COURT FILE NO. CV-16-549103
DATE: 20221115
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
LAURA RUTLEDGE
Plaintiff
– and –
MARKHAVEN, INC. and JONATHAN TUCKER
Defendants
Joel T.L. Smith, lawyer for the Plaintiff
Ross Dunsmore, Rachel J. Davis and Luisa D’Alessio, lawyers for the Defendants
HEARD: May 16, 17, 18, 19, 20, 24, 25 and 26, 2022
REASONS FOR DECISION
G. DOW, J.
[1] The plaintiff, Laura Rutledge claims damages for wrongful dismissal. At the outset of the trial, the action was discontinued against Jonathan Tucker who was a member of Markhaven, Inc.’s (“Markhaven”) Board of Directors during the relevant time period.
Background
[2] The following events were not in dispute or are as found by me to have occurred. The plaintiff was employed by the defendant, Markhaven for seven weeks short of 21 years. She was terminated on March 11, 2016 (Exhibit 1, Tab 60) at age 43. This was following an investigation of which she was advised verbally and in writing on December 2, 2015 (Exhibit 1, Tab 30). The investigation had been commenced earlier.
[3] Laura Rutledge held the top position of Executive Director with Markhaven having been promoted to this role on March 28, 2012, which was confirmed in writing (Exhibit 1, Tab 3). At the time of her dismissal, she was being paid $117,000.00 per year. She also had a benefit plan, the premiums of which were being paid by her employer, plus matching RRSP contributions up to 4 percent of her salary and cash payments on an annual basis for any unused sick days (believed to be 12 to 14 per year) and floating days (believed to be 4 to 6 days per year). She was also entitled to 6 to 8 weeks of vacation.
[4] The defendant operates a 96 bed long term care facility in Markham with a 2014 operating budget about $7 million. Of this amount, about 65 percent came from provincial subsidies. The facility employed about 150 individuals with about 5 or 6 directors/administrators/accounting consultants reporting to the Executive Director. For cost certainty, Markhaven contracted with a company (referred to as Marquise in these reasons) that had the capability to and provided dietary needs as well as housekeeping and laundry on a fixed amount per resident per day basis. In addition, Markhaven was a religious based facility with a Statement of Beliefs (Exhibit 1, Tab 76) which, unlike previous Executive Directors, the plaintiff was not required to sign. The Board’s minutes reflect meetings began with prayer.
[5] Exhibit 1, was an 86 Tab Joint Book of Documents that was marked after I had reviewed with counsel the direction of the Court of Appeal (from Girao v. Cunningham, 2020 ONCA 260 at paragraph 33) which sets out six questions to be addressed and received their responses. Exhibit 2 was a 7 page document entitled Admitted and Agreed Facts which contained the following admissions by the plaintiff:
a) she was the highest ranking employee, member of senior management, and had authority over all employees and contractors;
b) she was in a fiduciary relationship with Markhaven;
c) as a fiduciary and member of senior management, the plaintiff:
i) was expected at all times to put the best interests of Markhaven ahead of her own personal interests;
ii) had a legal responsibility at all times to exercise a high standard of care in protecting and promoting the interests of Markhaven;
iii) owed Markhaven an implied duty of fidelity and good faith which was a fundamental term implied within her contract of employment;
iv) was expected to serve Markhaven honestly and faithfully throughout her employment;
v) was expected to be forthcoming, honest and to act with integrity;
vi) was expected to avoid any conflicts of interest with her employer;
vii) was responsible to implement, comply and enforce the policies of Markhaven and its Board of Directors; and
viii) was expected to take and follow instructions from the Board.
[6] In 2014, it became apparent the Manager of Maintenance and Supply Services, responsible for the building’s maintenance as well laundry and housekeeping, was having difficulty performing his duties satisfactorily. His background was in building maintenance. As part of determining a solution, the plaintiff was also faced with a considerable increase in the cost of obtaining cleaning supplies. In conjunction with the Director of Human Resources & Business Services, Sabrina Capobianco, they approached and met with their direct contact at Marquise, Heidi Obstfeld-Adams, on June 12, 2014. The meeting resulted in a suggestion that the Manager of Food Services, Arjun Sathyaseelan, employed by Marquise (who managed the dietarian and food services requirements at Markhaven and to whom Markhaven employees reported) be given an expanded role of also managing the laundry and housekeeping staff under a new position to be called Director of Support Services. As Mr. Sathyaseelan had no prior experience with housekeeping and laundry, the change would not take effect until January 1, 2015 and he would receive training from Marquise in the interim. The increased cost to Markhaven would be about $800.00 per month.
[7] Ms. Obstfeld-Adams testified, and I accept she approached Arjun Sathyaseelan about the additional responsibilities and promoted taking the position on the basis it would expand his value to his employer rather than being any significant pay increase. He asked for and was giving a week to think about it before responding positively about the opportunity. Ms. Obstfeld-Adams’ evidence was that Arjun Sathyaseelan was one of her best managers. The details and advising the Manager of Maintenance and Supply Services were worked out over the Summer of 2014 cumulating in his being advised of the change at the end of September to take effect on January 1, 2015. However, the records produced (Exhibit 1, Tab 25) indicate the Manager of Maintenance & Supply Services individual abruptly resigned shortly on or before October 27, 2014.
[8] This resulted in the timeline for revision to the Amended Services Agreement being accelerated and Arjun Sathyaseelan assuming the role of Director of Support Services on November 1, 2014.
[9] The “Service Accountability Agreement” for April 1, 2013 to March 31, 2016 between the Local Health Integration Network (LHIN) and Markhaven (known as the Health Service Provider or “HSP”) contains definitions. For “conflict of interest” it contains wording that it includes “any person employed by the HSP who has the capacity to influence the HSP’s decision” who “has other commitments, relationships or financial interests” that “could be seen to interfere with the HSP’s objective, unbiased and impartial exercise of its judgment”. As indicated, about 65% of Markhaven’s financing came from provincial subsidies, or through the LHIN.
[10] Following Arjun Sathyaseelan’s promotion or, by both his evidence and that of Laura Rutledge, by the “Fall of 2014”, their relationship became romantic. The evidence was clear that the management group at Markhaven worked closely together and generally worked well together with some social interaction. Laura Rutledge had separated from her husband in the Spring of 2014 and was a parent of two teenage children. Emails were produced indicating events in their lives were being communicated between the management group and specifically Ms. Rutledge and Mr. Sathyaseelan.
[11] The earliest documented indication of Laura Rutledge and Arjun Sathyaseelan spending time together outside of work was in the first week of December, 2014 when they were each on vacation and met for furniture shopping. Arjun Sathyaseelan was furnishing a new house. I accept that evidence. I accept it was not until January, 2015 that the two of them disclosed to each other their romantic feelings. At that point, Laura Rutledge testified and I accept she spoke with the Director of Human Resources & Business Services about whether the relationship raised any conflict of interest at Markhaven. The Director of Human Resources & Business Services confirmed to Laura Rutledge that no policy prohibiting same existed at Markhaven. There was a sound basis to accept this statement given prior incidents of romantic relationships at Markhaven and, importantly, such as when the Maintenance Manager reported to her spouse who was then the Executive Director. As spouses and in the open, it can be and I find the Board at Markhaven was aware of that relationship and took no action.
[12] In May, 2015, the Board received its first complaint about Laura Rutledge and Arjun Sathyaseelan being in a romantic relationship. That complaint was detailed in an email chain between Board members including Norman Bier and Jonathan Tucker on May 27 and 28, 2015 (Exhibit 1, Tab 27). The complaint was in the form of a telephone call by someone wishing to remain anonymous and claiming to be a “family member”. The individual claimed the relationship had been ongoing for six months. Further “the individual with whom Laura has allegedly been involved in this relationship has been promoted to the position of Food Services Manager”. The decision of the Board in response was to set out in the balance of the email to review personnel policies and consult legal counsel for guidance on what should be done.
[13] It seems clear the Board members who took the call had some knowledge as to the identity of the complainant as the initial email from Norman Bier states “I purposely haven’t identified this person in writing”. Further, the motivation to investigate includes “that this relationship is becoming more obvious and undermines Markhaven’s reputation as a Christian home, bringing disgrace”.
[14] There was no evidence tendered that this allegation was raised with Laura Rutledge before a second complaint was made in July, 2015. Again, the evidence of the Board representative of Markhaven at his examination for discovery was “we took no specific action” (Exhibit 5, Tab 4, Question 422).
[15] It is not until November 3, 2015 that any reference occurs with the Board beginning its investigation by forwarding the May, 2015 emails to legal counsel, (Exhibit 1, tab 27) being the counsel who represented Markhaven throughout these proceedings and at trial.
[16] Another complaint is made on November 25 and 26, 2015. This time, the complainant is the Director of Programs and Services, Rasheeda Headley who spoke with Director Tucker. His typewritten notes include that other people at Markhaven were aware of the relationship, that it “occurred around the time AS got the position” and that Ms. Headley was “on the verge of looking for another job since she feels like she cannot complete her job properly due to all the ongoing issues”. Mr. Tucker advises Ms. Headley “if false accusations are made against a fellow employee that the whistle-blower will bear responsibility for those comments”. It should be noted the second phone call the next day was detailed and that Ms. Headley “would like to not be a part of any future investigation and that her previous call be ignored”. Ms. Headley gave evidence at the trial and could not remember details of these events. She described her employment at Markhaven as a “dark time” in her life. She was subsequently terminated by Markhaven and has “tried to forget” about her time at Markhaven.
[17] Having retained counsel on or shortly after November 3, 2015, Markhaven began its investigation. This included retaining an information technologist, Able-One Solutions to capture Laura Rutledge’s email accounts before advising her of their investigation in writing. Written notification to her is made following a Board meeting on December 2, 2015. (Exhibit 1, Tab 30).
[18] The letter of December 2, 2015 advised Laura Rutledge the Board was going to “obtain legal advice” (not that they already had) and that she may wish to do so as well. They referred her to Holly Robertson as the person who would “co-ordinate an independent third party investigation”.
[19] In fact, neither Ms. Robertson or her colleague, Robert Gill at Visio Investigations revealed their apparent direct link to the law firm of Dunsmore Wearing LLP representing Markhaven at that time and through to trial.
[20] The letter directs “both the Board and the investigator will try to keep this matter as confidential as possible” and asked Laura Rutledge “to act in a similar manner”. Further, Jonathan Tucker, as the Director who signed the letter stated “if you have questions which cannot be answered by the investigator, you may use me as your liaison”. Ms. Rutledge was reminded of her duty as “an officer and fiduciary of the corporation to be forthcoming and honest”.
[21] I accept Laura Rutledge’s evidence that, given that direction and her belief of not being able to discuss the situation with Arjun Sathyaseelan while maintaining their relationship, she contacted him and ended the romantic part of their relationship.
[22] Despite the stated need for confidentiality, Holly Robertson arranged to meet and interview Arjun Sathyaseelan on December 9 at the Tim Hortons nearby to Markhaven and where employees went for meals and breaks. Arjun Sathyaseelan’s concern for this action was reflected in his evidence and the corrections he made to the notes that Holly Robertson made of his answers to questions sent to him to review and edit (Exhibit 1, Tab 40). He corrected “in a remote section” of the Tim Hortons in the investigator’s version to “by the main entrance”. He inserted that the meeting location was a suggestion of Jonathan Tucker. He quantified the raise involved from Marquise to assume the new position of Director Support Services to be $2,500.00 to $3,000.00 per year. He redacted “promotion” and replaced it with “new position”.
[23] On December 8, 2015, Holly Robertson also made an email request for an in person meeting with Laura Rutledge at the nearby Tim Hortons to proceed on December 16, 2015. Laura Rutledge had retained counsel and made an in-writing request for assistance with that expense on December 14, 2015 which was refused (Exhibit 1, Tab 35 and Tab 41). Laura Rutledge requested the location of the meeting be changed to a more confidential place and she was provided with Markhaven’s areas of concerns in advance (Exhibit 1, Tab 36). This December 14, 2015 email from Holly Robertson made it clear that the hiring of the Director of Supply Services in 2014 and her “relationship” then and “currently” was at the heart of the matter. Laura Rutledge’s counsel responded in writing on December 15 (Exhibit 1, Tab 37) accurately describing the background circumstances including that Arjun Sathyaseelan was actually an employee of Marquise and that Marquise determined who filled the role at Markhaven pursuant to the agreement between Markhaven and Marquise. Regarding the nature of the relationship between Laura Rutledge and Arjun Sathyaseelan at the time of his accepting the new position and currently, Laura Rutledge advised there was “no romantic relationship” at either time.
[24] At the time of the decision to have Arjun Sathyaseelan fill the new position, there was “a working relationship” as “with all of her managers”.
[25] The only conflict of interest policy produced at the trial (Exhibit 1, Tab 42, Page 192) was approved in June, 2014 and due to be reviewed in April, 2017. It stated Markhaven was to “avoid all possible conflicts of interest situations in contracting and purchasing”. The procedure portion described avoiding doing business with firms in which staff or board members have a financial interest and the requirement for three competing bids for major purchases. It does not expressly prohibit romantic relationships between employees or members of the management team.
[26] The complaints policy produced at trial (Exhibit 1, Tab 82) was revised effective September, 2014 and due to be reviewed June, 2017. It stated concerns were to be placed in the suggestion box and the procedure to follow by management with records kept of the action/resolution by the Manager of Human Resources & Business Services. It does not (nor does the March 28, 2012 letter confirming Laura Rutledge’s appointment to Executive Director) provide for the type of investigation the Board conducted.
[27] An issue arose about Laura Rutledge’s conduct in deleting emails after receipt of the December 2, 2015 notification of, to quote that notification “a complaint respecting the selection and appointment of Arjun Sathyaseelan to the position of Food Services Manager” and that “a personal relationship” existed which was not disclosed. Laura Rutledge gave evidence which I accept that she deleted emails at some point after December 2, 2015 and before confronted with some of these (between her and Arjun Sathyaseelan) at a second meeting with Holly Robertson/Robert Gill on January 25, 2016. I accept that Laura Rutledge did so as part of her regular employment duties to keep her inbox manageable and with the belief that all emails were backed up whether kept in an inbox, sent or deleted folder. The emails noted (between May, 2014 and October, 2014) exchanges of personal and work related events going on but, I find do not undermine the evidence I have accepted that no romantic relationship existed between Laura Rutledge and Arjun Sathyaseelan existed until, at the earliest, December, 2014.
[28] It is not until the meeting on January 25, 2015 between Holly Robertson/Robert Gill and Laura Rutledge and her counsel that Laura Rutledge was asked directly and for the first time whether she had a romantic relationship with Arjun Sathyaseelan at any time and that she confirmed same.
[29] Subsequent to the meeting January 25, 2016, Laura Rutledge, through counsel, put concerns regarding the manner and scope of the investigation in writing (letter of February 1, 2016, Exhibit 1, Tab 51). The investigation had expanded from whether the nature of the relationship between Laura Rutledge and Arjun Sathyaseelan influenced his obtaining the position of Director of Support Services into Laura Rutledge’s conduct subsequent to that change and how Markhaven’s services were managed and whether Laura Rutledge was being “forthcoming” given her fiduciary relationship.
[30] The next step was personal delivery at Laura Rutledge’s home by Directors Jonathan Tucker and John Webster of the February 17, 2016 (Exhibit 1, Tab 52) letter suspending her with pay on the basis of her admission of being in a personal relationship with Arjun Sathyaseelan “while he was subject to your supervising authority” as a “potential violation of our Policy which you are employed to enforce”. I agree with the plaintiff’s submission any such “Policy’ was not being enforced, had been condoned both in the past with others and with regard to Laura Rutledge given the Board’s awareness of the allegation since May, 2015. As such, it cannot be relied on by the defendant.
[31] The staff at Markhaven were advised Laura Rutledge had been “reassigned”. The Director of Care, Lois Stanberry was temporarily assigned to be Executive Director (Exhibit 1, Tab 55).
[32] The evidence presented included a February 27, 2016 email from the Director of Human Resources, Sabrina Capobianco to Holly Robertson and copied to Board Members (Exhibit 1, Tab 59) detailing her concerns about the nature and extent of the investigation. I rely on her comments in reaching my decision. It should be noted that Ms. Capobianco passed away in March, 2022 and thus did not give evidence at the trial. Further, Ms. Capobianco was made a third party by Markhaven to the action which was resolved in 2018. I ordered the settlement agreement be produced to the plaintiff on the opening day of the trial.
[33] Communication between counsel about further questions to be answered and a meeting (not) held resulted in the current dispute arising from Laura Rutledge’s termination in writing on March 11, 2016. In advance of that letter, Laura Rutledge sought and began receiving short and then long term disability benefits due to the emotional stress she endured. Her Record of Employment issued May 13, 2016 listed May 6, 2016 as her last day.
Analysis
Was the plaintiff dismissed with just cause?
[34] In McKinley v. BC Tel, [2001] 2 S.C.R. 61 (at paragraph 57), the Supreme Court of Canada repeats the analytical framework to follow that each case should be examined “on its own particular facts and circumstances”. It also described the “principle of proportionality” at (paragraph 53) and the balance that “must be struck between the severity of an employee’s misconduct and the sanction imposed. The importance of this balance is better understood by considering the sense of identity and self-worth individuals frequently derived from their employment”. Further, “the manner in which employment can be terminated is equally important”.
[35] I agree with the statement of the law in Brien v. Niagara Motors Ltd. 2008 CanLII 41823 (ON SC), [2008] O.J. No. 3246 (at paragraph 229) that the “legal and evidentiary onus rests on the employer to prove that there was just cause for the summary dismissal of an employee. That onus must be strictly discharged given that summary dismissal is a drastic and most serious step not likely undertaken”.
[36] The defendant relied on the plaintiff’s admitted fiduciary duty to be honest and forthcoming and her conduct following being placed under investigation on December 2, 2015 (Exhibit 1, Tab 30) “respecting the selection and appointment of Arjun Sathyaseelan to the position of Food Services Manager”. I find her conduct neither before or after December 2, 2015 entitled the defendant to dismiss Laura Rutledge with cause. I rely on the following reasons.
[37] Regarding her conduct before December 2, 2015, the process following and creating the new position of Manager of Food Services was done in conjunction with Arjun Sathyaseelan’s actual employer, Marquise. It was done in consultation with the Human Resources Manager and Arjun Sathyaseelan’s boss at Marquise, Heidi Obstfeld-Adams. It was done in recognition that he was, as stated by Heidi Obstfeld-Adams in her evidence, was one of her best managers. It was done to broaden his experience and make him a more valuable employee rather than for any substantial increase in renumeration. It was done to help Markhaven deal with, (in the best interests of Markhaven), an increase in cleaning and food supply cost. Finally, it was done before any romantic relationship had developed between Laura Rutledge and Arjan Sathyaseelan.
[38] Regarding the complaint information, or knowledge Markhaven, through its Board of Directors, had before December 2, 2015, it is uncontroverted they had become aware of the allegation back in May 2015. They discussed what to do about it. They were aware and I find the complainant’s threat to take it to a “higher authority” meant the LHIN and this resulted in their being able to retrieve and review that agreement, with its definition of conflict of interest. The Board took no action or any other steps to investigate at that time. It also seems clear the Board of Directors were aware of the identity of that complainant.
[39] Further, the complaint was repeated in July, 2015. The evidence of director, Bruce Ander was “we took no specific action”. As a result, they condoned it.
[40] Regarding job performance of the key employees involved, there was no persuasive evidence that Arjun Sathyaseelan performed in the new position in anything but a positive manner. The best interests of Markhaven were protected. The Manager of Human Resources in Business Services, Sabrina Capobianco was informed of the romantic relationship in April, 2015 after it began and volunteered her assessment that such relationships had occurred at Markhaven in the past and had been condoned. Further, she observed no difference in the actions of either individual and was not concerned. The defendant raised Sabrina Capobianco seeking and receiving a $5,000.00 bonus in the Fall of 2015 as some kind of payment for her support from Laura Rutledge with no evidence aside from the quantum involved to support same (Exhibit 1, Tab 29). Laura Rutledge reviewed what could be done with the accountant at Markhaven and did not comply with Sabrina Capobianco’s request for a $10,000.00 per year increase (from $58,000.00 to $68,000.00).
[41] Regarding the investigation following the November 25-26, 2015 complaint (Exhibit 5), Jonathan Tucker notes also detailed Rasheeda Headley’s complaint about Laura Rutledge’s poor communication. That complaint was not investigated.
[42] Rasheeda Headley was advised if her allegations against a fellow employee were false, she will “bear responsibility for those comments”. I draw no connection between that statement and her subsequently being terminated by Markhaven.
[43] Finally, Rasheeda Headley followed up the next day asking not to be part of any investigation and her previous call “be ignored”. As the last of three complaints before the investigation was disclosed to Laura Rutledge, I find that did not occur.
[44] I find the investigation began in advance of December 2, 2015. It began following the Board’s decision to investigate, retaining Able-One to capture Laura Rutledge’s emails and retaining Visio Investigations. Contrary to what the Board of Markhaven told Laura Rutledge on December 2, 2015, its investigation was not an independent third party investigation. It used an investigation business associated with its defence counsel. It secured information from Laura Rutledge without her prior knowledge. It failed to take reasonable or prudence steps to keep the matter confidential by conducting interviews of involved persons at the nearby Tim Hortons where some of the 150 employees of Markhaven took breaks and ate meals. Portions of the investigation file were not produced under the guise of solicitor-client privilege. The scope of the investigation was expanded from its stated mandate.
[45] Laura Rutledge answered the question about the nature of her relationship at the time the new position was created and assigned to Arjun Sathyaseelan accurately and truthfully. Her answers when interviewed were accurate when asked when she was in a romantic relationship with him at that moment. When asked if she have ever had a romantic relationship with Arjun Sathyaseelan on January 25, 2016, she answered truthfully and admitted same.
[46] I find efforts were made to coerce or intimidate her to change that answer culminating her in suspending her from her job duties instead of assessing her answers and making a decision based the information disclosed by the contact through interviews and letters between the parties and their counsel. I have concluded no breach of Laura Rutledge’s fiduciary duty occurred.
[47] I am reinforced in my conclusion about the obligation of employees and employers where a fiduciary duty exists by the statement in Gestion Trans-Tek Inc. v. Lampel [2001] O.J. No. 1206 (at paragraph 65) that “By its nature, any employee or agent of a company placed in circumstances where a fiduciary duty or responsibility is imposed upon them must, in my view, be the recipient of the benefit of some mutuality of duties; that is to say some responsibility on the part of the employer, or principal, must also exist to act reasonably fairly and appropriately in their dealings.” That did not occur in this matter.
What was the proper notice period?
[48] The first two “Bardal” factors which guide this assessment are not in dispute. The plaintiff’s employment was seven weeks short of 21 years and she was terminated at 43 years of age. I am mindful this approach should not give disproportionate weight to any one one of the factors as indicated in Honda Canada Inc. v. Keays, 2008 SCC 39 (at paragraph 32).
[49] The character of employment brings into consideration the managerial nature of the role as Executive Director and being the highest level employed person at the defendant’s long term care facility. She managed a budget of about $7 million which employed about 150 individuals and operated 96 beds. Her income of about $117,000.00 per year at termination placed her in a small percentage of income earning Canadians. This favours the longer term of notice of 24 months sought by the plaintiff as opposed to the 18 months shorter notice sought by the defendant.
[50] The availability of such employment having regard to the experience, training and qualifications of the plaintiff was the subject of opposing submissions by each side. The defendant relied on a variety of positions posted in the career section of the Ontario Long Term Care Association of which both parties were aware. The defendant submits insufficient efforts were made to apply for multiple positions, some situate with in places such as Kitchener or a significant distance from the plaintiff’s residence in Keswick. I find these positions were not proximate to her residence and do not amount to a failure to mitigate.
[51] Further, the stress of the nature of the investigation resulted in her applying for and receiving disability benefits to approximately December 9, 2016. In fact, while attempting to secure comparable employment, without success, Laura Rutledge engaged in volunteer consulting work at Horizon Business and Staffing Solutions Incorporated and began part-time work at a Crock-a-Doodle franchise studio in Stouffville between January 2017 to March 2017. That studio was operated by Sabrina Capobianco who had also left Markhaven by this point. Laura Rutledge decided to and purchased her own Crock-a-Doodle franchise to operate in Keswick. She continues to operate that studio to the present day.
[52] I disagree any reduction of the notice period should be made as a result of any failure on the part of Laura Rutledge to mitigate her loss. As a result, I find the proper notice period to be 22 months (or $214,500.00).
What additional amounts are owed as part of proper notice?
[53] It was admitted Laura Rutledge received a $5,000.00 bonus in 2015 and submitted that she had received a similar bonus in the past. I would add $5,000.00 to her damages.
[54] It was admitted Laura Rutledge was entitled to a Registered Retirement Savings Plan payment equivalent to 4 percent of her present salary. This adds $8,580.00 to her damages.
[55] Laura Rutledge also had employer funded benefits such as disability, life, group health and dental which the plaintiff sought to have awarded at 10 percent of annual salary which the Court of Appeal has accepted in the absence of any contrary evidence proffered by the defendant (McGuinty v. 1845035 Ontario Inc. (McGuinty Funeral Home), 2020 ONCA 816 (at paragraph 54). No such evidence was tendered and thus I award an additional $21,450.00.
[56] The plaintiff also claimed entitlement to sick day and float day benefits at the rate of $5,400.00 and $3,600.00 per year respectively. This was not contested by the defendant and I award $9,900.00 for sick days and $3,300.00 for float days based on the 22 month notice period.
What deductions should be made from the award?
[57] As indicated, Laura Rutledge began receiving disability benefits shortly before being dismissed which continued to December 9, 2016. The plaintiff contends that these payments should not be deducted from her award. I disagree. The premium for the benefits were paid by her employer. The best evidence at trial was that she received 35 weeks of short-term disability at $1,416.00 per week (or $49,560.00) and at least $2,520.00 of long term disability benefits (for a total of $52,080.00). These benefits were paid at a time when she was not well enough to work or apply for jobs. As noted, I have not deducted any amount for failure to mitigate.
[58] This is not a situation like that in Beattie v. Women’s College Hospital, 2018 ONSC 1852 (at paragraph 67) where the plaintiff paid the premiums. I conclude the amount of $52,080.00 should be deducted from the award.
[59] In addition, the income earned following her dismissal on March 11, 2016 (or to January 11, 2018) should be deducted. This would include the commissions paid to her by Horizon Business and Staffing Solutions Inc. which the defendant quantified in its written submissions to be $6,166.19. It would include the payments made to her assisting at Crock-a-Doodle in Stouffville which the defendant quantified in its written submissions to be $1,791.40.
[60] The income earned from her own Crock-a-Doodle franchise in Keswick is more difficult to assess. I agree with the defendant’s submissions that new businesses are not profitable for some time. However, Laura Rutledge was shown to take some income from her new business between April to August, 2017 and I accept the defendant’s submissions of $7,840.00 as an appropriate amount to deduct.
What aggravated/bad faith damages should be awarded, if any?
[61] The plaintiff also sought Human Rights Code, bad faith, aggravated and punitive damages which were sought by the plaintiff in the amount of $50,000.00, $50,000.00, $100,000.00 and $250,000.00 respectively.
[62] I agree with the defendant’s submissions no evidence was tendered to support a claim for Human Rights Code damages. The plaintiff based that claim on discriminatory treatment that she was not previously promoted to the executive director position because of her (lack of) religious beliefs and the out of wedlock relationship with Arjun Sathyaseelan. This is contradicted by her having received the promotion and the period of time the Board was aware the relationship may be occurring and did nothing about it. I decline to award any Human Rights Code damages.
[63] Regarding the claim for bad faith, aggravated and punitive damages, this is based on the nature of the investigation and conduct during the litigation. As early as March 18, 2016, Laura Rutledge’s counsel confirmed in writing (Exhibit 1, Tab 61) of having advised the Board of Markhaven “the adverse effect that the investigation was having on her health”. The defendant was aware of the plaintiff’s application for short term disability benefits in advance of defence counsel’s letter dated March 31, 2016 (Exhibit 1, Tab 62) which referred to same. It was the basis for delaying issuance of her Record of Employment.
[64] Evidence was tendered at the trial of the assessment by Dr. Victoria Olech, Laura Rutledge’s family physician of her assessment in support of the claim for short term disability benefits (Exhibit 1, Tab 86). The primary diagnosis was of “Reactive Depression/Anxiety” from January 27, 2016 which required treatment. That document references earlier instances of a similar condition which the defendant relied on as a basis that its conduct was not the cause of any mental distress. I prefer the documentary and oral testimony of Laura Rutledge to the contrary.
[65] In addition, Laura Rutledge gave evidence of attending her examination for discovery and observing photographs of her home with comment by defence counsel of a pending motion for security for costs (which was never brought). As stated, the manner of the investigation was not by “an independent third party” as she was advised in writing. The investigation commenced earlier culminating with a capture of her emails after months of being aware of an allegation Laura Rutledge was responsible for Arjun Sathyaseelan’s selection as Food Services Manager on the basis of a romantic relationship and contrary to her responsibility to put the best interests of her employer first. As stated in Honda v. Keays, 2008 SCC 39 (at paragraph 57) “conduct during the course of dismissal that ‘is unfair or is in bad faith by being, for example, untruthful, misleading or unduly sensitive’ can give rise to an award of additional damages”. I find Laura Rutledge suffered damages beyond the ordinary psychological damage resulting from her dismissal.
[66] I am mindful normal distress and hard feelings resulting from dismissal are not compensable. I also recognize litigation conduct can attract an award of bad faith, moral and/or punitive damages. I have reviewed the circumstances and decision in Galea v. Walmart Canada Corp., 2017 ONSC 245 where such damages were awarded and the litigation conduct contributed to that award. I was not directed to any evidence in which photographs of the plaintiff’s house was relevant to any issue that arose in litigation.
[67] As a result, I have concluded an award for bad faith and moral damages as contemplated in Honda v. Keays, supra is warranted and assess same in the amount of $50,000.00.
[68] For clarity, I find no independent actionable wrong occurred that would give rise to a separate award of punitive damages.
Conclusion
[69] Laura Rutledge was dismissed without cause. She is entitled to 22 months notice or $214,500.00. She is also entitled to her 2005 bonus of $5,000.00, her employer’s 4 percent RRSP contribution of $8,580.00, the value of her benefits being $21,450.00, sick days in the amount of $9,900.00 and float days in the amount of $3,300.00 This totals $262,730.00.
[70] From that, the defendant is entitled to deduct her short and long term disability benefits of $52,080.00 to the income from Horizon Business and Staffing Solutions Inc. in the amount of $6,166.19, the Crock-a-Doodle Stouffville income in the amount of $1,791.40 and the Crock-a-Doodle Keswick income in the amount of $7,840.00 for a total of $67,877.59.
[71] Laura Rutledge is also awarded bad faith – moral damages of $50,000.00. I calculate the net recovery to be $244,852.41.
[72] Prejudgment interest is payable on the $194,852.41 portion of the damages award in accordance with section 128 of the Courts of Justice Act, R.S.O. 1990 c. C. 43.
Costs
[73] At my request, the parties provided me with their claim for costs if successful. The Costs Outlines were divided with regard to each defendant as the parties reached an agreement at the outset of the trial that it would not proceed as against Jonathan Tucker personally.
[74] The plaintiff’s Cost Outline against Markhaven sought substantial indemnity fees of $172,842.42 plus HST or partial indemnity fees of $115,228.28 plus HST without any list. of disbursements.
[75] The defendant, Markhaven sought substantial indemnity fees of $207,712.57 plus HST and disbursements of $10,174.20 (inclusive of HST) or partial indemnity fees of $174,314.91 plus HST.
[76] Regarding Jonathan Tucker, the Cost Outline was for substantial indemnity fees of $134,923.65 plus HST or partial indemnity fees of $113,254.18 plus HST and disbursements of $4,906.80 (inclusive of HST).
[77] I urge the parties to agree on costs. If they cannot, the parties seeking costs shall serve and provide to me written submissions, not exceeding seven (7) double spaced handwritten pages (excluding any supporting documentation such as an offer to settle being relied on) on or before December 15, 2022. The opposing party shall serve and provide me with their written submissions, identically limited, on or before January 12, 2023.
Mr. Justice G. Dow
Released: November 15, 2022
COURT FILE NO. CV-16-549103
DATE: 20221115
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
LAURA RUTLEDGE
Plaintiff
– and –
MARKHAVEN, INC. and JONATHAN TUCKER
Defendants
REASONS FOR DECISION
Mr. Justice G. Dow
Released: November 15, 2022