Before:
The Honourable Madam Justice Fenlon
Reasons for Judgment
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Counsel for the Plaintiff:
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C.R.
Forguson
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Counsel for the Defendant:
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T.J.
Delaney
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Date and Place of Trial:
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March
18, 19, 20, and May 16, 2008
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Vancouver,
B.C.
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I. INTRODUCTION
[1]
The plaintiff, Ms. Borsato, was the long-time
manager of the defendant, Atwater Insurance Agency Ltd. (the
"Agency"). She claims that she was constructively dismissed when the
Agency reduced her salary by 20%. The Agency says that Ms. Borsato
unilaterally changed her work schedule from five days a week to four, and that
the reduction in her salary that followed was simply a response to this
change. The Agency asserts that Ms. Borsato’s refusal to accept a
reduction in pay to match her reduction in hours amounted to a “constructive
resignation”.
[2]
The case turns on whether the terms of Ms.
Borsato's employment contract gave her the right to work less than full-time.
She seeks special damages for loss of income and benefits based on a notice
period of 16 months.
II. BACKGROUND
[3]
Ms. Borsato was 54 years old at the date of
trial. She had worked at the Agency in some capacity since 1980. From 1980 to
1983 she was an insurance agent. In 1983 she took time off to raise a family,
working only on a casual relief basis to maintain her insurance licence until
about 1990 when she returned to work to manage the office.
[4]
At that time the Agency was owned by a Mr.
Dupuy. When Ms. Borsato returned to work in 1990, her employer agreed that she
could work from 9:00 a.m. to 3:00 p.m. five days a week for a total of 30 hours
each week so that she could take her young children to school and pick them up
each day.
[5]
In November of 1992 Mr. Dupuy passed away. Ms.
Borsato continued to manage the Agency for his estate and agreed to take on
some additional responsibility with respect to another office in North
Vancouver. Ms. Borsato’s terms of employment were set down in writing in
a Memorandum of Employment dated January 2, 1992, which provided in part:
ADJUSTMENT IN SALARY:
To compensate for the change in job
description, comes in the form of:
ANNUAL BONUS OF $15,000. Warranted by the financial success of the business, in general.
WAGES are to be paid on an hourly basis, calculated at $23/hr, averaging
30 hours per week. Regular 6 hour day, 9:00am-3:00pm.
[6]
Although the contract referred to an hourly
basis for compensation, Ms. Borsato was paid a salary based on that hourly
wage multiplied by a 30 hour week, regardless of the precise number of hours
she worked. Ms. Borsato and her employer agreed that the six hour day was a
guideline, and that Ms. Borsato had flexibility with respect to the scheduling
of those hours.
[7]
In January of 1995, the retirement of the senior
insurance agent at the North Vancouver office left Ms. Borsato with more
responsibilities as the general manager. The Agency accordingly increased Ms.
Borsato's salary to reflect a base rate of $26 per hour. All other terms of
her employment contract remained the same.
[8]
Prior to Mr. Dupuy’s estate putting the Agency
on the market in 1996, the Agency and Ms. Borsato negotiated a change to her
terms of employment. Her compensation was changed from salary plus bonus to
salary only. As a result, Ms. Borsato was to receive $55,000 per year: the $15,000
bonus she had been receiving plus compensation of about $40,000 based on 30
hours per week at $26 per hour over 52 weeks.
[9]
Ms. Borsato's responsibilities as office manager
included all aspects of the day-to-day operation of the Agency, such as
scheduling her time and that of the five or six other employees. The office
was open seven days a week. Although the plaintiff was required to work a
minimum of 30 hours each week, as her children got older she tended to put in
extra hours to meet her management responsibilities, and tried to schedule her
hours over four days.
[10]
In 1996 Mr. Meier purchased the Agency and the
North Vancouver office from Mr. Dupuy's estate. It was one of the terms of his
offer to purchase that Ms. Borsato was to continue as the manager of the
Agency. He said at trial that the Agency was a successful one, and that he
understood from the previous owner that Ms. Borsato was an integral part of
that success.
[11]
I find that when Mr. Meier acquired the
Agency he did not know the precise terms of Ms. Borsato’s employment
contract other than the amount she was to be paid. He assumed she was working
full-time and made no further enquiries. Mr. Meier agrees that Ms. Borsato’s
hours and schedule were never specifically addressed. The only change he
negotiated with Ms. Borsato to her terms of employment was a reduction in her
salary to reflect the fact that she would no longer be responsible for the
North Vancouver office. Ms. Borsato agreed to accept about $4,000 less and to
continue in her position at a salary of $51,000 plus whatever additional income
she could earn through selling insurance, which on average amounted to
approximately $10,000 per year in commissions (an arrangement that had been in
place under Mr. Dupuy’s ownership as well).
[12]
The parties agree that after Mr. Meier acquired
the Agency in 1996, he gave Ms. Borsato complete autonomy to schedule the
office and her time as she saw fit. By all accounts he was an exemplary
employer and she was an exemplary employee. Over the next ten years the
parties had a good professional relationship and Mr. Meier said that he was
pleased with Ms. Borsato’s performance and the performance of the Agency as a
whole.
[13]
The only issue that arose prior to the events
giving rise to this litigation occurred in the fall of 2005 when Mr. Meier
learned that Ms. Borsato was working from home one day a week doing
accounting. Mr. Meier gave evidence that he did not like employees working
from home because there was no way to really ensure that they were working. In
addition, he did not want Ms. Borsato spending time away from expensive retail
space to do bookkeeping work that could be done by others when there was such a
shortage of insurance agents to handle the clients walking into the office. He
asked Ms. Borsato to concentrate on her duties as the office manager and on the
insurance sales. Mr. Meier sent Ms. Borsato an email confirming his direction
and she stopped working from home.
[14]
In August and September of 2006 the Agency hired
three employees from a competitor agency. Two of the new employees were assigned
to work full-time in the Agency, and another worked one day per week. The
addition of the new employees caused difficulties at the Agency. There were
only five workstations for seven people, and one of the employees was described
by all witnesses at trial as difficult or impossible to work with.
[15]
In September of 2006 Mr. Meier reviewed the
salaries of the original staff and the new employees, and gave a number of
people raises, including Ms. Borsato.
[16]
Early in October of 2006 it came to Mr. Meier's
attention that Ms. Borsato was working four days per week and was taking
Fridays off. He confronted Ms. Borsato with this information by way of a
telephone call initially, and again at a meeting in his office in Vancouver on
October 3, 2006. Mr. Meier said "What’s this I hear about you working
four days?" According to Ms. Borsato she told him that she was trying to
get back to four days per week, and he said "you can't do that" to
which Ms. Borsato replied "well I did". Mr. Meier’s evidence
was that he did not recall Ms. Borsato saying that she was “trying to get
back to four days per week” but rather that she said she had been “doing this
since August”. Ms. Borsato’s evidence was that she told Mr. Meier at
the October 3 meeting that she had been doing this for quite some time and that
he should check his payroll records.
[17]
The parties agree that at some point during the
October 3 meeting, Mr. Meier suggested that Ms. Borsato go for a coffee and
consider what she wanted to do in terms of her future with the Agency. When
she returned, they agree that she indicated that she had given some thought to
the situation and wanted to make things work. The meeting ended on a
relatively positive note, with Ms. Borsato expecting options to be put forward
by Mr. Meier, and Mr. Meier expecting to further discuss and resolve the issues
that had been raised at that meeting.
[18]
Instead of further discussions, Mr. Meier, on
October 4, 2006, wrote a letter to Ms. Borsato in which he said:
You have
arbitrarily changed your work week from 5 days to 4 days per week. I was very
surprised that that had taken place and needless to say, you cannot
arbitrarily change your income/working arrangements. We have a few managers
working shorter weeks and in all cases, we have adjusted their incomes to
reflect this change. We have accepted the reduction in your work week and have
adjusted your salary. This will take effect October 1, 2006. The amount you
were overpaid from August to September will be deducted at a rate of $500/mo.
from your commission statement.
[19]
The letter goes on to describe Ms. Borsato's
"management style and interpersonal skills" as "quite
antiquated". It suggests that her "compliance with the few head
office requirements is also poor" and suggests that she take an on-line management
course. The letter also advised that Mr. Meier's son would be coming out to
assess the Agency and would be making “recommendations if changes are required i.e.
to staffing, administrative procedures, training, etc.". The letter
concludes with the words: "I hope we can work together and assist you in
becoming a good, positive member of our team again."
[20]
On October 5, 2006, Mr. Meier instructed his
payroll staff to reduce Ms. Borsato’s salary by 20% and to deduct $500 per
month from her commission income to recover the 20% overpayment for August and
September.
[21]
On October 12, 2006, Ms. Borsato wrote to Mr.
Meier, describing her original agreement with Mr. Dupuy to work 30 hours, and
stating that during the nine years since Mr. Meier purchased the Agency
she had continued to do so, but often worked more hours without pay in order to
ensure that her work was completed. Ms. Borsato asked Mr. Meier to reinstate
her full compensation and advised him that:
Based on current
work patterns and staff schedules, I consider working the 30 hours in 4 days to
be optimum. However, if you wish I would certainly be open to discussing a
change in schedule in order to work the 30 hour week over 5 days.
[22]
Meetings took place between Ms. Borsato and Mr.
Meier on October 31, 2006 and between Ms. Borsato and Mr. Meier’s son,
Alex Meier, on November 3, 2006. Following the latter meeting, Alex Meier, as
directed by his father, insisted on Ms. Borsato leaving the office that
afternoon to begin a “stress leave”. The plaintiff never returned to work.
III. ANALYSIS
1. What were the terms of the
employment contract?
[23]
The defendant argues that Ms. Borsato’s contract
of employment changed over time. The defendant accepts that Ms. Borsato was
entitled to work 30 hours per week in 1990, but says that by 1996 when
Mr. Meier purchased the Agency, she was clearly working more than 30 hours
per week, and the 30 hours had ceased to be a term of Ms. Borsato's employment
contract. The defendant argues that terms may be implied into an employment
contract depending upon the reasonable expectations of the parties.
[24]
In relation to the reasonable expectations of
the Agency, the defendant submits that it is significant that Ms. Borsato never
told Mr. Meier she was a part-time employee or that she had an arrangement to
limit her work to 30 hours a week at any time before he purchased the Agency,
or during the ten years they worked together. The defendant’s counsel asserts
that Ms. Borsato was, in effect, “hiding her behaviour” from her employer and in
so doing was abusing a position of trust.
[25]
I do not accept the defendant’s submission that
a contract of employment can change over time based simply on one party’s
expectations, reasonable or otherwise. The defendant cited no case law in
support of this proposition. Nor do I accept that Ms. Borsato had an
obligation to ensure that Mr. Meier knew the precise terms of her contract when
he acquired the Agency if she expected to continue her employment on those
terms. I find nothing on the facts to suggest that Ms. Borsato was hiding her
work schedule from her employer. The evidence is to the contrary.
[26]
In March of 2004, a memo was sent out on behalf
of Mr. Meier to the Agency directing Ms. Borsato to send in monthly
schedules of hours worked by employees. The monthly schedules for December
2004 through December 2006 were put into evidence at trial. These schedules
are the best evidence of the plaintiff’s weekly work schedule available to the
Court. They show that Ms. Borsato frequently scheduled her time so that
she worked four eight-hour shifts. The schedule for September of 2005 shows
that Ms. Borsato worked three four-day weeks, and one five-day week. In
October of 2005 she worked four four-day weeks.
[27]
The defendant submitted that these schedules were
not reliable because Ms. Borsato admitted in cross-examination that she
often worked more than the hours recorded on the schedules. I find that while
Ms. Borsato often worked longer hours than those set out on the schedule, the
schedule tended to accurately reflect the days she worked each month.
[28]
The second piece of evidence that supports Ms.
Borsato’s position that she continued to work openly on a flexible part-time basis
is the “employee profile card” which Ms. Borsato was asked to complete in
June of 2006, before any dispute had arisen between the parties. That form
clearly records Ms. Borsato’s hours of work per week as 32, consisting of
eight hours per day, four days per week.
[29]
In support of its argument that the plaintiff's
position had evolved into a full-time, five day per week job, the defendant
first relies on the evidence of a number of Agency staff who gave evidence at
trial. They all agreed that Ms. Borsato worked very hard, would occasionally
come in on weekends, often worked late into the evening, and would fill in when
someone was sick or on holiday as needed. The tenor of this evidence was that
Ms. Borsato was always in the office.
[30]
Second, the defendant relies on Ms. Borsato's
evidence that she worked hard and spent whatever time was necessary to get the
job done, including filling in when people were away sick or the Agency was
short-staffed, or when she had to catch up from being away on holiday.
Ms. Borsato said that although she tried to schedule herself for four days
a week, she generally worked “more five day weeks than four day weeks”.
[31]
Third, the defendant relies on a letter drafted
by Ms. Borsato to U.S. Immigration Authorities in the summer of 2005, and
signed by Mr. Meier, confirming that she worked full-time for the Agency. Ms. Borsato’s
explanation for this letter was that she considered her job to be full-time
because she put in so many hours above and beyond the minimum 30 that she was
required to do.
[32]
Fourth, the defendant relies on a memo Mr. Meier
sent to Ms. Borsato in September of 2005 after he found out that Ms. Borsato
was working one day per week from home doing accounting work. He wrote to her
asking her to work “full-time from the office”. The defendant says that this
was a clear expression of the understanding of both parties that Ms. Borsato
was to be in the office five days per week.
[33]
Taken in context, I find that the focus of the
memo was where the work was being done. Ms. Borsato understood that
when Mr. Meier referred to “full-time”, he meant always working from the
office and not doing any work from home. I find that when she received the
memo Ms. Borsato did not turn her mind to whether “full-time“ meant “five days
per week” because that was not the issue at the time.
[34]
The defendant points out that in cross-examination
Ms. Borsato was asked “What do you think full-time means?” and she
responded: “Five days per week.” However, when asked what full-time meant to
her when she read the September 2005 memo she replied “Full-time on task, doing
the job.”
[35]
I accept the plaintiff’s evidence that she
scheduled herself for four day weeks when it was possible to do so, given the
competing demands to fill in when the Agency was short-staffed, others were on
holidays, or she had work to catch up on because she was returning from a
holiday herself. Ms. Borsato was a hard worker and the 30 hour minimum was
more often than not illusory in practice, given the demands of managing the
Agency. However, I find that she strove to make use of the flexibility she had
contracted for, and that she valued that flexibility, even though it was often
the exception rather than the rule. She made no attempt to hide her schedule
from her employer. To the contrary, she repeatedly reported it to head office.
[36]
Counsel for the plaintiff contended that
voluntary overtime provided by an employee, even a manager, cannot become the
employee’s obligation simply because the employee consistently works more hours
than she is required to under the terms of her contract. I agree with that
position. In my view the fundamental terms of an employment contract do not change
over time just because an employee regularly exceeds her obligations and the
employer comes to expect that level of performance. Amendments to an
employment contract, as with any other contract, require mutual contractual
intention and consideration.
[37]
In Brode v. Fitzwright Co. 
reflex, (1992),
41 C.C.E.L. 289 (B.C.S.C.) an employer sought to enforce a 90 day termination
provision contained in a letter delivered to the employee approximately nine years
after he started working for the company. In analysing the requirement for a
binding modification to an existing contract, the court stated (at pp. 295-296):
When contracts are formed or contractual modifications are made,
there must be an expression of agreement, express or implied. Arbitrary
pronouncement will not suffice. In the telephone conversation there was no
agreement between Robbins and Brode on the subject of notification of
termination to Brode. Robbins tried to impose a term in his letter of December
16, but Brode did not answer or acknowledge that letter. The proposition was
not accepted, acceded to, or acquiesced in by Brode. [Emphasis added]
[38]
The court went on to cite with approval a
passage from Rahemtulla v. Vanfed Credit Union, 51 B.C.L.R. 200, [1984]
3 W.W.R. 296 (S.C.):
... if the terms
of the policy manual are to be binding, it must be concluded that they have
contractual force. The usual elements of a contract must be established: a
concluded agreement, consideration, and contractual intention. [Emphasis
added]
[39]
In Brown v. OK Builders Supplies Ltd.
(1987), 14 C.C.E.L. xxxi (B.C.C.A.) an employee negotiated with his employer to
reduce his duties. The employer, without expressly raising a corresponding
reduction to the employee's salary, assumed that was reasonable and
unilaterally reduced the employee's salary by 25%. The Court of Appeal found
that in the absence of an express agreement between the parties to reduce the
employee's salary, such a term could not be implied into the contract.
[40]
In the case at bar the parties agree that they
did not discuss the number of hours or days of the week that Ms. Borsato was
working at any time after Mr. Meier took over the Agency. The closest
they came to the subject was the memo in September 2005 when the issue of
working in the office “full-time” came up. In the absence of the topic even
being raised, I cannot find that there was an "expression of agreement,
express or implied", that the original terms of Ms. Borsato’s employment
contract with the Agency were to be modified to require her to work more than
30 hours per week over five days.
[41]
Further, I find that there was no change to
Ms. Borsato’s remuneration or other terms of employment that could
constitute consideration for converting her minimum obligation to the Agency
from 30 hours scheduled over four or five days, to 40 hours over five days.
[42]
The salary of $51,000, which Mr. Meier and the
Agency agreed to continue paying Ms. Borsato, was based on 30 hours at $26 per
hour and a $15,000 bonus, less a few thousand dollars to reflect removal of the
North Vancouver office responsibilities. That consideration did not change
over the ten years of Ms. Borsato’s service to the Agency under Mr. Meier,
except for a small raise in September of 2006.
[43]
I find that the terms of Ms. Borsato’s
employment contract were as they had been prior to the Agency being sold to
Mr. Meier in 1996: a minimum of 30 hours per week with additional hours
as needed to meet the demands of the management position from time to time, and
flexibility with respect to scheduling of those hours and days of work. I find
that the only amendment to the terms of Ms. Borsato’s employment contract
when Mr. Meier took over was a reduction in salary to reflect the end of Ms.
Borsato's responsibility for the North Vancouver office.
[44]
Both Mr. Meier and Ms. Borsato presented as
frank and honest witnesses. I accept that Ms. Borsato proceeded on the basis
that her employment terms had remained unchanged, and that Mr. Meier believed
that Ms. Borsato was working five days and approximately 40 hours per week.
But Mr. Meier's assumptions and expectations, however reasonable they may have
been, cannot alter the terms of the employment contract.
[45]
Even if the contract had been amended (which I do
not find to be the case), on Mr. Meier’s understanding the key requirement was
a commitment to be in the office "five days a week and get the job
done." He said that it did not matter whether Ms. Borsato worked
"thirty-four or thirty-eight or thirty-nine hours" as long as she
fulfilled the five days per week and did her work. Ms. Borsato in fact
agreed to do just that on October 12, 2006. Despite that concession, the
defendant continued to pay the plaintiff a reduced salary.
[46]
It was apparent from Mr. Meier’s evidence
that he was satisfied and pleased with Ms. Borsato’s performance as a
manager until he found out that she was working four days per week. What
troubled Mr. Meier was that the plaintiff, in his view, had made a change
to the way she was working without first seeking his permission. At trial
Mr. Meier said:
But what I don’t
like is people doing things arbitrarily. If she had asked, it might be okay, I
might have agreed.
2. Did the defendant unilaterally change a
term of the contract?
[47]
It follows from the findings I have made on the
terms of the employment contract that Mr. Meier's decision on October 4, 2006
to reduce Ms. Borsato's salary by 20% was a unilateral change to the contract.
3. Did the plaintiff unilaterally
change a term of the contract?
[48]
The defendant says that when the plaintiff took
the position in her October 12, 2006 letter that she would work 30 hours over
five days, she converted the 30 hours per week from a minimum to a maximum.
[49]
I do not accept the defendant’s characterization
of the plaintiff’s proposal to work 30 hours over five days to be a declaration
by the plaintiff that she would never work more than 30 hours in a week. I
accept Ms. Borsato’s evidence that she intended to work as she always had,
scheduling her minimum time over five days, but continuing to do what was
required to get the job done.
4. Did the defendant’s change to the contract amount to a constructive
dismissal?
[50]
In Farber v. Royal Trust Co.,
1997 CanLII 387 (S.C.C.), [1997] 1 S.C.R. 846 at para. 34, the court cited with approval the following
passage from an article written by Sherstobitoff J.A., of the Saskatchewan
Court of Appeal:
A constructive
dismissal occurs when an employer makes a unilateral and fundamental change to
a term or condition of an employment contract without providing reasonable
notice of that change to the employee. Such action amounts to a
repudiation of the contract of employment by the employer whether or not he
intended to continue the employment relationship. Therefore, the
employee can treat the contract as wrongfully terminated and resign which, in
turn, gives rise to an obligation on the employer's part to provide damages in
lieu of reasonable notice.
[51]
More recently in Hanni v. Western Road
Rail, 2002 BCSC 402 (CanLII), 2002 BCSC 402, 17 C.C.E.L. (3d) 79 at para 52, Burnyeat J.
stated:
There are no
circumstances, financial or otherwise, that justify an employer making
unilateral and fundamental changes to the contract of employment of the
employee, unless such changes are specifically permitted by the contract of
employment.
[52]
In Allison v. Amoco Production Co.
(1975), 58 D.L.R. (3d) 233 at 238 (Alta. S.C.), an allowance that made up
approximately 25% of the employee’s remuneration was withdrawn. The court held
this to be a constructive dismissal and quoted from Labatt’s Master &
Servant, 2nd ed. (1913), vol. 1, p. 587:
A declaration by the
master that he will no longer pay the stipulated amount of compensation, and
that the servant, if he stays, must do so at a lower rate of wages, may be
treated by the servant as equivalent to a dismissal. But the more correct
theory with regard to these and other cases in which the servant is offered the
alternative of leaving or of submitting to an essential alteration in the
conditions of the service would rather seem to be this -- that the servant is
justified in abandoning his work, and suing the master on the ground of a
specific breach of duty in altering the conditions.
[53]
Counsel for the defendant in this case conceded,
quite properly, that a 20% reduction in an employee’s salary amounts to a
fundamental change to the employment contract.
[54]
I find that the Agency’s reduction of
Ms. Borsato’s compensation by 20% constituted a constructive dismissal.
5. What
is the appropriate notice period?
[55]
The primary factors to be taken into account when
deciding the reasonable period of notice required on a dismissal are the length
of service of the employee, the nature of the employment, the age of the
employee, and the opportunities to find similar employment given the training,
qualifications, and experience of the employee (Bardal v. Globe &
Mail Ltd. (1960) 24 D.L.R. (2d) 140 (Ont. H.C.J.)).
[56]
Counsel for the plaintiff submitted that a notice
period of 16 months is appropriate, based on the length of service from the
plaintiff’s return to work at the agency in 1990 until her constructive
dismissal in 2006. The plaintiff relies on Allen v. CP Express and
Transport Ltd. reflex, (1989), 29 C.C.E.L. 279 (B.C.S.C.). The plaintiff in
that case was 54 years old. He had worked continuously for the defendant for
16 years and was a terminal manager supervising a staff of five. He was
awarded 16 months’ notice.
[57]
The defendant argues that a notice period of 12
months is appropriate in the circumstances given that the maximum notice period
is 24 months. The defendant also points to the high demand for insurance
agency personnel with Ms. Borsato’s training and experience, and relies on Lelievre
v. Commerce and Industry Insurance Co. of Canada, [2007] B.C.J. No. 366
(S.C.). In that case a sales manager who was 56 years of age and had worked
for the employer for six years managing one other employee was found by the
court to be entitled to a notice period of six months.
[58]
I find that the plaintiff’s situation more closely
resembles the case of Allen. Ms. Borsato worked with the Agency
for an uninterrupted period of 16 years, with an earlier three year period of
full-time employment from 1980 to 1983, and part-time involvement from 1983 to
1990.
[59]
It was Mr. Meier’s evidence that when he bought the
Agency from Mr. Dupuy’s estate, all employees were terminated and then
rehired, a view supported by the purchase agreement. But there was no evidence
that Ms. Borsato was aware of a termination at the time, and the Agency,
on the employee profile card, recorded her original hire date as January 1,
1980. In any event, the parties agreed that in terms of determining the
appropriate notice period, little turns on whether Ms. Borsato was employed
continuously from 1990 to 2006, or from 1996 to 2006.
[60]
I am of the view that a notice period of 16 months
is appropriate in these circumstances.
6. Did
Ms. Borsato fail to mitigate?
[61]
The onus is on the defendant to prove that the
plaintiff failed to mitigate her damages.
[62]
The defendant raises two issues with respect to
mitigation. First, the defendant submits that the plaintiff should have stayed
with the Agency until she could find another job. Second, the defendant
asserts that Ms. Borsato should have searched more diligently for work and
been less selective after she left the Agency.
(a) Continuing
to work at the Agency
[63]
The defendant relies on Evans v. Teamsters
Local Union No. 31, 2008 SCC 20 (CanLII), 2008 SCC 20 as support for its argument that
Ms. Borsato should have mitigated her losses by continuing to work at the
Agency until she found another job. In that case Mr. Evans had worked as
a business agent for the union for 23 years. A new president of the union was
elected. Mr. Evans had supported the incumbent during the election. He
was told his employment would be terminated and the union entered into negotiations
with him concerning working notice and the amount of notice. The parties
basically agreed Mr. Evans would receive 24 months’ notice. The union
wanted him to work 12 months and then receive 12 months’ pay. Mr. Evans
wanted other terms, including a requirement that his wife be given his job
after he left. The negotiations broke down.
[64]
The union told Mr. Evans he could keep working
in his position. Mr. Evans refused to report back to work.
[65]
The Supreme Court of Canada ruled that
Mr. Evans failed to mitigate his loss by failing to report back to work.
In doing so the court said at para. 29:
There appears to be
very little practical difference between informing an employee that his or her
contract will be terminated in 12 months' time (i.e. giving 12 months of
working notice) and terminating the contract immediately but offering the
employee a new employment opportunity for a period of up to 12 months. In both
situations, it is expected that the employee will be aware that the employment
relationship is finite, and that he or she will be seeking alternate work
during the 12- month period. It can also be expected that in both situations
the employee will find that continuing to work may be difficult. Nonetheless,
it is an accepted principle of employment law that employers are entitled
(indeed encouraged) to give employees working notice and that, absent bad faith
or other extenuating circumstances, they are not required to financially
compensate an employee simply because they have terminated the employment contract.
It is likewise appropriate to assume that in the absence of conditions
rendering the return to work unreasonable, on an objective basis, an employee
can be expected to mitigate damages by returning to work for the dismissing
employer. Finding otherwise would create an artificial distinction between an
employer who terminates and offers re-employment and one who gives notice of
termination and offers working notice. In either case, the employee has an
opportunity to continue working for the employer while he or she arranges other
employment, and I believe it nonsensical to say that when this ongoing
relationship is termed "working notice" it is acceptable but when it
is termed "mitigation" it is not.
[66]
The plaintiff counters by arguing that Evans
does not require Ms. Borsato to continue working for her employer when the
salary for her position has been significantly reduced. The plaintiff relies
on para. 30 of the Evans decision which provides:
I do not mean
to suggest with the above analysis that an employee should always be required
to return to work for the dismissing employer and my qualification that this
should only occur where there are no barriers to re-employment is significant. This Court has held that the employer bears the onus of demonstrating
both that an employee has failed to make reasonable efforts to find work and
that work could have been found (Red Deer College v. Michaels, 1975 CanLII 15 (S.C.C.), [1976] 2
S.C.R. 324). Where the employer offers the employee a chance to mitigate
damages by returning to work for him or her, the central issue is whether a
reasonable person would accept such an opportunity. In 1989, the Ontario
Court of Appeal held that a reasonable person should be expected to do
so "[w]here the salary offered is the same, where the
working conditions are not substantially different or the work demeaning, and
where the personal relationships involved are not acrimonious" (Mifsud
v. MacMillan Bathurst Inc. 1989 CanLII 260 (ON C.A.), (1989), 70 O.R. (2d) 701). [Emphasis added]
[67]
In my view it was not reasonable to expect
Ms. Borsato in these circumstances to mitigate her damages by returning to
work at a salary that was 20% lower than her previous compensation. In
addition, the Supreme Court of Canada identified as relevant factors whether
the employee was still working for the employer when the offer of re-employment
was made or whether she had already left, as in the case at bar; and whether or
not the employee has commenced litigation, as Ms. Borsato had by December
21, 2006.
(b) Searching more diligently for work and being less
selective after she left the Agency
[68]
The defendant argues that the notice period
should be reduced by two months because Ms. Borsato did nothing more than
“look at the internet and the newspapers for the first two months” after the
Christmas break. The Agency notes that when Ms. Borsato sent her resume
to recruitment agencies, she was offered a position within nine days.
[69]
The defendant relies on Parks v. Vancouver
International Airport Authority, 2005 BCSC 1883 (CanLII), 2005 BCSC 1883, and Lelievre.
[70]
In Parks, the court made the
following comments (at paras. 52-54):
The next issue is: did Mr. Parks fail to
mitigate his damages by not seeking employment in a timely fashion? The Airport
Authority asserts that Mr. Parks took no steps to pursue alternate employment
until April 2004, as by his own admission he did not make any applications for
jobs until then. On April 20th, he contacted the RCMP and on May 4, 2004 was
offered employment. He began working for the RCMP on May 10th and is still
employed there.
Although Mr. Parks says he looked in
newspapers, on the internet and had general conversations about possibilities
of employment, there is minimal evidence that he made any efforts to seek
employment until the beginning of April 2004. I accept Mr. Parks' submission
that the onus is on the Airport Authority to establish that he failed to
mitigate his damages; however, there must be some reasonable effort on the part
of the employee. I agree that the timing of the termination would have
inhibited Mr. Parks' ability to seek employment for at least a month. As well
Mr. Parks states he was emotionally upset as a result of the manner in which he
was terminated and says that, together with the timing of the termination (just
before Christmas), delayed his ability to obtain alternative employment.
However, there is no medical evidence to suggest that Mr. Parks was depressed
or suffering from stress.
Although I agree
that there is no evidence that jobs were available, the evidence is that Mr.
Parks obtained employment less than two months after he began looking in
earnest. In these circumstances, it is reasonable to infer that if Mr. Parks
had made efforts earlier he would have obtained employment somewhat sooner. In
my view, it is appropriate to reduce the award to the equivalent of five months
salary; two months due to the timing and upset Mr. Parks experienced from
losing his job so abruptly and three months to seek appropriate alternate
employment.
[71]
In Lelievre the notice period of
six months was reduced to three months because the plaintiff had failed to
pursue employment opportunities in a timely way. It was submitted by the
defendant that a similar approach should be taken in the case at bar.
[72]
Ms. Borsato’s last day at the Agency was
November 3, 2006 when she went home on a stress leave. By December 6, 2006,
Ms. Borsato was cleared by her doctor to return to work. Some
negotiations between counsel for the parties took place in December, but by
mid-December it was clear that Ms. Borsato was not returning to work.
These proceedings were commenced on December 21, 2006.
[73]
The plaintiff’s evidence was that she did not
begin looking for work until January of 2007. While the defendant concedes that
this was a reasonable start date given the intervening Christmas break, he says
that the plaintiff did not do enough. In January, Ms. Borsato talked to
people, studied opportunities for work, and looked at employment postings on an
internet job board for the industry. Ms. Borsato agreed that she did not
actually apply for any jobs until early March 2007.
[74]
At the beginning of March Ms. Borsato registered
with three recruitment companies. By March 12, she had accepted a three month
position with Jardine Lloyd based on an annual salary of $48,000 per year.
When that ended on May 31, 2007, she began looking for other opportunities. By
July 2, 2007, she advised the recruitment agencies that she was open to moving
anywhere to get a management position, including the Okanagan.
[75]
In August Ms. Borsato concluded an
employment contract with an insurance agency in Penticton where she began
working on September 10, 2007, moving from White Rock to Penticton to take up
the position. In her current employment in Penticton, Ms. Borsato is
earning $52,000 as of March 1, 2008. Prior to that she was earning $49,010.
[76]
In addition to these efforts to find employment,
Ms. Borsato renewed her licence and attached it to another White Rock
agency, and tried doing insurance commission work in March, April and May of
2007. She also did relief work for a manager at Pacific Rim Insurance with her
last day of employment for Pacific Rim occurring on September 1, 2007, when she
left to take up the permanent position in Penticton.
[77]
In the circumstances, I am of the view that it
was appropriate for Ms. Borsato to take part of December and the month of
January to recover from the stress of the dismissal, but that she should have
begun pursuing employment opportunities more diligently by February of 2007,
rather than waiting until March 2007. On that basis, I would reduce the notice
period by one month from 16 to 15 months.
[78]
The defendant also asserts that Ms. Borsato
was “picky” about where she would work, and did not pursue opportunities in
North Burnaby, Aldergrove and Chilliwack.
[79]
With respect to the North Burnaby opportunity,
Ms. Borsato said she was concerned about the commute from White Rock to
North Burnaby and noted that the position paid $23 per hour, which was what she
was earning in 1992.
[80]
In relation to an opportunity in Aldergrove,
Ms. Borsato could not recall if she had applied for the position, but
there was no evidence led as to the terms of employment. Ms. Borsato
indicated that she did not apply for a management position with a Chilliwack
agency because it would have been too far to commute every day from White Rock.
[81]
I find that Ms. Borsato’s decision not to pursue
the North Burnaby, Aldergrove and Chilliwack positions was a reasonable one,
and does not amount to a failure to mitigate.
7. Damages
[82]
Ms. Borsato is entitled to damages based on a notice
period of 15 months. Those damages should be calculated based on her salary
with the Agency prior to the reduction imposed as of October 1, 2006, plus
$10,000 in annual commission earnings. From that sum should be deducted all
monies she earned from her mitigation efforts during the notice period.
[83]
In addition Ms. Borsato is entitled to
recover the money the Agency withheld from her commission payments to recover
what it perceived to be overpayments to the plaintiff in August and September
of 2006.
[84]
The defendant submitted that the plaintiff
received a bonus from her current employer in March of 2008 that related to
work done in the previous fiscal year. The defendant says this effectively
increased Ms. Borsato’s salary as of her start date on September 10, 2007, and
accordingly should form part of the plaintiff’s earnings during the notice
period. The plaintiff did not concede that the bonus applied to 2007, and
there is no evidence before the Court upon which to make that finding.
[85]
Ms. Borsato also claims for the cost of dental
work for her husband which would have been covered by her group plan with the
Agency had those benefits not been terminated along with her employment. The
dental claim is for $2,432.90.
[86]
The defendant relies on James G. Knight et al, Employment
Litigation Manual, 2d ed., looseleaf (Markham, Ont: LexisNexis, 2007)
at p. 7-56 for the proposition that the Agency’s liability should be limited to
the cost of premiums that Ms. Borsato could have paid for replacement insurance
coverage.
[87]
In my view this authority as well as David
Harris, Wrongful Dismissal, looseleaf (Don Mills, Ont.:
Carswell, 1990) at p. 4-116.4 support the principle that the dismissing
employer is responsible for actual costs incurred by the employee, including
costs of dental work incurred by a dependent who had been covered under the
employee’s plan. Ms. Borsato is therefore entitled to recover from the
defendant that portion of the dental work claim that would have been covered
under her dental plan with the Agency.
[88]
Counsel advised that they are in a position to
calculate the precise amount of the damages payable to Ms. Borsato. If they
are unable to agree on the amount, they are at liberty to speak to the issue.
[89]
Ms. Borsato is entitled to her costs on
Scale B.
“The
Honourable Madam Justice Fenlon”
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