



COURT OF APPEAL FOR ONTARIO

CITATION: Hagholm v. Coreio Inc., 2018 ONCA 633

DATE: 20180712

DOCKET: C64879

Simmons, Huscroft and Miller JJ.A.

BETWEEN

Rosemary Hagholm

Plaintiff (Respondent/

Appellant by way of cross-appeal)

and

Coreio Inc.

Defendant (Appellant/

Respondent by way of cross-appeal)

Andy Pushalik and Rachel Kattapuram, for the appellant

Dennis Crawford and Madchen Funk, for the respondent

Heard: June 18, 2018

On appeal from the judgment of Justice J.W. Sloan of the
    Superior Court of Justice, dated December 27, 2017.

REASONS FOR DECISION

[1]

In January 1995
Ms. Hagholm began working full-time for
    a predecessor of the appellant Coreio Inc. on the understanding that she could
    work from home three days per week. On January 16, 2017, shortly after
    acquiring the business, the appellant informed Ms. Hagholm that commencing March
    1, 2017, she could no longer work from home. Rather than report for work on
    March 1, 2017, Ms. Hagholm took the position that she had been constructively
    dismissed.

[2]

On a motion for summary judgment, the
    motion judge determined Ms. Hagholm had been constructively dismissed for two
    reasons. First, because the appellant breached an essential term of her
    employment contract, namely the term entitling her to work from home 60% of the
    time. Second, because the appellant arbitrarily set Ms. Hagholms fourth quarter
    2016 bonus in a manner contrary to the terms of her employment contract (she
    received $6,739 rather than something close to $18,000, to which the motion
    judge found she was entitled).

[3]

Further, the motion judge concluded that Ms.
    Hagholm was not obliged to return to a former employer from a mitigation
    standpoint." He found this was not an option as the appellant had breached
    a major term of Ms. Hagholms contract permitting her to work from home a
    substantial portion of the time. Further, a letter sent by the appellants
    lawyer on March 2, 2017 was carefully worded. Had the appellant intended to
    convey that it was prepared to permit Ms. Hagholm to work from home 60% of the
    time, the letter should have said so.

[4]

The motion judge awarded Ms. Hagholm:

i)     20.5 months of salary, less 10% of 10.5
    months salary for the contingency that she may find employment before the
    expiry of the 20.5-month period;

ii)    $11,261 as compensation for the
    underpayment of her fourth quarter 2016 bonus; and

i
ii)    compensation for lost benefits for
    20.5 months.

[5]

The appellant appeals from the motion judges
    judgment; Ms. Hagholm cross-appeals.

[6]

The appellant raises two issues on appeal.

[7]

First, the appellant argues the motion judge erred in failing to find
    that Ms. Hagholms duty to mitigate did not require her to return to work for
    the appellant. In this regard, the appellant submits that the motion judge
    conflated the test for constructive dismissal with the test for when an
    employee will be required to accept an offer of continued employment in order
    to mitigate damages for constructive dismissal. In addition, the appellant
    alleges Ms. Hagholms claims that she was constructively dismissed are tainted
    by her subsequent application for multiple positions in the Greater Toronto
    Area (GTA) requiring an equivalent or longer commute. Finally, the appellant
    argues the motion judge made palpable and overriding errors concerning the
    facts of Ms. Hagholms commute.

[8]

We do not accept these arguments. Even assuming the motion judge made a
    legal error concerning the applicable test or any factual errors concerning Ms.
    Hagholms commute, it would not be objectively reasonable to require a sixty-year
    old employee who, more than 20 years earlier had stipulated she would not
    accept a position if it required her to commute from Waterloo to Toronto every
    day, to mitigate her damages for the appellant's breach of contract by doing
    so. Further, like the motion judge, we are not satisfied the appellant had any
    intention of permitting Ms. Hagholm to continue to work from home 60% of the
    time during the notice period. Finally, the motion judge did not accept that
    Ms. Hagholm's application to other employers in the GTA demonstrated that she
    would have accepted those jobs without a work-from-home provision. This finding
    was open to him on the record.

[9]

Second, the appellant argues that the motion judge erred by concluding
    that the appellant arbitrarily set Ms. Hagholms fourth-quarter bonus payment
    for 2016. We reject this argument. The motion judge drew a negative inference
    from the appellant's inability to provide an intelligible description of how
    the bonus was calculated. On the evidence before him, he was entitled to do so.
    He also noted that although the appellant lost a significant client in 2016,
    that would not affect the appellants bottom line until after 2016. He
    concluded that Ms. Hagholms fourth quarter bonus for 2016 was not calculated
    as it should have been, and had previously been, but was arbitrarily set
    contrary to terms of her employment contract.

[10]

The
    appeal is dismissed.

[11]

Ms.
    Hagholm raises two issues by way of cross-appeal.

[12]

First,
    she argues that the motion judge erred by not awarding her the pro rata portion
    of her 2017 bonus for the two months she worked in 2017. Second, she argues
    that the motion judge erred by failing to award her all forms of compensation,
    including bonus compensation, for the duration of the notice period.

[13]

We
    accept these submissions. Concerning the pro rata portion of Ms. Hagholms 2017
    bonus for the two months she worked in that year, apart from alluding to the
    appellants loss of a major client in 2016, the motion judge gave no reason for
    denying her bonus entitlement for that period. If the 2016 loss of a client
    affected the appellants first quarter 2017 performance or the manner in which
    it awarded bonuses to other employees, the appellant could and should have
    adduced evidence to demonstrate that. Further, the motion judge erred in
    failing to turn his mind to the question of bonus entitlement during the balance
    of the notice period. See:
Paquette v. TeraGoNetworks Inc
.
,
    2016 ONCA 618, 352 O.A.C. 1, at para. 16.

[14]

Rather
    than having the parties incur the expense involved in remitting this matter to
    the motion judge for determination, we conclude that it is in the interests of
    justice that we address it. As noted by the motion judge, Ms. Hagholm had
    always received in the range of 90% to slightly more than 100% of her annual
    bonus entitlement. At the time of dismissal her annual bonus entitlement was $72,000
    per year, payable quarterly, with the opportunity to earn more bonuses. The bonus
    was patently an integral part of Ms. Hagholms compensation package. Moreover,
    the appellant did not identify any terms of her compensation package that would
    disentitle her to a bonus over the notice period. Averaging Ms. Hagholms
    bonuses over the five years immediately prior to her termination, leads us to
    conclude she should receive 100% of her bonus entitlement during the notice
    period (including the working notice period). See:
Singer v. Nordstrong
    Equipment Ltd
.,
2018 ONCA 364, at paras. 21 to 25.

[15]

We
    therefore allow the cross-appeal and direct that the motion judges order be
    amended to provide that Ms. Hagholm receive her pro rata bonus entitlement throughout
    the notice period, including the working notice period, based on a quarterly
    bonus entitlement of $18,000.

[16]

Costs
    of the appeal and cross-appeal are to Ms. Hagholm on a partial indemnity scale
    fixed in the agreed upon amount of $15,000 inclusive of costs and applicable
    disbursements.

Janet Simmons J.A.

Grant Huscroft J.A.

B.W. Miller J.A.


