Employer Scores Rare Win in Wrongful Dismissal Case – 7-0

Author: Mike Weiler, KSW Lawyers Employment & Labour Group (mweiler@ksw.bc.ca)

 

The courts have not been particularly kind to employers in wrongful dismissal suits these days.  More and more decisions find employers not only liable for damage based on significant notice periods,  but also other damage claims such as aggravated or even punitive damages.  And in some cases employers are being ordered to pay enhanced costs equal to the actual legal fees the employee pays her lawyer.  So it was refreshing to see a decision that was almost 100% in favour of the employer on key issues in dispute.  And in fact the employer was awarded costs even though the Plaintiff was successful in getting judgment.

In Leanne LeClair v Pater Pharma Inc dba Shoppers Drug Mart (“SDM”), 2021 BCSC 1904 the Plaintiff aged 41 was terminated by the Defendant without cause and without notice (although she was paid her Employment Standards severance pay).  She was employed as a retail manager of the Defendant for 9 years and 10 months and earned $82,000 a year.

The Plaintiff pursued every possible claim she could.  Unfortunately for her neither the evidence nor the law supported her position.  Here are some highlights.

1. COURT REJECTS SOME EVIDENCE TENDERED BY PLAINTIFF

The case proceeded by way of Summary Trial based primarily on affidavits and discovery evidence.  It was conducted by MS Teams.

The Plaintiff attempted to introduce several pieces of evidence.  She tried to read into evidence her own discovery transcript.  She relied on the statement of her lawyer in a letter to the Defendant claiming the costs of benefits.  She also tried to introduce letters that were found to be inadmissible due to settlement privilege.  The Defendant objected to this evidence.  The law is very clear on these points.  For example the court noted a party cannot rely on its own discovery evidence—only a party adverse in interest can tender that evidence.

The court rejected the parts of the evidence objected to by the Defendant.  Not a good start to the Plaintiff’s case.

2. LENGTH OF EMPLOYMENT

An employee’s length of service is one of the most important factors considered by a court when it determines the length of notice in a wrongful dismissal.  The Plaintiff was employed by the franchisee which was a separate legal entity.  She tried to argue that her entire service with other SDM stores should be included.  She alleged that the stores she previously worked for were “common employers” so when she was terminated by the Defendant she should be considered to be an employee of 18 years not the approximately 10 years she was with the Defendant. 

The court held that her length of service was 9 years 10 months as argued by the Defendant.  The Defendant was the employer not SDM and there was no evidence to suggest that the Defendant was not independent and distinct from the other franchises the Plaintiff worked for.  The court relied on the uncontroverted evidence of the Defendant that it had no corporate relationship to the over 100 SDM stores including those the Plaintiff had worked at.  The evidence simply did not “support a finding that SDM had a measure of control over Ms. LeClair that would be necessary under the common employer doctrine.”

The court also found that in any event the evidence did not support a finding that the Plaintiff’s employment was “continuous”.

The decision provides a good review of the “common employer” doctrine especially as it applies to franchisees.

3. REASONABLE NOTICE

The Court examined the 4 “Bardal” tests to determine reasonable notice.  The Plaintiff argued she was entitled to 16—18 months’ notice based on what she claimed was 18 years total continuous service.  The Defendant argued that the range of notice was 9—12 months.

The court found in favour of the Defendant and held that the notice period was 10 months.  The court noted that at 41 the Plaintiff had many years before retirement and had marketable skills.  It also relied on the 4th Bardal factor noting there were numerous comparable jobs available during the notice period.  Given the employee shortages in BC today this factor is becoming more important in reducing the notice period despite the continuing effects of COVID.

Accordingly after deducting what she was paid in severance the court held that subject to other adjustments her damages were $55,690 a far cry from what she claimed at $125,000.

4. BENEFITS AND BONUS

The Plaintiff claimed she was entitled to a bonus in addition to lost salary. The court noted that where the payment of the bonus is discretionary and there is doubt as to whether the employee would have received a bonus during the notice period, the court must assess whether the bonus was integral to the employee’s compensation.  The court reviewed the relevant law and then turned to the Plaintiff’s evidence.  The evidence fell woefully short of establishing a right to a bonus.  While there were documents that showed bonus calculations in past years, for some reason the Plaintiff simply attached the documents without explanation.  The court noted that “in a summary trial application, it is not sufficient to merely attach documents to an affidavit without explanation as to what those documents are.” [59]. Therefore the claim for a bonus was dismissed as the Plaintiff failed to prove she was entitled to a bonus.

Similarly the Plaintiff’s claim in respect of benefits was dismissed again because her evidence failed to establish the key elements of such a claim.  She relied on a letter from her lawyer in response to a demand from discovery that “Ms. Leclair advises that she is currently paying $68/month for extended benefits through Blue Cross…”[62]. The court states another practice rule of evidence that in a summary trial “a party cannot establish a disputed fact by statements of counsel”[para 63]  Why no further evidence was led is not clear.

5. MITIGATION

In February 2020 the Plaintiff was offered a similar job with Canadian Tire but at a substantially lower starting salary of $58,000.  But after accepting the job she decided to accept a lower paying minimum wage job at Air Canada because she wanted to get the travel perks.  Unfortunately the Air Canada job did not pan out due to COVID. The court held that failure to accept the Canadian Tire job was a failure to mitigate.  Although this only resulted in a one month reduction of the damage award the decision is significant for employers as the court reviews the law of mitigation.  The court held:

“An offer of employment need not be made at the same salary that the employee earned before they were terminated; it may be necessary for a terminated employee to accept a position that would pay less in the short-run…

In my view, a salary being offered at approximately $52,000 plus benefits for a supervisory position and an opportunity for further promotion is a reasonably comparable position that she have accepted. As in Goetz it is sometimes necessary to accept a position that would pay less in the short run.” [81]

6. AGGRAVATED, PUNITIVE AND BREACH OF GOOD FAITH

Courts will allow aggravated damages for mental stress if the employer has failed to act in good faith in the manner of dismissal.  While the diagnosis of a psychological condition is not required “the plaintiff must prove, medically or otherwise, that she suffered mental distress beyond the ordinary upset that accompanies termination of employment.” [88] The courts require an evidentiary foundation for such an award.

Punitive damages are awarded in rare cases where the plaintiff can prove conduct that is “harsh, vindictive, reprehensible and malicious” that is ‘extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment.”[89]

The court dismissed both these claims.

Once again the Plaintiff led no evidence that she personally suffered such injury so that alone undermined her claim for aggravated damages.  Further and just as importantly there was no evidence the Defendant breached its duty of good faith in the manner it conducted the termination.  The Plaintiff argued that the Defendant gave a negative reference letter and thus she was entitled to aggravated damages.  The court held that there is no obligation to provide a reference for a departing employee and in any event this was not a case where the provision of a reference was used in an inappropriate manner [such as the court found in the Vernon decision]

Finally the court dismissed the punitive damage claim.  The Plaintiff argued that the Defendant had acted improperly in the conduct of the litigation.  The court noted the Defendant had not argued just cause nor did it make those allegations as part of its defense.  The court held that the delay in the litigation and the motions the Defendant had to bring were totally proper and in fact it had been successful in both motions.  It appears that if anybody could have been criticized about how they acted during the litigation it would be the Plaintiff.

The court summarized its decision as follows:

“In summary, there is no evidence to support an award of aggravated or punitive damages in the circumstances of this case.”[114]

7. COSTS

Finally the court made its position clear when it came to an order for costs.  Normally “costs follow the event” so here the Plaintiff was awarded judgment albeit far below what she claimed and what in fact the Defendant essentially agreed she was entitled to. But here the court awarded the Defendant its costs based on Scale “B” of the Tariff because it had been substantially successful.  While that decision might be open to challenge, the Defendant asked to make submissions on costs.  It may well be there was an Offer to Settle that would have supported an Order in the Defendant’s favour in any event.

TAKEAWAYS

I thought this case was worth reporting in some detail because it reflects the dilemma employers face when confronted with a Plaintiff that makes outrageous claims without legal or factual foundation.  Many employers simply do not want the effort and costs of litigation so they settle beyond what their counsel advises a court would likely award.

So it is refreshing to see an employer win so handily in a case like this.  It might make other employees’ counsel pause before taking a case all the way to trial.  An employee runs the risk of having an adverse decision like this form a negative part of their record of employment when applying for other jobs as these court decisions are published.

We strongly urge our clients to consider the merits of their case carefully and base their settlement discussions on that opinion.  In many cases such as this mediation is an effective tool to achieve settlement and avoid incurring significant legal fees.

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Our Employment & Labour Group has been working with businesses to develop and draft the right policies and contracts for their workplace and are here to help! Get in touch today.

Note to Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter or drafting of workplace vaccination policy, please contact Mike Weiler at mweiler@ksw.bc.ca.

Mike Weiler is senior counsel with the Employment & Labour Group at KSW Lawyers (Kane Shannon Weiler LLP). Mike specializes in labour law and helping unionized employers, and has more than 40 years of experience practicing employment, labour and human rights law, and related areas, including governance and shareholders rights (and corporate defences to same). He represents employers, management, executives and other senior employees.

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