. Ms. Nooks made claims totaling $15,815. This amount was paid out by the TTC through the benefit plan. For the reasons set out above, I find that the claims were not legitimate. Although Ms. Nooks shared these amounts with Healthy Fit, the claims were paid out as a result of her actions and, therefore, the TTC is entitled to reimbursement of the full amount from her.

[152] The TTC advances its claim by way of counterclaim. The claim involves six transactions that occurred when she was a union member and subject to the collective agreement and four transactions that occurred when she was a supervisor and no longer in the union. The fraud was discovered when Ms. Nooks was no longer subject to the collective agreement. The TTC asks that all claims be resolved in this action.

[153] Pursuant to the collective agreement, the employer is to advance any claims against the employee by arbitration. Here, the nature of the dispute is Ms. Nooks’ participation in the fraudulent scheme. The participation was both during the time she was part of the union and subject to the collective agreement and after such time.

[154] The court has jurisdiction only if the dispute, in its essential character, does not arise from the interpretation, application, administration, or violation of the collective agreement: see Weber v. Ontario Hydro, 1995 CanLII 108 (SCC), [1995] 2 S.C.R. 929, at para. 52. The conduct of Ms. Nooks was the same when she was bound by the collective agreement and after. I am of the view that the conduct in dispute is not dependent upon the collective agreement and the entire amount claimed in the counterclaim can be determined in this action.

[155] The uncontroverted evidence is that the amount of benefits paid as a result of Ms. Nooks’ conduct is $15,815. I find the TTC is entitled to judgment against Ms. Nooks in this amount.

DISPOSITION

[156] I make the following order;

1. The Plaintiff’s action is dismissed;

2. The counterclaim is allowed, and damages are awarded to the TTC in the amount of $15,815, plus pre-judgment interest pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43.

[157] The Defendant is successful in this action and is presumptively entitled to its costs. Before this decision was released, I received Bills of Costs from the parties. The Defendant’s costs on a full indemnity basis are in the amounts of $162,630 for counsel fee, $21,141.90 for HST, and $103,963.04 for disbursements. The disbursements include payments totaling $95,622.81 to the expert Mr. Nagel. The Plaintiff submitted a Bill of Costs in the amounts of $91,750 for the counsel fee for her former counsel and $49,850 for her current counsel, for a total of $141,600 in counsel fee, plus $18,408 for HST, and $13,531.85 for disbursements.

[158] If the parties are unable to agree on costs or the amount of pre-judgment interest, the Defendant may make written submissions of no more than five pages, not including case law, within 20 days of the date of this endorsement. The Plaintiff may deliver written submissions in response on the same basis within 20 days of receiving the Defendant’s submissions. The Defendant may deliver reply submission of no more than three pages in length within ten days of receiving the Plaintiff’s submissions.

DATE: April 29, 2021