



COURT OF APPEAL FOR ONTARIO

CITATION: Motion Industries (Canada) Inc. v. McCarthy, 2015
    ONCA 224

DATE: 20150407

DOCKET: C58619

Sharpe, Pepall and van Rensburg JJ.A.

BETWEEN

Motion Industries (Canada) Inc.

Appellant/Defendant

and

Kerry McCarthy

Respondent/Plaintiff

Daniel McDonald and Rahool Agarwal, for the appellant

Eric O. Gionet, for the respondent

Heard and released orally: March 27, 2015

On appeal from the order of Justice Martin S. James of
    the Superior Court of Justice, dated March 12, 2014.

ENDORSEMENT


[1]

The appellant employer appeals the decision of the trial judge finding
    that it constructively dismissed the respondent and awarding substantial
    damages for wrongful dismissal.

[2]

The appellant raises four issues:

1) The trial judge
    inappropriately used judicial notice in relation to certain economic facts when
    finding that the respondent was constructively dismissed;

2) The trial judge
    erred by failing to find the respondent was obliged to accept the recall
    proposal as part of his duty to mitigate;

3) The notice period
    of 16 months was unreasonable; and

4) The trial judge erred
    in his determination of the respondents date of termination on account of the
Employment
    Standards Act, 2000
,

S.O. 2000, c. 41,
s. 56.

[3]

For the following reasons the appeal is dismissed:

1. Judicial Notice

[4]

The appellants submission on this issue focuses on para. 59 of the
    trial judges reasons which states as follows,

In my view the defendant was obliged
    to recall the plaintiff to a position similar to the work he had been
    performing before the lay-off went into effect. I accept the plaintiff's
    evidence that he was prepared to return to the same position even though there
    were no orders on the books at that time. It is reasonable that he assessed the
    prospects for new orders as fairly good. The commission structure was
    sufficiently generous that it was worth the risk.
The mining industry is
    notoriously cyclical and a bet that the demand for drill rigs would resume was
    not foolishly speculative. Mining companies and the businesses that service
    them in northern Ontario have experienced significant swings in demand and
    prices over many decades. Cyclicality is a way of life in the mining sector.

[5]

We do not accept the argument that the trial judges findings in this
    passage, in relation to the implications of the cyclical nature of the mining
    industry, rest upon an inappropriate use of judicial notice.

[6]

First, the trial judges comments as to the cyclical nature of the
    mining industry were made in the context of his assessment of the respondent
    plaintiffs response to the position he was offered by the appellant. The
    respondent had worked for several years on a commission basis, and he had seen
    wide fluctuations in his income which was entirely dependent on the BOAR04 account.
    The respondent had assumed major responsibility for all aspects of that
    account. He had reached the point where the management of that account was the
    essence of his job. His position with the appellant was defined by that
    responsibility.

[7]

In our view, the reference made by the trial judge to the cyclical
    nature of the mining industry was essentially a recognition that the
    respondents position entailed a risk, and that the respondent was prepared to
    accept that risk. The trial judge found as a fact, that the appellant had made
    a clear determination to remove the BOAR04 account from the respondent. There
    was evidence in the record to support the trial judges finding that the
    respondent was prepared to return to that position, despite the uncertainty in
    the market at the time of his recall. The reference to the cyclical nature of
    the mining industry was merely background to the trial judges finding that the
    respondent was in effect prepared to assume the risk his former position had
    entailed, and to forego the certainty of the steady but significantly lower
    income the appellants offer would have afforded him.

[8]

Second, in any event, there was evidence in this record to support a
    finding that the mining industry was indeed cyclical. The volume in the BOAR04
    account had risen and fallen dramatically. That rise had yielded huge
    commissions for the respondent and the fall had resulted in him accepting a
    temporary lay-off. There was clear evidence that the BOAR04 account was showing
    signs of life at the time the appellant decided to remove it from the
    responsibility of the respondent.

[9]

We add here that these findings are sufficient to satisfy the test for
    constructive dismissal as defined by the Supreme Court of Canada in both
Farber
    v. Royal

Trust Co.,
[1997] 1
    S.C.
R.
and
Potter
    v. New Brunswick (Legal Aid Services Commission),
2015 SCC 10.

[10]

Accordingly,
    we reject this ground of appeal.

2. Mitigation

[11]

We
    see no basis upon which to interfere with the trial judges finding in relation
    to the obligation to mitigate. This was essentially a factual question upon
    which the trial judges findings are entitled to deference. The trial judge
    flatly rejected the appellants evidence that the removal of the BOAR04 account
    from the respondents responsibility had no significance given the current
    status of that account. As the trial judge put it at para. 65, The future prospects
    and plans for the drill rig production account and the rich stream of commissions
    generated by it would have been the elephant in the room. There was evidence
    to support the finding that the position offered to the respondent was
    substantially different from the one he had previously enjoyed, and that that
    change in responsibility amounted to a significant diminution in his status and
    station. Accordingly, he was not obliged to accept that position in mitigation.

3. Notice period

[12]

We
    are not persuaded that there was any error in the trial judges assessment of
    16 months as reasonable notice. The trial judge referred to the appropriate
    legal test and the respondents age, years of service, responsibilities,
    education, and the difficulty he would face in finding alternative equivalent
    employment.

4. Termination Date

[13]

The
    appellant makes a number of arguments in reliance on the provisions of the
Employment
    Standards Act
. We note that only one of these arguments appears to have been
    raised at first instance, namely, whether the respondents termination date
    relates back to January 29, 2009, in which case damages would be reduced to $294,092.33,
    assuming the 16 month notice period was applied by the trial judge, or approximately
    $26,000, if the notice period was reduced to 12 months. The trial judge
    concluded that there was no relation back to the commencement of the lay-off
    period.

[14]

The
    appellant relies on the provisions of ss. 56(1), (2), (4) and (5) of the
Employment
    Standards Act
. Section 56(1) states that it applies for the purposes of s.
    54. Assuming without deciding that s. 56 is engaged in the context of this
    common law action for wrongful dismissal, we reject the appellants arguments.

[15]

Section
    56(1)(c) provides that an employer terminates the employment of an employee for
    the purposes of s. 54 (the requirements to give written notice and statutory
    termination pay) if the employer lays the employee off for a period longer than
    the period of a temporary lay-off. The appellant contends that under s. 56(2), for
    a non-unionized employee like the respondent, the temporary lay-off would
    expire at 35 weeks unless the employee had been recalled. Section 56(5) provides
    that if an employee is not recalled before the end of the temporary lay-off,
    his employment shall be deemed to be terminated on the first day of the lay-off.

[16]

The
    appellants argument is based on on s. 56(4):

Temporary lay-off not termination

(4)  An employer who lays an employee off
    without specifying a recall date shall not be considered to terminate the
    employment of the employee, unless the period of the lay-off exceeds that of a
    temporary lay-off.

[17]

The appellant submits that the effect of s. 56(4)
is
    that an employer can
only
terminate an employee on temporary layoff
    through the expiry of the lay-off period. In other words, by operation of law,
    this provision ousts the application of the common law doctrine of constructive
    dismissal during the temporary layoff period.

[18]

We
    reject that argument for the following reasons.

[19]

First,
    we note that the argument was not advanced at trial.

[20]

Second,
    we are unable to accept the proposition that the language of s. 56(4) is
    capable of excluding the possibility of constructive dismissal. The appellant
    concedes that this provision was added to the legislation to correct the
    mischief under the prior wording of the section that had been interpreted to
    mean that laying off an employee without specifying a recall date amounted to
    termination. We see no reason to expand the interpretation of this provision
    beyond that meaning. The Act is remedial in nature and s. 56(4) was enacted to
    remedy a specific issue. To accept the interpretation advanced by the appellant
    would go well beyond that purpose and would defeat the remedial objective of
    the Act as a whole.

[21]

In
    any event, we agree with the trial judge that the respondent was recalled
    before the end of the temporary layoff period and that the position he was then
    given amounted to constructive dismissal. It is clear on the evidence that the
    mutual intention of the parties was to ensure that the respondent was recalled
    before the end of the temporary lay-off period and that the appellant did not intend
    to terminate his employment.

[22]

Finally,
    the appellant argues, again for the first time on appeal, that the effective
    date of the end of the 35 week lay-off period was September 27, 2009, not
    October 9, 2009. If accepted, this submission would mean that the respondent
    was terminated by operation of law under s. 56 (1)(c) before the alleged
    constructive dismissal and by virtue of s. 56(5), the termination date is the
    first day of the lay-off.

[23]

We
    reject this submission.

[24]

The
    appellant cannot assert for the first time on appeal that the return to work
    date was September 27, when the date it communicated to the respondent, the
    date that was accepted by both parties, and the only date that was relied on by
    both parties at trial and by the trial judge, was October 5, 2009. It would be
    fundamentally unfair to permit the appellant to rely on its own error (if
    indeed there was an error) in calculating the
ESA
time frame at this
    stage, to deprive the respondent of the benefits to which he would otherwise be
    entitled.

Disposition

[25]

Accordingly,
    the appeal is dismissed.

[26]

Costs
    to the respondent fixed at $15,000 inclusive of disbursements and taxes.

Robert J. Sharpe J.A.

S.E. Pepall J.A.

K. van Rensburg J.A.


