



COURT OF APPEAL FOR ONTARIO

CITATION: McGuinty v. 1845035 Ontario Inc.
    (McGuinty Funeral Home), 2020 ONCA 816

DATE: 20201217

DOCKET: C67290

Strathy C.J.O., Brown and
    Huscroft JJ.A.

BETWEEN

Grant McGuinty

Plaintiff (Respondent)

and

1845035 Ontario Inc. o/a
    McGuinty Funeral Home

Defendant (Appellant)

Eric O. Gionet and Sabrina A. Lucenti,
    for the appellant

Sara Yousefi, for the respondent

Heard by videoconference: October 8, 2020

On appeal from the judgment of Justice Robbie
    D. Gordon of the Superior Court of Justice, dated July 9, 2019, with reasons
    reported at 2019 ONSC 4108, 2019 C.L.L.C. 210-059.

Huscroft J.A.:

[1]

This is an appeal from the judgment of the trial judge finding that the
    respondent was constructively dismissed and awarding him $1,274,173.83 in
    damages, a figure that reflects the nine-year term remaining on the
    respondents fixed term contract, along with commissions, benefits, and
    expenses.

[2]

The appellants principal argument is that the
    trial judge erred in finding that the respondent did not condone the course of
    conduct that he found met the test for establishing constructive dismissal. The
    appellant says that the respondent did not treat the appellants actions,
    either individually or collectively, as a repudiation of the employment
    agreement. In addition, the appellant argues that the trial judge erred in
    calculating the respondents damages.

[3]

I conclude the trial judge did not err in finding that the respondent
    was constructively dismissed, despite the lengthy passage of time that he took
    to accept the appellants repudiation and sue. It was open to the trial judge
    to find that the respondent did not condone the appellants conduct, not least
    because the respondent was incapable of working as a result of the depression
    and anxiety he suffered because of that conduct. The trial judge did not
    misapprehend the evidence, nor did he make any error in calculating the
    damages.

[4]

I would dismiss the appeal for the reasons that follow.

BACKGROUND

[5]

The respondent was the third-generation owner of the McGuinty Funeral
    Home in North Bay, a family business that was started by his grandfather. He had
    taken over the business from his father in 1990 and operated it with his brother.
    By 2012, his brother was no longer able to continue to work in the business and
    the respondent decided to sell the business to the appellant company,
    controlled by Gary and Steven Eide. The respondent was then 55 years of age.
    The funeral home business was the only career he had known.

[6]

It was a term of the agreement that the respondent would enter into a
    Transitional Consulting Services Agreement (TCSA), pursuant to which he would
    continue to work as General Manager of the funeral home for a ten-year period.
    The agreement included a vehicle and fuel allowance and set out a commission
    payment system for prepaid funerals and prearranged funeral packages. Despite
    its lengthy term, the TCSA did not include any provisions dealing with early
    termination. The agreement did, however, include a non-competition clause that
    ran for a 10-year period following termination of the respondents employment.

[7]

The trial judge found that a lack of trust soon developed between the
    respondent and Gary Eide. For example, Gary arranged for an employee to track
    the amount of time the respondent spent at the office and required the
    respondent to complete time sheets. On August 30, 2013, Gary Eide sent a note
    to the respondent informing him that he was no longer permitted to use the
    company vehicle for his personal use. That same day, the respondent sent a
    letter of objection, stating the vehicle was part of the TCSA and he expected
    that he should continue to be able to use it.

[8]

The respondent entered the funeral home during the Labour Day weekend
    and removed some furniture he had stored there. Gary Eide believed that during
    the course of this visit the respondent threw away funeral home files without
    authorization. He changed the locks to the funeral home shortly thereafter,
    without notice to the respondent.

[9]

On September 4, 2013, the respondent commenced a two-week medical leave
    as set out in a note from his doctor. The respondent testified that he
    attempted to drop off the note at the funeral home but on his arrival found
    that he could not unlock the doors. A text exchange with Gary Eide followed in
    which Eide instructed the respondent to drop the note off the next day during
    regular work hours, in order that he could send it to his lawyer. On September
    6, 2013, the respondent sent a handwritten note to Gary and Steve Eide in which
    he stated: I wish to make clear I am on medical leave and am not stepping down
    from my position as general manager at McGuinty Funeral Home.

[10]

On
    September 16, 2013, the respondent was reassessed by his doctor, who provided a
    second note stating that he was Off work for medical reasons while work issues
    are resolved. No further medical information was provided by the respondent.
    The respondent testified that he spoke by telephone with Gary Eide on October
    4, 2013 and that Gary indicated he wanted the respondent back at work. The
    respondent says he met with Gary at the funeral home at his invitation and
    concluded that he was no longer welcome. Gary Eide denied that this meeting
    took place.

[11]

On
    October 14, 2013, the respondent went to the funeral home to attend the funeral
    of his cousin. He testified that his desk had been moved to the kitchen in the basement
    of the funeral home and that his picture, which had hung on the wall by the
    front desk of the funeral home along with pictures of his brother, father, and
    grandfather, had been removed.

[12]

The
    respondent sent an email to Gary Eide on October 28, 2013 in which he raised
    Just a few matters to clear up so we can move forward. In particular, he
    raised commissions he said were owing to him, deductions from his paycheque that
    he considered in breach of contract, and payment for pre-arranged funeral
    packages. He also sought records for all prearranged funerals since October 31,
    2012, so that he could confirm the accuracy of payment he was owed. The email
    stated:

I will drop by the funeral home to give you an update on my
    medical status and continued absence from work-related stress.

Feel free to call me in the meantime to discuss an amicable
    solution to all issues so that we can both move forward. I mentioned this to
    Steve last week but have not heard back.

[13]

The
    respondent applied to his insurer for long-term disability benefits but his
    application was denied and, on April 7, 2014, his internal appeal from that
    decision was dismissed. Gary Eide wrote to the respondent on April 24, 2014
    indicating that the respondent was on an unsupported absence from work and
    asked him to call to discuss his ongoing employment options by May 1, 2014.
    Eide said that if the respondent did not return to active employment, in
    accordance with the contract, benefit coverage would cease.

[14]

The
    respondent never returned to work. There were no further communications between
    the parties until the respondents statement of claim was issued on September
    2, 2015.

The trial judges decision

[15]

The
    trial judge found that Gary Eides decision to require the respondent to return
    the company vehicle would have led a reasonable person in the respondents
    position to conclude that the employer intended to no longer be bound by the
    TCSA. However, he concluded that the respondent did not treat removal of the
    vehicle as a repudiation of the contract and as a result was not constructively
    dismissed on this account.

[16]

The
    trial judge noted that although the respondent had objected to the loss of the
    company vehicle, in his September 6, 2013 letter to Gary Eide the respondent
    stated that he was on medical leave and was not stepping down from his
    position as General Manager. He also noted that although the respondents
    October 28, 2013 email to Gary Eide raised some matters in dispute, including
    commissions and expenses, it did not mention the vehicle. The trial judge
    stated that the respondents express indication that he was not stepping down
    from his employment and his two-year delay in proceeding with his claim speak
    to his not having treated the Defendants removal of the vehicle as a
    repudiation of the employment contract.

[17]

However,
    the trial judge went on to apply the second branch of the test set out by the
    Supreme Court in
Potter v. New Brunswick (Legal Aid
    Services Commission)
, 2015 SCC 10, [2015] 1 S.C.R. 500 and found
    the appellants course of conduct would have led a reasonable person in the
    respondents position to conclude that the appellant no longer intended to be
    bound by the terms of the TCSA. Specifically, the trial judge found the
    appellant:

(i)

improperly terminated the respondents use of
    his company vehicle;

(ii)

recruited a subordinate employee to track the
    respondents time at work, without notifying him;

(iii)

failed to pay the respondent commissions to
    which he was entitled;

(iv)

removed the respondents photograph from the
    funeral home; and,

(v)

changed the locks to the funeral home without
    notice or explanation.

[18]

The
    trial judge then considered whether the appellants conduct was the cause of
    the respondents refusal to return to work. He rejected the appellants
    argument that the respondent no longer wanted to continue to work because he
    regretted having sold the family business, finding that the respondents regret
    arose not simply from having sold the business but from having sold the
    business and the situation turning out as it had.

[19]

The
    trial judge rejected the appellants argument that the extended period of time during
    which the respondent was on sick leave without notice should be understood as
    condoning the appellants conduct. The trial judge stated:

I do not agree. What is required for condonation or
    acquiescence is
acceptance
of the new
    situation, which may be inferred by the employees willingness to remain in the
    altered position for a significant time period, absent other mitigating
    factors.

In the case before me, it cannot be said that [the respondent]
    willingly remained in his position subject to the conduct of [the appellant] for
    the intervening period. The evidence is clear that he did not and could not
    return to work during that period of time due to depression and anxiety cause
    by that very conduct.

[20]

The
    trial judge concluded that the appellant had engaged in a course of conduct
    that would lead a reasonable person in the respondents position to conclude
    that the appellant no longer considered itself bound by the terms of the TCSA,
    and that the respondent accepted this repudiation and was constructively
    dismissed. He awarded the respondent $900,000 in salary, $108,000 for vehicle
    expenses, $90,000 in benefits, $9,000 for a golf membership, and $167,173.83 in
    commissions.

DISCUSSION

[21]

The
    caselaw governing constructive dismissal is not in dispute. It was set out by
    the Supreme Court in
Potter
, at paras. 37-43
. In short,
    constructive dismissal can be established by either (i) the employers breach
    of an essential term of the employment contract or (ii) a course of conduct by
    the employer that establishes that it no longer intends to be bound by the
    employment contract.

[22]

The trial judges review of the evidence was
    careful and balanced. He found that Gary Eide had not acted in an oppressive,
    humiliating, or improper manner, and that neither Eide nor the respondent was
    blameless for the falling out that had occurred. Nevertheless, he found that
    the appellants conduct would lead a reasonable person in the respondents
    position to conclude that the appellant no longer intended to be bound by the
    terms of the TCSA. This was a reasonable finding that was open on the record
    before him and supports his conclusion that the respondent had an election to
    condone the breaches or claim wrongful dismissal.

[23]

The thrust of the appellants argument is that
    the respondent condoned its conduct and as a result was not entitled to claim
    constructive dismissal. I will address the issues in the order raised by the
    appellant.

The respondent did not condone the
    appellants actions

[24]

It is well established that an employers conduct
    that would otherwise support a finding of constructive dismissal under the
    first or second branch of the
Potter
test may be condoned by the
    employee, such that the employee cannot claim to have been constructively
    dismissed. The employee has an election to make  whether to continue to work,
    and so accept the single breach/course of conduct, or to treat that breach/conduct
    as bringing the contract to an end and sue for constructive dismissal. A claim
    that the employee has condoned a breach or course of conduct is a defence to a
    claim of constructive dismissal and the burden is on the employer to establish
    it.

[25]

The difficulty is that condonation must be
    inferred from circumstances in which an employees intentions may be unclear.
    As this court confirmed in
Persaud v. Telus Corporation
, 2017 ONCA 479,
    at paras 14-15, an employee must make his/her election within a reasonable
    period of time. Of course, reasonableness is not a rule but a standard, and it
    is a notoriously vague standard at that. Thus, whether an employee acts within
    a reasonable period of time is a fact-specific determination that must be made
    by the trial judge based on consideration of a number of factors, and the trial
    judges finding is entitled to deference.

[26]

In the usual case, a finding of condonation
    occurs where an employee has continued to work or resumed work despite the
    employers actions. But continuing or resuming work is not determinative of
    condonation; employees must have a reasonable period of time to attempt to
    resolve workplace problems short of litigation: see
Belton v. Liberty
    Insurance Co. of Canada
(2004), 72 O.R. (3d) 81 (C.A.), at para. 26. Care
    must be taken before concluding that an employee has given up his or her right
    to sue for constructive dismissal, and employees unique personal circumstances
    must be taken into account. For example, an employees health, including his or
    her mental health, may be a relevant consideration in determining whether his
    or her conduct implies condonation. Given the wide variety of personal
    circumstances, it is not surprising to find cases in which employees have been
    found not to have condoned breaches or repudiation of their contracts of
    employment despite having continued to work even for relatively extended
    periods of time. Each case turns on its facts.

[27]

In this case, the trial judge found that the
    respondent did not treat withdrawal of the company vehicle  something the
    trial judge considered a serious breach  as a repudiation of the contract. He
    referred to the respondents September 6, 2013 note in which he stated: I wish
    to make clear I am on medical leave and am not stepping down from my position
    as general manager at McGuinty Funeral Home, along with the fact that the
    appellant did not proceed with his constructive dismissal claim until two years
    later.

[28]

The appellant says it follows that the respondent
    must be taken to have condoned the appellants course of conduct considered as
    a whole. I disagree. The trial judges findings on the first branch of the
Potter
test are not incompatible with his findings on the second.

[29]

The respondents October 28, 2013 email to Gary
    Eide came not long after he had informed Eide that he was on medical leave and
    was not stepping down from his position. In that email, the respondent sought
    to clear up a few matters so we can move forward. This included commissions
    he claimed were owing on pre-paid funerals; wrongful deduction of expenses from
    his paycheque; and payment of the marketing allowance component of in-house
    pre-arranged funerals. The respondent sought records going back to October 31,
    2012, in order to review past payments. He said that he would drop by the
    funeral home to provide an update on his medical status and continued absence
    and invited Eide to call him to discuss an amicable solution to all issues so
    that we can both move forward, indicating that he said the same thing to Steve
    Eide the prior week but had not heard from him.

[30]

The respondents September 6 note and his
    October 28, 2013 email indicate that he was attempting to resolve his various
    concerns with the appellant. He was entitled to do so and his efforts in this
    regard do not compel the conclusion that he condoned the appellants course of
    conduct. The main problem in this case appears to be delay. The respondent did
    not purport to accept the appellants repudiation of the contract until September
    2, 2015, when he issued his statement of claim.

[31]

By
    any standard, the period of time taken by the respondent to make his election
    was lengthy. But while it may be reasonable to find that an employers burden
    to establish condonation is discharged where the employee has continued to work
    for a lengthy period of time despite the employers impugned conduct, it is
    more difficult to conclude that condonation has been established where the
    employee has been unable to work because of the very conduct that establishes
    the constructive dismissal.

[32]

The trial judge found that the respondent could
    not be taken to have accepted the new situation  that is, it could not be said
    that he willingly remained in his position as General Manager of the funeral
    home despite the appellants conduct  because he did not and could not return
    to work during that period of time due to depression and anxiety, and that his
    depression and anxiety was caused by the appellant.

[33]

This was the trial judges decision to make and
    the appellant has established no basis to interfere with it. The trial judges
    finding that the respondent condoned the appellants decision to take back the
    company vehicle does not compel the conclusion that the respondent condoned the
    appellants course of conduct considered as a whole. The cumulative effect of
    the appellants actions went to the heart of the respondents role as General
    Manager at the funeral home, and a reasonable person in the respondents
    position would conclude that the appellant no longer intended to be bound by
    the TCSA.

[34]

The respondents delay in making his election must
    be seen in light of the particular circumstances of his employment. The funeral
    home was a family business in which the respondent had worked for over 30 years
    before selling it to the appellant. At that time, the respondent, a licensed
    funeral director, was 55 years of age. The sale was conditioned on the parties
    entering into the TCSA, which effectively guaranteed the respondent employment in
    his chosen profession until he reached retirement age, while continuing the
    goodwill his connection to the business maintained  a business that continued
    to bear his family name. As noted above, the TCSA did not contain a provision
    for its cancellation but the respondent was subject to a non-competition clause
    that would fairly be understood by the respondent to bar him from working in
    his community in the only profession he had known  again, until he reached
    retirement age. The time taken by the respondent to make his election must be
    understood in this context, as well as the depression and anxiety caused by the
    appellant.

[35]

The appellant asserts that there was no medical
    evidence that the respondent was incapable of communicating his election or
    instructing legal counsel to commence or assert a claim for constructive
    dismissal before he did. The short answer to this submission is that the
    question was not whether the respondent was incapable of making or communicating
    his election, but instead whether in all of the circumstances, including the
    passage of time, it should be inferred that he accepted the new situation 
    that he condoned the appellants course of conduct and so lost his right to sue
    for constructive dismissal. The trial judge was entitled to find that the
    respondent did not return to work, could not return to work, and did not
    condone the appellants actions. These findings were open on the record and I
    would not interfere with them.

[36]

Finally, there is no merit to the submission
    that this was merely a contractual interpretation dispute, as in
Chapman v.
    G.P.M. Investment Management
, 2017 ONCA 227, 2017 C.L.L.C. 210-033, leave
    to appeal refused, [2017] S.C.C.A. No. 195. Although a dispute over the
    calculation of a bonus or a commission does not necessarily constitute a
    constructive dismissal, the finding of constructive dismissal in this case
    flows from the entire course of the appellants conduct, only one part of which
    concerned payment of the respondents commission.

The trial judge did not misapprehend the
    evidence

[37]

The appellant argues that the trial judge erred
    by ignoring evidence and by failing to make necessary findings of fact
    concerning key events. I would reject these arguments.

The trial judge did not ignore evidence

[38]

The appellant submits that the trial judge
    ignored the evidence of three current or past employees who testified that
    events alleged by the respondent, as part of his narrative about the toxicity of
    the workplace, did not occur.

[39]

There is no merit to this submission. It is well
    established that a misapprehension of evidence must go to the substance of a
    matter, rather than to the detail, and must be material rather than peripheral:
R. v. Lohrer
,
2004 SCC
    80, [2004] 3 S.C.R. 732, at para. 4. A trial judge need not make findings on
    every disputed matter in order to provide meaningful reasons for a decision.

[40]

The evidence of the three current or past
    employees concerned a matter that was ultimately peripheral, for the trial
    judge found that Gary Eides conduct toward the respondent was not oppressive,
    humiliating, or improper. Thus, there was no need to address this evidence in
    his decision. The trial judge did not misapprehend the evidence.

The trial judge did not fail to make necessary findings of fact

[41]

The appellant acknowledges that the trial judge
    was not required to refer to all of the evidence tendered at trial but argues
    that he failed to make findings on a significant matter that might have changed
    the decision. Specifically, the appellant says that trial judge should have
    resolved conflicting evidence concerning a phone call and meeting the appellant
    says took place on December 13, 2013.

[42]

Gary Eide testified that the respondent called
    him on December 13, 2013. He was very distraught and crying. According to
    Eide, the respondent apologized, expressed remorse, and asked how he could
    return to work. Eide testified that the respondent just didnt sound like he
    was in good shape on the phone call. Eide said that he told the respondent to
    get a doctors approval before seeking to return. A few hours later the
    respondent showed up, unannounced, at the funeral home. Eide claimed that the
    respondent again told him that he was ready to return to work. Eide testified
    that the respondent did not look well  that he was shaking and crying  and that
    he was concerned for him. Eide said he reiterated that the respondent had to
    see his doctor before returning to work and that the respondent became upset
    and left the funeral home. The respondent denied that this meeting took place.

[43]

The appellant says that this evidence suggests
    that the respondent did not treat its conduct as a repudiation of the TCSA and
    that this could have affected the analysis under either or both branches of the
Potter
test. The respondent argues that the trial judges decision,
    read as a whole, suggests that he must have concluded that the meeting did not
    occur, but, in any event, whether the meeting occurred was peripheral to the
    condonation issue given the trial judges conclusion that the respondent did
    not and could not return to work because of his depression and anxiety.

[44]

The trial judges decision to recount the
    evidence concerning the meeting alleged to have taken place on December 13,
    2013 suggests that the evidence was relevant to the question of condonation. Having
    raised the conflict, the trial judge should have either resolved it or to explained
    why it was not necessary to do so.

[45]

Nevertheless, the trial judges failure to
    resolve this conflict ultimately does not undermine his finding that the
    respondent did not condone the appellants actions and was constructively
    dismissed. That finding is well supported by the record. In any event, the respondents
    inability to return to work during the relevant time is key to the trial
    judges decision. The respondent may well have preferred to return to work if
    his concerns with the appellants actions had been resolved. But they were not,
    and in all of the circumstances of this case the mere expression of a desire to
    return to work relatively early in the course of the parties dispute would not
    constitute condonation of the employers course of conduct.

DAMAGES

[46]

The lions share of the damages awarded by the
    trial judge  $900,000  reflects salary for the nine years that remained on
    the fixed-term contract. The appellant does not contest the trial judges
    finding in this regard, which flows from this courts decision in
Howard v.
    Benson Group Inc.
, 2016 ONCA 256, 129 O.R. (3d) 677, leave to appeal
    refused, [2016] S.C.C.A. No. 240.

[47]

The appellant argues that the trial judge erred
    in calculating damages in three respects. First, the trial judge accepted the
    respondents guess as to the value of the company vehicle and fuel allowance.
    Second, the trial judge awarded damages for commissions on pre-arranged
    funerals even though the respondent failed to prove actual damages based on
    figures that were available to him. Third, the trial judge awarded an arbitrary
    amount of damages for the respondents employee benefits rather than requiring
    the respondent to prove them.

[48]

I would reject these arguments.

[49]

First, in answer to the question as to the
    approximate value of the company vehicle, including lease expense, insurance,
    fuel and maintenance, the respondent testified that when he was ready to sell
    the business it was roughly $12,000-15,000 annually. This was information
    within his knowledge and his evidence was not challenged by the appellant, nor
    did the appellant lead evidence establishing that the replacement vehicle
    expense was unreasonable.

[50]

The trial judges decision to use the low end of
    the respondents range and award him $12,000 per year for nine years, or
    $108,000, was reasonable.

[51]

Second, although the trial judges award of
    damages for commissions on pre-arranged funerals was based on an estimation, that
    estimation was necessary because of the nature of pre-paid funerals. The trial
    judge agreed with the appellant that the respondents damages assessment was
    untenable, because it could not be said with certainty how many persons with
    pre-arranged funerals could be expected to die during the period of the
    respondents commission entitlement, what the costs of their funerals would be,
    and how that cost would be apportioned between fees and disbursements.

[52]

In these circumstances, the trial judge
    calculated the respondents average monthly commission during an eleven-month
    period for which payroll records were available, in addition to email correspondence
    from Gary Eide, and multiplied that amount by the remaining 108 months of the
    contract, arriving at a figure of $125,350. In my view this was a reasonable
    approach, one that follows the instruction set out by this court in
Martin
    v. Goldfarb
(1998),
41
    O.R. (3d) 161 (Ont. C.A.), leave to appeal refused,

[1998] S.C.C.A. No. 516, which the
    trial judge cited.

[53]

At the hearing, the appellant did not pursue the
    argument it made in its factum  that the respondent could have obtained
    specific reports from third party insurance companies that would have
    established a factual basis for the calculation of damages. The closing
    submissions of the respondents trial counsel show that the trial judge was
    apprised of the relevant issue and there is no basis to interfere with his
    decision on the matter.

[54]

Third, the trial judge considered it appropriate
    to approximate the value of the respondents benefits, including medical,
    dental, life and disability coverage, at 10%, rather than the 15% of salary
    sought by the respondent. This approach has been followed in several trial
    decisions, including
Ruston v. Keddco Mfg. (2011) Ltd.
, 2018 ONSC
    2919, 2018 C.L.L.C. 210-051, affd 2019 ONCA 125, which the trial judge cited,
    as well as by this courts decision in
Cormier v. 1772887 Ontario Limited
    (St. Joseph Communications)
, 2019 ONCA 965, 2020 C.L.L.C. 210-01. This
    approach was reasonably followed in this case. The cost of the respondents
    benefits would have been information known to the appellant and the appellant
    proffered no evidence to the contrary. There is no basis to interfere with the
    judges decision in this regard.

CONCLUSION

[55]

I
    would dismiss the appeal.

[56]

I
    would award the respondent costs in the agreed amount of $30,000, all
    inclusive.

Released: December 17, 2020 (G.R.S.)

Grant
    Huscroft J.A.

I agree.
    G.R. Strathy C.J.O.

I agree.
    David Brown J.A.


