



COURT OF APPEAL FOR ONTARIO

CITATION: Keenan v. Canac Kitchens Ltd., 2016 ONCA 79

DATE: 20160127

DOCKET: C60019

Gillese, MacFarland and van Rensburg JJ.A.

BETWEEN

Marilyn Keenan and Lawrence Keenan c.o.b. as
    Keenan Cabinetry

Plaintiffs (Respondents)

and

Canac Kitchens Ltd., a division of Kohler Ltd.,
    and Kohler Canada Co.

Defendant (Appellant)

Paul Boshyk, for the appellant

Bram A. Lecker and Matthew A. Fisher, for the
    respondents

Heard: January 18, 2016

On appeal from the judgment of Justice Graeme Mew of the Superior
    Court of Justice, dated January 21, 2015.

Gillese
    J.A
.:

[1]

This appeal depends upon the answer to two questions.  The first
    question relates to exclusivity.  Exclusivity is a significant factor in
    determining whether a person is a dependent or independent contractor.  Is
    exclusivity to be determined at, or about, the time of termination of the business/employment
    relationship?  The second question relates to reasonable notice.  Were there
    exceptional circumstances in the present case which support an award for a
    period in excess of 24 months?

BACKGROUND IN BRIEF

[2]

Lawrence Keenan began working for Canac Kitchens Ltd., a division of
    Kohler Canada Co., in 1976.  Canac was a manufacturer, distributor, and
    retailer of kitchen cabinets and related accessories.  For the first six or
    seven years, Mr. Keenan worked as an installer of kitchen cabinets.  In 1983,
    he became a foreman, supervising the work crews which installed Canac kitchens
    in new homes.

[3]

Marilyn Keenan is Lawrence Keenans wife.  She formally began work for
    Canac in 1983, as a foreman.  Before that, she had helped out her husband on an
    informal basis.

[4]

The Keenans relationship with Canac came to an end on March 15, 2009,
    when they were called to a meeting and told that Canac was closing its
    operations and their services were no longer needed.  At that time, Mr. Keenan
    was 63 years of age and Mrs. Keenan was 61.

[5]

Canac gave the Keenans nothing on termination - no notice, no pay in
    lieu of notice, and none of the usual statutory entitlements.  None has ever
    been provided or paid.  Why?  Because in Canacs view, the Keenans were
    independent contractors.  To understand this, one needs to appreciate how the employment
    relationship between Canac and the Keenans unfolded.

[6]

As already indicated, Mr. Keenan and Mrs. Keenan worked fulltime for
    Canac beginning in 1976 and 1983 respectively.  They continued as fulltime
    Canac employees until October 1987 when they were called into a meeting and
    told that they would carry on their work as contractors.

[7]

Canac told the Keenans that their job title had changed from foreman to
    Delivery and Installation Leader and that, going forward, installations would
    be done in the following way.  The installers would provide their own trucks
    and pick up the kitchens from Canac.  They would then deliver the kitchens to
    job sites where they would be installed.  Canac would set the rates to be paid
    to the installers and give the Keenans the amounts owing to the installers. 
    The Keenans were then to pay the installers.  The Keenans were also made
    responsible for any damage to cabinets that occurred while in transit and told
    that they were expected to obtain insurance to cover those costs.

[8]

The Keenans themselves were to be paid, as before, on a piece work basis
    for each box or unit installed but the amount would be increased to reflect the
    fact that they were paid in gross, without deductions for income taxes,
    employment insurance and CPP.

[9]

Shortly after the 1987 meeting, Canac presented the Keenans with a draft
    agreement, which reflected the new arrangements and which had already been
    signed by Canac.  Only Mrs. Keenan signed the agreement.  The Keenans did not
    obtain independent legal advice before she signed.  The agreements required the
    Keenans, as sub-contractors of Canac, to devote full-time and attention to
    Canac.

[10]

The
    Keenans also received records of employment, which showed that the reason for
    issuance was that they had quit their jobs with Canac.  Neither paid any
    attention to those records because their working relationship with Canac was continuing. 
    The Keenans never incorporated; they carried on business as Keenan Cabinetry, a
    sole proprietorship.

[11]

For
    all intents and purposes, after the 1987 meeting, the Keenans working
    relationship with Canac and their duties remained unaltered.  The Keenans
    continued to supervise the delivery, installation and service of Canac
    kitchens.  And, the Keenans considered themselves loyal Canac employees.  They
    continued to enjoy employee discounts, wore shirts with the Canac logo, and
    used Canac business cards.  Mr. Keenan received a signet ring for 20 years of
    loyal service.  In the words of the trial judge:

To the outside world, and in particular, to Canacs customers,
    the [Keenans] were Canacs representatives.

[12]

With
    the exception of some weekend jobs and work for friends and family, the Keenans
    continued to work exclusively for Canac until the end of 2006.

[13]

Beginning
    in 2007, the Keenans started to do some work for Cartier Kitchens, a competitor
    of Canac.  They did so because the work from Canac had slowed down.  Canac
    turned a blind eye to the work that the Keenans performed for Cartier.

[14]

At
    p. 5 of his reasons, the trial judge found that, despite taking on work for
    Cartier, a substantial majority of the Keenans work continued to be done for
    Canac.  In 2007, the Keenans revenues attributable to Canac and Cartier were
    80% and 20% respectively.  In 2008, it was 66.4% and 33.6%.  And, in 2009, to
    the point of termination, the split was 72.6% and 27.4%.

[15]

After
    Canac ended the relationship in March 2009, the Keenans brought the within
    action.

[16]

At
    trial, a short statement of agreed facts was entered and both the Keenans
    testified.  Canac did not call any evidence.    Although initially there was a
    suggestion that the Keenans remained employees throughout, as the trial
    developed it became clear that the real issue was whether the Keenans were
    dependent or independent contractors in March of 2009.

[17]

The
    trial judge considered the five principles set out in
Belton v. Liberty
    Insurance Co. of Canada

(2004), 70 O.R. (3d) 81, 2004 CanLII 6668
    (C.A.) for distinguishing employees from independent contractors.  Based on
McKee
    v. Reids Heritage Homes Ltd.
, 2009 ONCA 916, at para. 32, the trial judge noted
    that those principles also apply to distinguishing employees from dependent
    contractors.  The trial judge found that all five of those now well-known
    principles favoured a finding that the Keenans were dependent contractors from
    1987 until termination.

[18]

In
    particular, the trial judge found that the Keenans were economically dependent
    on Canac due to the fact that they worked exclusively for Canac or at a high
    level of exclusivity.

[19]

Having
    found that the Keenans were dependent contractors, they were entitled to
    reasonable notice on termination.  The trial judge awarded them damages of approximately
    $125,000 in lieu of 26 months notice.

[20]

Canac
    appeals.

THE ISSUES

[21]

Canac
    contends that the trial judge erred in:

1.

finding that the
    Keenans were dependent  rather than independent  contractors; and

2.

awarding the
    Keenans 26 months of notice.

ANALYSIS

Issue #1  Dependent or Independent Contractors

[22]

Canac
    takes issue with only one aspect of the trial judges determination that the
    Keenans were dependent contractors: his finding of exclusivity.  Canac acknowledges
    that the Keenans worked exclusively for it until the end of 2006.  However,
    from then until termination, on the findings of the trial judge, the Keenans
    also worked for one of its competitors.  Canac contends that exclusivity is a
    matter to be determined at, or about, the time of termination of the
    relationship.  Thus, it argues, as the Keenans did not work exclusively for
    Canac in the approximately two-year period immediately preceding termination,
    the trial judge erred in finding that the Keenans were dependent
    contractors.

[23]

I
    reject this submission.  I see no basis for interfering with the trial judges finding
    of exclusivity or near exclusivity.

[24]

The
    trial judge observed that, in the jurisprudence leading to a recognition of the
    intermediate category of dependent contractors, a finding that the worker was
    economically dependent on the company due to complete exclusivity or a high
    level of exclusivity weighed heavily in favour of the conclusion that the
    worker was a dependent contractor.

[25]

In
    my view, this observation is not only correct, it is vital to understanding how
    the question of exclusivity is to be approached.  Exclusivity cannot be
    determined on a snapshot approach because it is integrally tied to the
    question of economic dependency.  Therefore, a determination of exclusivity
    must involve, as was done in the present case, a consideration of the full history
    of the relationship.  It is for the trial judge to determine whether, after
    examining that history, the worker was economically dependent on the company,
    due to exclusivity or a high level of exclusivity.

[26]

The
    trial judge was fully aware that the Keenans did some work for one of Canacs
    competitors in the last two years of the relationship  but he considered that
    information in context. Lawrence Keenan worked exclusively for Canac from 1976
    to 2007.  Marilyn Keenan worked exclusively for Canac from 1983 to 2007.  Their
    agreement with Canac demanded nothing less.  The services that the Keenans
    provided to Cartier were for a relatively short period, and done in response to
    a slowdown in work from Canac.  Canac turned a blind eye to that work. 
    Furthermore, on the findings of the trial judge, during the period that the
    Keenans provided services to Cartier, the substantial majority of their work
    continued to be done for Canac.

[27]

Counsel
    for Canac conceded that between 1987 and the beginning of 2007 approximately
    97.5% of the Keenans income was from Canac.  And, I note, this figure does not
    include the Keenans prior periods of employment with Canac, as employees, when
    they worked exclusively for Canac.

[28]

Of
    the approximately 32 and 25 years of service that Lawrence Keenan and Marilyn
    Keenan respectively gave to Canac, in all but two of those years they
    exclusively served Canac.  With this history of the work relationship between
    the parties in mind, I see no fault in the trial judges finding of the
    requisite high degree of exclusivity.

[29]

Accordingly,
    I would dismiss this ground of appeal.

Issue #2  The Notice Period

[30]

If
    it fails on the first ground of appeal, Canac asks this court to set aside the
    trial judges award of damages of 26 months of notice.  Canac founds its
    position on this courts decision in
Lowndes v. Summit Ford Sales Ltd.
,
    [2006] O.J. No 13 (C.A.).  At para. 11 of
Lowndes
, this court stated
    that while the reasonable notice period is a case-specific determination and
    there is no absolute upper limit on what constitutes reasonable notice,
    generally only exceptional circumstances will support a notice period in excess
    of 24 months.  Canac says that the trial judge erred in principle by failing to
    make a finding of exceptional circumstances before awarding damages for
    reasonable notice in excess of 24 months.  Consequently, it submits, this court
    can set aside the award.  It urges this court to make an award of between 16 to
    18 months but, in any event, not greater than 24 months.

[31]

I
    agree that the trial judge failed to expressly make a finding of exceptional
    circumstances.  I note that as part of the agreed statement of facts, the
    parties presented an agreed damages calculation that included figures for up to
    26 months of notice.  This may explain why there is no explicit finding of
    exceptional circumstances as it clearly indicates that an award beyond 24
    months was in the contemplation of all parties.  In any event, however, given
    the Keenans ages and lengths of service, and the character of the positions
    that they held, I would not interfere with the award.

[32]

Lawrence
    Keenan and Marilyn Keenan worked for Canac for approximately 32 and 25 years respectively. 
    Together, their average length of service was 28.5 years.  They were 63 and 61 years
    of age at the time of termination.  They held supervisory, responsible
    positions in which they oversaw the installation of Canacs products and met
    with Canacs customers as its representatives.  For over a generation, they
    were Canacs public face to the outside world.  Over a period of approximately thirty
    years  the entirety of their working lives  the Keenans income had come from
    Canac and they relied on that income to support themselves and their family. 
    Even during the approximately two years that they provided some services to
    Cartier, a substantial majority of the Keenans work continued to be done for
    Canac.  These circumstances justify an award in excess of 24 months and I see
    nothing wrong in the trial judges finding that 26 months notice was
    reasonable.

[33]

I
    also reject Canacs submission that the trial judge erred in his assessment of
    reasonable notice by basing his decision on
Cardenas v. Canac Kitchens
,
    2009 CanLII, 17976 (ON SC).  In
Cardenas
, a 43-year old shift supervisor
    who had worked for Canac for 27.5 years was awarded damages of 26 months
    notice.

[34]

I
    do not accept that the trial judge based his award on that given in
Cardenas
. 
    He considered the
Cardenas
case, along with the other cases put forward
    by the parties, when determining the period of reasonable notice.  It is not an
    error to consider awards made in other cases involving the same company.  While
    each case must be adjudicated on its own facts, previously decided cases 
    particularly those with analogous circumstances  offer useful guidance. The
    trial judge did precisely as he was required to do  he adjudicated this case,
    on its own facts, having due regard to the relevant case law.

DISPOSITION

[35]

Accordingly,
    I would dismiss the appeal with costs fixed at $24,000, all inclusive.

Released: January 27, 2016 (E.E.G.)

E.E. Gillese
    J.A.

I agree. J. MacFarland J.A.

I agree. K. van Rensburg
    J.A.


