



COURT OF APPEAL FOR ONTARIO

CITATION:
Bennett v. Cunningham, 2012
    ONCA 540

DATE: 20120817

DOCKET: C53920

MacPherson, Gillese and MacFarland JJ.A.

BETWEEN

Dawn Marie Bennett

Plaintiff (Respondent)

and

Karen Rosalee Cunningham

Defendant (Appellant)

Kenneth M. Alexander, for the appellant

William R. Gale and Michael Stitz, for the respondent

Heard:  May 8, 2012

On appeal from the order of the Divisional Court
    (Hackland R.S.J., Harvison Young and Whitaker JJ.), dated January 19, 2011,
    with reasons by Hackland R.S.J. reported at 2011 ONSC 28, allowing an appeal
    from the judgment of Justice George T. Valin of the Superior Court of Justice,
    dated November 7, 2006.

MacFarland
    J.A.:

[1]

This
    is an appeal from the order of the Divisional Court (with leave of this court
    granted June 24, 2011), which allowed an appeal from the trial judgment which
    found that the respondent Ms. Bennett had been dismissed for just cause. The
    Divisional Court found that the trial judge erred in failing to apply a
    contextual approach to the analysis of whether there was just cause. The
    Divisional Court also concluded that the trial judge would have found that
    dismissal for just cause was not made out had he undertaken the appropriate
    analysis.

[2]

For
    the reasons that follow, in my view, the Divisional Court erred in finding that
    the trial judge failed to apply a contextual approach to his analysis of the
    question of whether there was just cause to terminate Ms. Bennett. I would
    overturn the order of the Divisional Court and restore the trial judgment in
    all respects.

THE FACTS

[3]

At
    all relevant times the parties were lawyers and members of the Law Society of
    Upper Canada. Ms. Cunningham operated a one-woman law firm in Mississauga,
    Ontario, and in the summer of 2002 was looking for a junior associate lawyer to
    assist her with litigation files. She interviewed Ms. Bennett, who had been
    called to the bar in 2001, for the position on July 4, 2002, and on July 8,
    2002 Ms. Bennett accepted Ms. Cunninghams offer of employment.

[4]

At
    trial, much time was spent on the issue of whether Ms. Bennett was an employee
    or an independent contractor. The trial judge determined that Ms. Bennett was
    an employee. That issue is not before us here.

[5]

At
    the time of her hiring, Ms. Bennett elected to be compensated on the basis of
    the first of two schemes offered by Ms. Cunningham. She would be paid fifty
    percent of all fees billed and collected with an annual, recoverable advance
    against commission of $38,000.

[6]

The
    trial judges other factual findings are set out in paragraphs 5 through 17 of
    his reasons for judgment:


[5] Ms. Bennett began work on
      July 15, 2002.  During her first morning of work, Ms. Cunningham presented
      her with a written agreement specifying the terms of the position. The written
      agreement contained a number of provisions that had not been discussed during
      either the interview or the subsequent telephone conversation when Ms. Bennett
      accepted the position.  Ms. Bennett signed the agreement.

[6] Ms. Bennett immediately
      assumed responsibility for a number of files, the majority of which were family
      law cases, an area in which she had little experience.  The office was
      busy.  Ms. Bennett worked long hours from Monday to Friday, and often on
      weekends.  She became concerned that Ms. Cunningham was not providing her
      with the tools she required to do her work.  Her concerns focused on the
      paucity of office resources available to her and the inadequacy of the
      technology in place.

[7] Ms. Bennett prepared a
      proposed business plan to address those concerns.  She met with Ms. Cunningham
      in mid-August 2002 to discuss them. In addition to office resource and
      technology issues, Ms. Bennett expressed concern that she had been asked to
      sign a written agreement relating to her position on such short notice,
      particularly when there had been no mention of a written agreement during the
      interview or at the time of the job offer.

[8] In response [to] Ms.
      Bennetts concerns, Ms. Cunningham had the staff attend at the office on a
      Saturday after her meeting with Ms. Bennett.  They identified and listed
      the files assigned to Ms. Bennett.  Ms. Cunningham invested in voice mail
      and software known as Amicus Attorney.  She also adopted Ms. Bennetts
      suggestion that each file contain a sub-folder for lawyers notes.

[9] Prior to the introduction of
      the Amicus Attorney software, Ms. Bennett had submitted handwritten dockets for
      the time spent on all files she worked on.  The receptionist was
      responsible for entering the dockets into the office computer for file and
      billing purposes.  The receptionist retired suddenly about August 22,
      2002, and was not replaced until September 1, 2002.

[10] Ms. Cunningham met with
      Ms. Bennett on the evening of November 5, 2002.  Ms. Bennett expressed
      concern that, while her share of fees billed was about $26,500, only $2,650 had
      been collected.  She was also concerned about whether all her time dockets
      had been entered.  A subsequent comparison of the handwritten documents
      with the computer records for her files confirmed that 42.8 hours of her
      docketed time had not been
entered
in the computer.

[11] The two lawyers met again
      on December 16, 2002.  Ms. Bennett remained concerned.  The gap
      between fees billed and collected had increased; after five months, the
      advances paid to Ms. Bennett exceeded her share of fees collected by about
      $10,000.  She asked Ms. Cunningham for a legal assistant.  Ms.
      Cunningham told her that if she wanted one, she would have to bear the cost
      from her commission income.

[12] Prior to this meeting, Ms.
      Bennett had pulled some accounts rendered and discovered a number of instances
      where time she had docketed had been credited to Ms. Cunningham.  When she
      learned of this, Ms. Cunningham told Ms. Bennett that these errors would be
      corrected upon receipt of copies of the accounts where such errors had
      occurred.

[13] Ms. Bennett met with Ms.
      Cunningham on Saturday morning, December 21, 2002, just prior to Ms. Cunningham
      leaving on a Christmas vacation. She handed Ms. Cunningham a four-page letter
      dated December 21, 2002, which documented nine areas of concern.  She also
      sent her a copy by registered mail.  In the letter, Ms. Bennett made a
      number of statements that Ms. Cunningham claimed were untrue.  Under the
      heading Docketing System, Ms. Bennett accused Ms. Cunningham of being
      dishonest and negligent.  The letter contained other comments suggesting
      that Ms. Cunningham was disorganized and incompetent.

[14] Ms. Cunningham left
      on vacation and returned to the office on January 6, 2003.  On that date,
      she invited Ms. Bennett to her office and informed her that she was
      terminated.  On January 8, 2003, Ms. Cunningham handed a termination
      letter dated January 7, 2003 to Ms. Bennett, advising that her last day of work
      was to be January 10, 2003.

[15] Ms. Bennett subsequently
      secured a similar position on similar terms with another lawyer.  She
      began working for him on March 25, 2003, although he had invited her to
      commence work as of March 1, 2003.

[16] Prior to the commencement
      of this action, Ms. Cunningham never asked Ms. Bennett to re-pay her any money
      by way of excess advances paid over Ms. Bennetts share of fees collected,
      although the agreement dated July 15, 2002 entitled her to do so.  While
      Ms. Bennett may have been concerned about her ability to pay Law Society fees
      and liability insurance premiums due at the end of December, she never
      expressed that concern to Ms. Cunningham.

[17] During the trial, Ms.
      Cunningham admitted through her counsel that Ms. Bennetts share of fees billed
      and collected to date, and remaining unpaid net of advances, is
      $18,545.73.  Ms. Cunningham admitted that she owed that amount to Ms.
      Bennett.


DECISIONS BELOW

A.

Trial Judgment

[7]

After
    reviewing the facts, the trial judge analyzed the nature of the contract
    between Ms. Bennett and Ms. Cunningham. Again, as indicated above, that issue
    is not before this court. The parties now accept the trial judges finding that
    Ms. Bennett was an employee at the relevant time.

[8]

At
    paragraph 29 of his reasons for judgment the trial judge turned to the question
    of whether Ms. Cunningham had just cause to terminate Ms. Bennett. After
    briefly reviewing the context in which Ms. Bennett gave Ms. Cunningham the
    December 21, 2002 letter, the trial judge went on, at para. 32, to outline how
    Ms. Cunningham had responded to Ms. Bennetts concerns about the shortcomings
    of the offices organization that were raised at meetings in August and
    November. These responses included having her entire staff attend on a Saturday
    to help Ms. Bennett organize her files, authorizing Ms. Bennett to use the
    office process server to obtain copies of missing pleadings, installing Amicus
    Attorney computer software, installing voicemail, revising the office filing
    system to include a sub-folder in each file for lawyers notes, and offering to
    correct docketing errors where it appeared that Ms. Cunningham had been
    credited for time that should have been credited to Ms. Bennett.

[9]

At
    para. 33, the trial judge listed his findings regarding the December 21, 2002
    letter. The trial judge found that Ms. Bennett had made several unsubstantiated
    allegations about Ms. Cunninghams practice.

[10]

At paras. 34 to
    40, the trial judge further analyzed the language and tone of the letter. He
    assessed whether it provided a sufficient basis upon which to conclude that Ms.
    Bennett had been insolent to the extent that the employment relationship could
    no longer be maintained, thereby justifying summary dismissal.

[11]

At para. 35, the
    trial judge noted Ms. Bennetts concerns over the fact that she appeared to owe
    more to Ms. Cunningham than she had earned and that her Law Society and
    insurance dues would soon require payment. He also noted that Ms. Bennett had
    not mentioned her concerns about her fees to Ms. Cunningham.

[12]

Beginning at
    para. 41, the trial judge concluded his analysis:


[41] The relationship between
      lawyers practicing in the same law office is fundamentally based on confidence,
      respect and trust. After she had an opportunity to read the letter in its
      entirety and to consider its implications, Ms. Cunningham concluded that she
      could no longer have a working relationship with Ms. Bennett.

[42] Her conclusion in that
      regard was justified. The letter was highly critical of the operations in
      the law office and of Ms. Cunningham's integrity. The comments and
      accusations in the letter undermined the confidence she had in Ms. Bennett and
      destroyed the employment relationship.

[43] I find that the contents
      and tone of the letter constituted serious misconduct on the part of Ms.
      Bennett. The insolence was not reconcilable with maintaining the employment
      relationship. In the circumstances, Ms. Cunningham had just cause for
      terminating the services of Ms. Bennett without notice.


B.

Divisional Court Decision

[13]

The Divisional
    Court, in its decision to reverse the trial judgment, focused on the failure of
    the trial judge to apply a contextual approach to the assessment of whether
    there was just cause for dismissal, as mandated by the decisions in
McKinley
    v. BC Tel
, 2001 SCC 38, [2001] 2 S.C.R. 161, and
Dowling v. Ontario
    (Workplace Safety and Insurance Board) (2004)
, 246 D.L.R. (4th) 65 (Ont.
    C.A.).

[14]

At paras. 9 and
    11 of its reasons, the Divisional Court stated the following:


[9]  I agree with the appellant Ms.
      Bennetts submission that there was an absence of the required contextual
      analysis concerning the cause for dismissal in this case and that such an
      analysis would have led to the finding that her letter of December 21, 2002 did
      not warrant dismissal for cause.



[11]  I am of the opinion that a failure to apply a contextual approach to a
      determination of just cause for dismissal, as mandated by the Supreme Court of
      Canada in [
McKinley
]
, is an
        error of principle and constitutes an overriding and palpable error justifying
        appellate intervention, see
Henry v. Foxco Ltd.

2004 NBCA 22 (CanLII)
,
      (2004), 31 C.C.E.L. (3d) 72 (NBCA).


ANALYSIS

[15]

The Supreme
    Court of Canada instructs us in
McKinley
, at para. 34, that the
    contextual approach involves examining both the circumstances surrounding the
    conduct as well as its nature or degree. In my view, a fair reading of
    paragraphs 32 through 43 of the trial judges reasons for judgment clearly
    demonstrates that he did precisely that, even if he did not use the words
    contextual approach.

[16]

The case was
    neither complicated nor complex. The trial judge considered the circumstances
    leading up to the writing of the letter, the facts surrounding the actual
    delivery of the letter to Ms. Cunningham, and the nature of the allegations and
    accusations contained in the letter. He also considered the nine areas of
    concern Ms. Bennett outlined in her letter and found many of her complaints to
    be unsubstantiated. He was entitled to make these factual findings on the
    record before him. Only after having done so, did the trial judge conclude that
    Ms. Cunningham had just cause for terminating the services of Ms. Bennett.

[17]

The trial
    judges decision was also premised on his factual findings, included at the
    beginning of the judgment that set out the nature of the parties relationship.
    The trial judge need not repeat his factual conclusions when he considers the
    question of whether there was just cause for termination. He zeroed in on the
    central question in this case: whether Ms. Bennetts four page letter dated
    December 21, 2002 provided just cause for her immediate termination. He
    concluded it did and I agree with his disposition. The trial judges conclusion
    in this regard is essentially factual in nature, and, absent palpable and
    overriding error, will not be overturned on appeal. See
Housen

v.
    Nikolaisen
, 2002 SCC 33, [2002] 2 S.C.R. 235.

[18]

In effect the
    Divisional Court simply substituted its view of the facts for that of the trial
    judge. This is not the role of an appellate court. The trial judge found that
    the December 21, 2002 letter did constitute just cause for dismissal and he was
    entitled to do so on the evidence before him.

CONCLUSION

[19]

In the result, I
    would allow the appeal, set aside the order of the Divisional Court, and
    restore the trial judgment in all respects.

COSTS

[20]

In view of the
    result, the costs before the Divisional Court should be to the appellant in
    this court.

[21]

The costs of the
    appeal, including the application for leave to appeal, are fixed in the sum of
    $12,000.00 inclusive of disbursements and applicable taxes, and are payable to
    the appellant.

J. MacFarland J.A.

I agree J.C. MacPherson J.A.

I agree E.E. Gillese J.A.

Released:
J. MacF. August 17,
    2012


