COURT FILE NO.: CV-19-92

DATE: 2022/02/02

SUPERIOR COURT OF JUSTICE-ONTARIO

RE: DAVID TONKIN, Plaintiff

-and-

THE SANDERSON-HAROLD COMPANY LIMITED O/A PARIS KITCHENS, Defendant

BEFORE: Gibson J.

COUNSEL: Dennis Touesnard, Counsel for the Plaintiff Matthew Dewar, Counsel for the Defendant

HEARD: May 11 – 14, 2021

ENDORSEMENT

Overview

[1] The plaintiff David Tonkin was employed by the defendant Paris Kitchens for 22 years. He says that his job title was Regional Sales Manager. His salary was $75,000 per year, and his vehicle allowance was $18, 315. On March 4, 2019, he was informed that he would continue to be employed as a Project Manager, at the same salary. He submits that this was a demotion that amounted to a constructive termination at law, and that he should receive 24 months’ pay in lieu of reasonable notice. He seeks damages for breach of contract in the amount of $150,000, $36,630 for a lost vehicle allowance, and the value of lost employment benefits.

[2] The defendant The Sanderson-Harold Company Limited is an Ontario Corporation which, among other interests, owns and operates Paris Kitchens, a designer, manufacturer, supplier and installer of custom kitchen cabinetry and related accessories. Its head office is in Richmond Hill. It has a manufacturing facility and office in Paris, Ontario. That is where the plaintiff was employed. Paris Kitchens say that Mr. Tonkin was actually employed as a Senior Project Manager, not a Regional Sales Manager. It says that he was not demoted, that he voluntarily resigned on April 5, 2019, and that he is not entitled to any compensation. It submits that his actions constituted an attempt to invite an involuntary termination, and that Paris Kitchens did not commit a fundamental breach of the employment relationship sufficient to generate a viable action in constructive dismissal.

[3] A virtual trial was held from May 11 – 14, 2021.

Law

[4] When an employer’s conduct evinces an intention no longer to be bound by the employment contract, the employee has the choice of either accepting that conduct or changes made by the employer, or treating the conduct or changes as a repudiation of the contract by the employer and suing for wrongful dismissal: Potter v. New Brunswick Legal Aid, 2015 SCC 10 at para. 30.

[5] The burden rests on the employee to establish that he or she has been constructively dismissed. If the employee is successful, he or she is then entitled to damages in lieu of reasonable notice of termination: Potter, at para. 31.

[6] What the law requires to establish constructive dismissal was succinctly summarized by Miller J.A. in Chapman v. GPM Investment Management, 2017 ONCA 227 at paras. 13-17:

[13] As the trial judge noted, there are two routes that a plaintiff can follow to establish constructive dismissal, as set out in Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10, [2015] 1 S.C.R. 500.

[14] The first branch is apt where an employer has, by a single unilateral act, breached an essential term of the contract of employment. The second branch allows for constructive dismissal to be made out where there has been “a series of acts that, taken together, show that the employer no longer intended to be bound by the contract”. On both branches, it is “the employer’s perceived intention no longer to be bound by the contract” that gives rise to the constructive dismissal: Potter, at para. 43.

[15] The first branch – for a single unilateral act – has two steps: (1) the employer’s conduct must be found to constitute a breach of the employment contract, and (2) the conduct “must be found to substantially alter an essential term of the contract”: Potter, at para. 34.

[16] In contrast, the focus of enquiry on the second branch is not on a single act of the employer, but on the “cumulative effect of past acts by the employer” that establish that the employer no longer intends to be bound by the contract:Potter, at para. 33.

[17] The perspective shifts during the analysis. In ascertaining whether an employer’s conduct has amounted to a breach of contract (the first step of the first branch), the test is objective: Potter, at para. 62. Thereafter, on both the second step of the first branch and on the second branch, the perspective shifts to “that of a reasonable person in the same circumstances as the employee …The question is whether, given the totality of the circumstances, a reasonable person in the employee’s situation would have concluded that the employer’s conduct evinced an intention to no longer be bound by [the contract]” (emphasis in original): Potter, at para. 63. In these parts of the analysis, the trial judge must conduct the enquiry from the perspective of the reasonable employee. This perspective excludes, for example, reliance on information that “the employee did not know about or could not be expected to have foreseen.” Potter, at paras.62 and 66. Furthermore, the employee is not required to establish that the employer actually intended to no longer be bound by the contract, but only that a reasonable person in the employee’s situation would have concluded that this was the employer’s intention: Potter, at para. 63.

Issues

[7] The Issues before the Court on this trial are thus:

(i) Whether Paris Kitchens has, by a single unilateral act, breached an essential term of the contract of employment;

(ii) Whether there has been a series of acts that, taken together, show that Paris Kitchens no longer intended to be bound by the contract; and

(iii) If either ground of constructive dismissal is made out, what damages should be awarded?

Evidence

[8] The defendant called two witnesses: the plaintiff David Tonkin himself, and his wife Debbie Tonkin, who also worked under Mr. Tonkin at Paris Kitchens for some period of time.

[9] The defendant called three witnesses: Carolyn Iyer, the Chief Operating Officer of Paris Kitchens; Larry Wolfman, the former General Sales Manager and now President of Paris Kitchens; and Paul Malakovski, the Director of Project Management at Paris Kitchens.

[10] The defendant admitted that by email dated May 2, 2013 from then Chief Operating Officer Donna Hirst, the plaintiff was provided with a job description as the “Regional Sales Manager-Paris Kitchens-Paris (Ontario)”. The plaintiff was never disciplined for failing to meet any of the requirements under the Job Description. The plaintiff was never performance managed in connection with failing to meet any of the requirements of the job description.

[11] The defendant posted a job advertisement for a Business Development Representative on February 13, 2019. Mr. Tonkin was upset by this, as the work depicted in this posting represented the sort of work he wished to do more of going forward.

[12] The evidence of all three of Carolyn Iyer, Larry Wolfman and Paul Malokovski was that in March 2019 the plaintiff was solely employed as a Project Manager, and did not exercise any significant sales or business development function with the company. They further stated that he had never done so. I accept their evidence, and find this as a fact.

Analysis

[13] The evidence and submissions of the parties in this case depict two very different tales of competing reality.

[14] The plaintiff David Tonkin is now 69 years old. He submits that he was a major force for sales at Paris Kitchens, and that this was snatched away by a humiliating demotion, entitling him to regard himself as having been constructively dismissed. He submits that a demotion, which generally means less prestige and status, is a substantial change to the essential terms of an employment contract that warrants a finding that the employee has been constructively dismissed. He submits that it does not matter if the present salary is maintained. He asserts that the change in his status from Regional Sales Manager was humiliating and demeaning, and that it is reasonable for him to look at it as a demotion and a loss of status. He submits that the evidence of the defendant’s witnesses was revisionist history, after the fact.

[15] The defendant’s view was that this was a family run business which valued Mr. Tonkin for his Project Manager work. It made a decision in March 2019 to maintain the status quo rather than accede to Mr. Tonkin’s ambitions to take on a larger role in sales, or to change the fundamental nature of his duties in project management. This was communicated to him at the meeting on March 4, 2019. The company was surprised by his decision to essentially walk off the job. It now submits that this was at bottom a pretext by Mr. Tonkin in seeking a severance package.

[16] The test in Potter puts the initial burden on the employee. The employee must meet one of the two tests. The first is where any employer has, by a single unilateral act, breached an essential term of the contract of employment. This has two steps. The employer’s conduct must be found, assessed on an objective basis, to constitute a breach of the employment contract; and, assessed from the perspective of a reasonable person in the same circumstances as the employee, the conduct must be found to substantially alter an essential term of the contract.

[17] In this case, the plaintiff’s claim fails on this branch. Paris Kitchens did not breach an essential term of the contract of employment. In 2019 Mr. Tonkin was actually employed as a Project Manager. He had little time for sales. The record of his sales does not demonstrate that he made any more sales than any other employee. The company did not regard him as a Sales Manager. Larry Wolfman himself made the great proportion of sales for the company. Mr. Tonkin did not act in any meaningful fashion as a Regional Sales Manager. In 2019, no one other than himself regarded him as such. There was no meaningful content to that title in any event. Its origin was unclear, but the President of Paris Kitchens, Larry Wolfman, was unequivocal in his evidence that he was indifferent to titles, and would have been happy to have the plaintiff describe himself as such, but that his function and value to the company was as a Project Manager. I find that there was no significant change in responsibilities and duties in March 2019. Mr. Tonkin was unhappy that the company had posted an advertisement for a Business Development Specialist. He wanted to do that kind of work. He approached Carolyn Iyer about this. She consulted with the management team of the company and determined that they preferred he retain his then current role in project management. He was asked by the company to continue in the same role, with the same responsibilities, salary and benefits, as he had in fact had for many years. It was in fact Mr. Tonkin, not Paris Kitchens, who wanted to evolve the nature of his employment duties into something different. He was frustrated when the company did not accede.

[18] The second branch allows for constructive dismissal to be made out where there has been a series of acts that, taken together, show that the employer no longer intended to be bound by the contract. The focus of enquiry is not on a single act of the employer, but, assessed from the perspective of a reasonable employee, on the cumulative effect of past acts by the employer that establish that the employer no longer intended to be found by the contract. This requires that a reasonable person in the employee’s situation would have concluded that this was the employer’s intention.

[19] As stated by Miller J.A. at para. 22 in Chapman,

“it must be borne in mind that both the first and second branches of Potter are in service of the same ultimate enquiry: the determination of whether the employer has, by its conduct, evinced an intention not to be bound by the contract: Potter, at para. 63. The question of whether there has been a substantial alteration of an essential term of the contract is not an end in itself, but a step towards answering this ultimate question. The trial judge had this ultimate question in mind, and did not conflate the two branches of the Potter test.

[20] I find that the employer did not evince an intention not to be bound by the contract, and that a person viewing the matter from the perspective of a reasonable employee would not have concluded otherwise. There were to be no de facto changes in respect of Mr. Tonkin. He was not put in an untenable situation. His salary and benefits were to have been the same. He was asked to continue doing the same work that he had been doing for many years. But for the title, which was a chimera that only he understood to be in effect, everything would have continued as before. The company entreated him to stay. He did not. Neither did he effectively mitigate his potential damages by an effective search for other employment.

[21] On its facts, the situation in this case is readily distinguishable from that in Farwell v. Citair, 2012 ONSC 6013, and 2014 ONCA 177, where there was a significant change in responsibility.

[22] There was no significant change in responsibility for Mr. Tonkin suggested by Paris Kitchens in March 2019. A reasonable person in the position of the employee would not have concluded otherwise.

[23] The defendant has acknowledged its mistake in not correctly filling out the Record of Employment when Mr. Tonkin subsequently sought EI benefits, or ensuring that is was issued promptly. I accept its representation that there was no bad faith on its part in this regard, and that it was an honest mistake. Mr. Tonkin did not reach out to query this, and the company did not know that there was a problem. I do not assess it to be after-the-fact evidence of punishment or bad faith on the part of Paris Kitchens.

[24] I find that the plaintiff has not satisfied the onus upon him to demonstrate that he was constructively dismissed. He voluntarily left employment with the company in April 2019.

[25] In this circumstance, it is not required to consider the issues of mitigation or damages.

Order

[26] The Plaintiff’s claim is dismissed.

Costs

[27] The parties are encouraged to agree upon appropriate costs. If the parties are not able to agree on costs, they may make brief written submissions to me (maximum three pages double-spaced, plus a bill of costs) by email to my judicial assistant, Mona Goodwin at mona.goodwin@ontario.ca and Kitchener.SCJJA@ontario.ca. The defendant may have 14 days from the release of this decision to provide its submissions, with a copy to the plaintiff; the plaintiff a further 14 days to respond; and the defendant a further 7 days for a reply, if any. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves. If I have not received any response or reply submissions within the specified timeframes after the defendant’s initial submissions, I will consider that the parties do not wish to make any further submissions, and will decide on the basis of the material that I have received.

M. R. Gibson, J.

Date: February 2, 2022