The Whalley Trial Part XII: Constructive Dismissal?

Editor’s Note: John Whalley, the former Economic Development Manager of the Cape Breton Regional Municipality (CBRM) is suing the CBRM for constructive dismissal. The case finally came to trial from 20-24 August 2018 and the Spectator was there. We’re presenting our coverage in a series of articles because the trial touched on so many issues of interest to CBRM residents. This is Part XI (Read Part I,Part II,Part III,Part IV,Part V, Part VIPart VIIPart VIII, Part IX, Part X and Part XI)

 

Having discussed the terms of Whalley’s contract, his lawyer, Blair Mitchell, then turned to the question of whether Whalley was constructively dismissed.

I’ve basically covered Mitchell’s arguments backing Whalley’s claims of constructive dismissal in my previous articles – chief among them being that the port represented one of Whalley’s three core responsibilities (the other two being municipal financing and demographics), the loss of which constituted a breach of the terms of his contract.

Mitchell went over much of the same ground again – he spent considerable time, for instance, on the circumstances surrounding the McKeil deal – so rather than rehashing of all of that, I think I’ll indulge my newfound enthusiasm for case law and look at the various precedents he cited in his summation. (Warning: this could get seriously wonky.)

 

Farber v. Royal Trust Co.

Farber v. Royal Trust Co. is a constructive dismissal case that was finally settled by the Supreme Court of Canada (SCC) in 1997 – although the incident at its heart happened in 1984.

The appellant, David Farber, was a regional manager for Western Quebec with Royal Trust Co, in which position he “supervised and administered 21 branches, 17 branch managers, 400 real estate agents and 35 secretaries.” The region generated annual gross income of more than $16 million.

In 1984, the company undertook a reorganization and offered him the manager’s position at a single branch in Dollard (a position he had held eight years and four promotions earlier). As manager of the Dollard branch, Farber would be responsible for supervising “22 real estate agents and 2 secretaries” Moreover, the SCC decision noted, the branch was “experiencing problems” and sales “amounted to less than $700,000.”

As regional manager, Farber had received a base salary plus commissions and benefits. As manager of the Dollard branch, he would receive no base salary – his income would be based strictly on commissions.

Rather than accept the offer, Farber quit and sued for constructive dismissal.

The SCC agreed with Farber, finding that Royal Trust’s offer, while made in good faith (that is, not as a way of forcing Farber to resign) amounted to both a demotion and a significant reduction in salary which “substantially altered the essential terms of the employment contract.”

The court also ruled that the lower court had erred in allowing the respondent (Royal Trust Co.) to enter evidence showing sales of the Dollard branch had been much better than expected in the year after Farber quit because, “The sales figures subsequent to the offer could not reasonably have been foreseen at the time the offer was made.”

Farber was awarded $150,000 as one year’s remuneration in lieu of notice.

 

Potter v. New Brunswick Legal Aid Services Commission

Whalley’s case did not involve any decrease in salary, but Mitchell reminded the court that employers have been known “to make things so uncomfortable or so unfair” for employees that they felt compelled to leave their positions, even though, in terms of their remuneration, nothing had changed.

And here he cited what I’ve since discovered are the “oft-cited” observations of Chief Justice Brian Dickson of the SCC (in the 1987 Reference Re Public Service Employee Relations Act (Alta.):

Work is one of the most fundamental aspects in a person’s life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person’s employment is an essential component of his or her sense of identity, self-worth and emotional well-being.

In keeping with this citation within a citation thing both lawyers had going, Mitchell was actually citing now-SCC Chief Justice Richard Wagner citing Dickens in Potter v. New Brunswick Legal Aid Services Commission, a constructive dismissal decision from 2015. In that ruling, Wagner continued:

Thus, it is clear that the benefits derived from performing work are not limited to monetary and reputational benefits.

Mitchell drove the point home a little further with a reference to Employment Law in Canada, edited by Geoffrey England and Innis M. Christie (and a steal right now at $810, marked down from $1,080), in which the authors argue that in decisions like Potter, the courts “do not require a reduction in wages” as a condition of constructive dismissal “rather, importance is attached to the diminished psychological satisfaction that comes with a substantial reduction in responsibilities, status or prestige.”

 

Kerr v. Valley Volkswagen revisited

Mitchell then took issue with some of the authorities cited by Mozvik in his final submission (saying he was concerned they could “lead to error”), beginning with Kerr vs Valley Volkswagen.

Mitchell said he was not sure on what basis Mozvik had cited the case, but pointed out that “this was not a constructive dismissal case.”

“That is of no assistance to your lordship here,” Mitchell told Justice Murray, as there was “no allegation of constructive dismissal” and no question of mitigation.

 

Gillis v. Sobeys Group

Next, Mitchell turned to Gillis v. Sobeys Group (which I am quite sure Mozvik did not mention in his oral summation but which was apparently in his written brief).

This was a 2011 decision by Justice Kevin Coady of the Supreme Court of Nova Scotia (Mitchell kept referring to it as Justice Gregory M. Warner’s decision but I don’t think that’s correct).

The plaintiff, Deborah C. Gillis, had worked for Sobeys for 28 years, having started as a cashier in 1981 when she was 17. As of 30 March 2009, when “the employment relationship ended,” she held the (incredibly titled) position of “food experience manager” in Sobeys’ head office in Stellarton. The court also noted that she had an unblemished record as an employee.

Early in 2009, the marketing department (which Gillis belonged to) was restructured and her position eliminated. She was offered two alternatives in a letter from Sobeys VP of marketing, Cindy Stevens:

  • Assistant Store Manager in Truro (with a pay-cut and a one-time, lump sum payment to make up for it); or
  • Demo Coordinator at the head office in Stellarton (which Sobeys did eventually admit was a demotion with a significant pay cut, although, again, the company offered a one-time, lump sum payment to make up for it).

Sobeys logo

In the letter, Stevens chastised Gillis for some “very serious matters,” including her failure to complete something called “the birthday club plan.” (She also used Gillis’ first name, “Debbie,” repeatedly and began a sentence with “Irregardless,” neither of which inspired any comment by the judge, but both of which set my teeth on edge, let me tell you.)

Gillis “did not respond positively to any of these proposals and the employment relationship came to an end. Litigation was commenced shortly there after.”

She sued for constructive dismissal.

Sobeys argued that Gillis had abandoned her employment or resigned. “Alternatively, the employer argued that there was a failure to mitigate when the employee did not accept alternative employment with the employer.”

Coady sided with Sobeys, saying that Gillis was not constructively dismissed and that even had the court found she was constructively dismissed, “her failure to accept the employer’s offer of alternative employment constituted a failure to mitigate and would stand as a full defense to her damages claim.”

Coady wrote that it was unreasonable of Gillis to have turned down the Assistant Store Manager job, as he believed Stevens’ evidence that Gillis would have been manager “in no time.” He added that if Gillis “had been able to put aside her emotional responses, she should have realized this would not be ‘a step back.’”

Mitchell drew the court’s attention to paragraph 37 of Justice Coady’s decision:

I conclude that the in-store position amounted to a transfer and did not represent a substantial change in the essential terms of her employment contract.

Mitchell argued the passage shows that Justice Coady’s decision was based “on a finding of fact,” that Coady had considered “at some length” Sobeys’ practices in terms of “moving people around,” and had reached his conclusion based “on a detailed analysis of the employment in context.”

“You have the full evidence of Mr. Whalley’s employment in context,” Mitchell told Murray, “there were not changes except as they occurred over time, substantial time, measured in years.” Therefore, he argued, Gillis v Sobeys could be “of no assistance” to Justice Murray in deciding Whalley’s case.

 

MacKinnon v Acadia University revisited

MacKinnon v Acadia University, which Mitchell characterized as a “well-known constructive dismissal case involving issues of mitigation,” actually was decided by Justice Warner.

Acadia University. (Source: CBC)

Source: CBC

Mitchell says that Justice Warner “reviewed in detail” Cook MacKinnon’s employment history (including the original fact sheet for her job) then spent 25 paragraphs reviewing “all aspects of the interchanges,” concluding that:

To describe, in her case, individual parts of her portfolio of responsibilities as “core” is inappropriate. The term means the essence or gist. Ms. Cook MacKinnon had oversight of a broad basket of important departments and an equally important role in the overall direction of the university.

Warner characterized Cook MacKinnon as a “generalist” whose duties “fluctuated” with the ever-changing “problems and priorities” of the university and who expected such changes in her duties.

Mitchell argued this was not the case with Whalley, whose job had only changed gradually over time and who was “very much a specialist” not a generalist.

 

Evans v Teamsters

This reference – Evans v. Teamsters Local Union No. 31 – is another one Mozvik didn’t actually make during his oral submission, but must have included in his brief.

The appellant, Donald Norman Evans, was employed for over 23 years as a business agent in the Teamster’s Whitehorse office. He was dismissed in January 2003, after the election of a new union executive.

Evans claimed he was entitled to reasonable notice of the termination, and said he was prepared to accept 24 months’ notice which could take the form of 12 months’ continued employment and 12 months’ salary in lieu of notice.

Lawyers for both sides debated the issue for some months, but reached no solution. Ultimately, the union requested that Evans come back and serve out his 24 months. Evans said he would if the union rescinded its termination letter of January 2003, but the union refused to do so.

The case went to trial and the judge found that Evans had been wrongfully dismissed and was entitled to 22 months’ notice. The judge found the union had not shown Evans had failed to mitigate his damages and awarded Evans over $100,000 in damages.

The Court of Appeal, however, set aside the damage award, “holding that Evans had not acted reasonably with respect to the job offer made to him by the union, and that this constituted a failure to mitigate his damages.”

Mitchell (once again) said he didn’t know why Mozvik had raised the case which “turns on the fact” that the employee had written to the employer himself to indicate he was prepared to return to work and “that’s not what occurred here.”

 

MGA

Mitchell’s penultimate reference was not to case law but to the Nova Scotia Municipal Government Act (MGA), from which he read the description of the role of mayor and noted that no member of council was permitted to give counsel to or instruct an employee of the municipality.

Mitchell argued that the Mayor’s offer (conveyed by Marie Walsh) to Whalley that he could return to work following his resignation represented the exercise of an authority “not authorized by the MGA.”

He also cited the section of the Act that forbids municipalities from selling or leasing property to for-profit companies and the section that forbids municipalities from granting tax concessions or other forms of direct financial assistance to business or industry.

He didn’t actually explain why he was citing these, but I assume it was to back Whalley’s misgivings about the McKiel deal.

 

CBC Photo

CBC Photo

Irwin v Sysco

Mitchell referenced one final “authority,” Irwin v Sysco  which apparently Mozvik had also cited in his brief.

Mitchell barely spoke about it, so I won’t go into detail either, except to say that the plaintiff, Heather Irwin, was hired to complete a maternity leave term position by Sysco Halifax. The woman on maternity leave didn’t return and someone else was hired to fill the full-time position. Irwin was offered other work for the balance of the term. She claimed constructive dismissal. Sysco said there was no constructive dismissal and that Irwin had failed to mitigate her damages.

Justice Suzanne Hood ruled that Irwin was constructively dismissed but had failed to mitigate her damages.

Mitchell told Justice Murray that, once again, the case was not relevant to Whalley’s as Irwin was a temporary hire, not a long-term, permanent employee.

And with that, the plaintiff rested.

 

 

 

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