



COURT OF APPEAL FOR ONTARIO

CITATION: Cormier v. 1772887 Ontario Limited (St. Joseph
    Communications), 2019 ONCA 965

DATE: 20191206

DOCKET: C66596

Feldman, Fairburn and Jamal JJ.A.

BETWEEN

Kelly Cormier

Plaintiff (Respondent)

and

1772887 Ontario Limited carrying on business as St.
    Joseph Communications

Defendant (Appellant)

Ian R. Dick, for the appellant

Christopher Perri and Genevieve Cantin, for the
    respondent

Heard: October 21, 2019

On appeal from the judgment of Justice Paul M. Perell of
    the Superior Court of Justice, dated January 24, 2019, with reasons reported at
    2019 ONSC 587, 53 C.C.E.L. (4th) 60.

REASONS FOR DECISION

A.

overview

[1]

This is an appeal from summary judgment arising from a wrongful
    dismissal claim.

[2]

The respondent worked for the appellant as a wardrobe stylist and later
    as a fashion studio manager from 1994 until she was dismissed without cause in
    2017. The motion judge determined that the respondent acted in the capacity of
    a dependent contractor between 1994 to 2004, after which she became the
    appellants employee. The respondent brought an action seeking damages for
    wrongful dismissal. She also sought to be reimbursed for amounts that she said
    had been improperly deducted from her wages while she was still employed.

[3]

The motion judge found that the termination clause in the employment
    agreement was void because it attempted to contract out of the minimum
    standards provided for under s. 5 of the
Employment Standards Act
,
2000
,
    S.O. 2000, c. 41 (
ESA
). He granted summary judgment in favour of the
    respondent and awarded her 21 months pay in lieu of notice, 10 percent of her base
    salary for loss of benefits, and $2,373 owing under her cellphone allowance,
    less any amounts that had been paid to date. The motion judge also held that
    the appellant had made unlawful deductions from the respondents wages
    beginning in 2016, contrary to s. 13 of the
ESA
, and awarded her
    compensation for the lost wages.

[4]

The summary judgment is appealed on several
    grounds. For the following reasons, the appeal is dismissed.

B.

analysis

(1)

Was this an appropriate case for summary judgment?

[5]

First, the appellant suggests that this was not
    an appropriate case for summary judgment because: there were material facts in
    issue; credibility findings had to be made; the respondent had not put her best
    foot forward by producing necessary documents, such as tax returns, to show her
    dependent contractor status; and the respondent did not plead that she was a
    dependent contractor between 1994 to 2004.

[6]

In determining that this was an appropriate
    matter for summary judgment, the motion judge specifically referred to and
    applied
Hryniak v. Mauldin
,
2014 SCC 7, [2014] 1 S.C.R. 87. He concluded that there was no
    genuine issue requiring a trial and that this case was appropriate for summary
    judgment. We see no error in that determination.

[7]

As the motion judge noted, there were really
    only two factual issues in dispute: how to correctly characterize the parties employment
    relationship between 1994 and 2004; and whether the respondent failed to mitigate
    her damages. Those issues turned largely upon non-disputed facts. The rest of
    the issues were largely ones focused upon contractual and statutory
    interpretation.

[8]

The motion judge turned his mind to the question
    of credibility and found that there were no significant issues of credibility
    to be determined as few facts were even in dispute. Moreover, he specifically
    noted that there had been cross-examinations conducted with respect to all of
    the factual issues and it appeared that the parties had done their best to put
    forward all records and documents. As such, the quality and quantity of the
    record would not appreciably change at a trial. We see no error in those
    conclusions, all of which are supported by the factual record in this case.

[9]

While the appellant claims that the respondent
    failed to put her best foot forward as it relates to documents supporting the
    issue of her employment status and her mitigation efforts, we disagree. During
    her cross-examination relating to outstanding documents for the period of 1994
    to 2004, she gave explanations as to why those documents were missing. She also
    swore two affidavits about her efforts to mitigate her damages, which were
    subject to cross-examination. The appellant did not ask for further documents
    related to the respondents mitigation efforts, apart from a request for her
    2017 tax documents, which the respondent provided. A trial would not have
    improved the factual record on these points. In any case, the burden was on the
    appellant to demonstrate that the respondent had not mitigated her damages:
Red
    Deer College v. Michaels
,
[1976] 2 S.C.R. 324
,
at p. 332;
Belton v. Liberty Insurance
    Co. of Canada
(2004), 72 O.R. (3d) 81 (C.A.), at paras. 32-34.

[10]

As for the pleadings argument, it is made for
    the first time on appeal. While the respondent did not specifically plead that
    she was a dependent contractor from 1994 to 2004, the pleadings were clear
    that the respondent was claiming that she had been employed since 1994 and was
    entitled to damages arising from that point in time. While the legal characterization
    of that employment relationship was not described by its precise name, the
    pleadings were clear as to what was being claimed.
Both pleadings put in
    issue the nature of the relationship between the parties between 1994 and 2004.
    No one was taken by surprise. The parties had the opportunity to lead evidence
    on the degree of economic exclusivity in the work relationship and made written
    submissions that squarely addressed whether the respondent was a dependent
    contractor during that period.
Accordingly, we would not give
    effect to this submission.

(2)

Did the motion judge err by finding that the respondent was a
    dependent contractor between 1994 and 2004?

[11]

The appellant also claims that the motion judge
    erred in concluding that the respondent was a dependent contractor from 1994 to
    2004. The appellant argues that the motion judge erred by failing to consider
    all relevant factors. Specifically, the appellant says that the motion judge
    erred by focusing upon the exclusivity of the parties working relationship,
    thereby failing to focus upon whether the respondent was economically dependent
    upon the appellant.

[12]

We see no error in the motion judges approach
    to this issue. He referred to all of the pertinent authorities. Among other
    authorities, the motion judge referred to both
McKee v. Reids
    Heritage Homes Ltd.
,
2009
    ONCA 916,

315 D.L.R. (4th) 129,

and
Keenan v. Canac
    Kitchens Ltd.
,
2016 ONCA
    79, 29 C.C.E.L. (4th) 33
.
The motion judge adverted to the correct legal
    test for determining dependent contractor status.

[13]

We do not agree that the motion judge ignored
    whether the respondent was economically dependent upon the appellant. Indeed, relying
    upon the test set out in
McKee
, the motion
    judge specifically listed that consideration as one of the factors that
    differentiate a dependent from an independent contractor. His factual
    conclusion that, within a short time of engagement, the respondent worked exclusively
    for [the appellant] and, practically speaking, [the appellant] was her boss
    was telling. Read contextually, the motion judge clearly concluded that the
    respondent was not only in an exclusive relationship with the appellant, but
    an economically dependent one. We would defer to the motion judges ultimate
    conclusion that [w]hat stands out is that [the respondent] had a twenty-three
    [year] solid workplace relationship with [the appellant]. We would not give
    effect to this ground of appeal.

(3)

Did the motion judge err by finding that the termination clause was
    unenforceable?

[14]

The appellant also suggests that the motion judge erred
    in finding that the termination clause was unenforceable because it purported
    to contract out of the requirements of the
ESA
.
While the appellant acknowledges that an
    employer cannot contract out of the minimum standards provided for under the
ESA

unless that contracting out provides a greater benefit for
    the employee than that provided for under the
ESA
,
the appellant says that the motion
    judge erred in concluding that there had been a contracting out.

[15]

This is a matter of contractual interpretation to which the standard of
    review requiring a palpable and overriding error applies:
Sattva Capital
    Corp. v. Creston Moly Corp.
,
2014 SCC 53, [2014] 2 S.C.R. 633,

at
    para. 50. We would not give effect to this ground of appeal.

[16]

Section 60(1)(c) of the
ESA

says that during a notice
    period, the employer shall continue to make whatever benefit plan
    contributions would be required to be made in order to maintain the employees
    benefits under the plan until the end of the notice period. Accordingly, the
ESA

requires that an employer continue all benefits during the applicable
    notice period. Yet the impugned clause in this case purported to contract out
    of two things: (a) short-term and long-term disability benefits during the
    notice period; and (b) other benefits absent the consent of the Companys
    insurers:

Termination without Cause

(b) In addition to the foregoing and
subject to the consent
    of the Companys insurers
, you will be entitled to continue to receive
    Company benefits (
excluding STD and LTD benefits
) during the notice
    period specified above. [Emphasis added.]

[17]

We find no palpable and overriding error in the motion judges
    interpretation of the impugned clause within the employment contract. He
    concluded that it allowed the employer upon termination to provide [the
    respondent] with only some of the employee benefits that she received before
    termination and even then, only subject to the consent of [the appellants]
    insurers. Clearly, the long and short-term disability benefits were excluded
    and other benefits would be excluded unless the insurer consented to giving
    effect to those benefits. This constituted a contracting out of and fell short
    of the s. 60(1)
ESA

benefit protections. As such, in accordance
    with this courts decision in
Wood v. Fred Deeley Imports Ltd.
,
2017 ONCA 158, 134 O.R. (3d) 481, at
    para. 46,
the
termination clause was unenforceable and
    the motion judge was correct to apply the common law to determine the
    appropriate period of notice.

(4)

Did the motion judge err in calculating the
    damages for wrongful dismissal?

[18]

The appellant also submits that the motion judge
    erred in calculating the amount of damages arising from the duration of
    employment (including the stage when the respondent worked as a dependent
    contractor) and the amount of damages for lost benefits. This was a matter
    within the discretion of the motion judge.

[19]

The appellant argues that the respondent was
    required to provide contributions toward her benefits and, therefore, should
    not have benefited from the typical calculation that provides for 10 percent of
    base salary for loss of benefits. We would not interfere with the conclusion
    reached by the motion judge. While there may be cases where an employees
    contribution to benefits could reduce the typical percentage of base salary
    awarded in lieu of benefits during the notice period, this is not one of those
    cases. There was no evidence to support the claim that the amount of damages in
    lieu of benefits should be reduced to five percent. The real question was what
    the appellant paid for the benefits. That information lay exclusively within
    their knowledge and no evidence was led on this point. Accordingly, we would
    not interfere with the motion judges calculation.

[20]

The appellant also challenges the 21 months of
    notice, claiming that it was unreasonable and that the motion judge wrongly
    thought that it had conceded the point. The motion judge said that, although
    the appellant asked for a lesser notice period, that request depended in the
    main on the enforcement of the termination clause or on defining [the respondents]
    years of employment as commencing with an original hire date of June 7, 2004. If
    the respondent was found to have had a longer employment relationship, though,
    the motion judge noted that the appellant actually suggested that the
    appropriate notice period was around twenty to twenty-one months.

[21]

We agree with the motion judges
    characterization of the appellants position. In the appellants written
    submissions on the motion, it accepted that based upon a hire date of 1994,
    the reasonable notice period would be 21.6 months. In any event, in the
    circumstances of this case, and considering the 23-year work history, 21 months
    of common law notice was squarely within a reasonable range.

[22]

The appellant also points out that there is a
    clause in the employment contract that says, Your original hire date of June
    7, 2004 will be recognized as your start date for the calculation of your years
    of service, vacation entitlement and heath care benefits under this agreement.
    The appellant argues that this clause means that the length of the reasonable
    notice period at common law should not be calculated with regard to the period
    of time prior to June 7, 2004, when the respondent acted as a dependent
    contractor. We disagree. Years of service may be used for any number of
    purposes that do not relate to an employee's rights on termination. If an
    employer wishes to contract out of the common law reasonable notice period, the
    contract must clearly specify another period of notice:
Wood
, at para.
    15, citing
Machtinger v. HOJ Industries Ltd.
,
    [1992] 1 S.C.R. 986, at p. 998. This contract did not contain the type of clear
    language that would be needed to contract out of that notice.

(5)

Did the motion judge err in finding that the appellant had made
    wrongful deductions from the respondents wages, contrary to s. 13 of the
ESA
?

[23]

There is also an issue about whether the motion
    judge was correct in concluding that there was a deduction from the
    respondents wages that offended s. 13 of the
ESA
.

[24]

In June 2016, the appellant advised the
    respondent that as part of a cost-saving measure, all employees would be
    required to take two weeks of unpaid vacation between July 1, 2016 and June 30,
    2017. Starting on July 1, 2016 until the end of her employment, the appellant held
    back $125.54 from the respondents biweekly pay. This was all done on a
    unilateral basis. No amendment was made to the employment contract. At the time
    of termination, a total of $3,264 had been deducted from the respondents pay.

[25]

The motion judge concluded that the unpaid
    vacation plan did not comply with the
ESA

because it was implemented by deductions from wages, and s. 13 of
    the [
ESA
] prohibits an employer [from] making
    deductions from wages unless, among other things, the deductions are authorized
    by court order or by the employees written authorization. Section 13(1)
    reads:

13(1) An employer shall not withhold wages
    payable to an employee,
make a deduction from an employees wages
or
    cause the employee to return his or her wages to the employer unless authorized
    to do so under this section. [Emphasis added.]

[26]

As there was no authorization in this case, the
    motion judge found that s. 13 of the
ESA

had been offended and damages to replace the deducted wages should
    be granted.

[27]

The appellant argues that the motion judge erred
    in concluding that the wages had been deducted as opposed to reduced. The appellant
    argues that s. 13(1) is designed to prevent deductions from earned wages, but
    not a reduction of wages. According to the appellant, in effect, the appellant
    imposed a two-week layoff on all of its employees with a corresponding
    reduction in wages that were to be paid in the coming year. The
ESA

is said not to apply to this kind of situation. Although
    such a reduction could amount to a material change in the employment terms and,
    theoretically, constitute a constructive dismissal (a claim that the appellant
    presumably would have opposed), the respondent did not claim constructive
    dismissal. As a result, she was not owed the money because the lesser amount
    did not constitute a deduction from her wages as captured by s. 13(1) of the
ESA
.

[28]

In all of the circumstances here, we see no
    error in the motion judges conclusion that the appellants conduct breached s.
    13(1) of the
ESA
.
The appellant acknowledges that the unpaid vacation leave was
    tantamount to a temporary lay-off, the cost of which was spread out over
    multiple pay periods. The program was for all intents and purposes funded
    through periodic deductions from the employees wages.

[29]

Any suggestion that the respondent effectively
    waived her contractual rights does not answer the breach of s. 13(1). For a
    binding waiver to apply, the respondent would have had to authorize the
    reductions in writing in accordance with ss. 13(3) and (5) of the
ESA
.

(6)

Did the motion judge err in awarding the
    respondent damages to compensate for the loss of her cell phone allowance?


[30]

The appellant maintains that the motion judge
    erred when he awarded the respondent $2,712 to compensate her for the loss of
    her cell phone allowance over the notice period. She received $113 per month to
    cover the cost of a cell phone. The appellant argues that no damages are owed
    for the cell phone because the payments were intended as nothing more than
    reimbursement for the respondents business expenses, which she was no longer
    required to incur after termination.

[31]

We note that the employment contract refers to
    the appellant as being required to reimburse the respondent for all expenses
    actually and properly incurred in the performance of her services under the
    employment agreement. Under that agreement, acceptable expenses included cell
    phone expenses.

[32]

The point of a damages award for wrongful
    dismissal is to compensate for all losses arising from the employers breach
    of contract in failing to give proper notice, and to place the employee in
    the same financial position he or she would have been in had such notice been
    given:
Paquette v. TeraGo Networks Inc.
, 2016
    ONCA 618, 352 O.A.C. 1, at para. 16 (citation omitted).

[33]

It was open to the motion judge to arrive at the
    conclusion that, while the respondent was being reimbursed for her cell phone
    expenses, she personally benefited from the use of the cell phone. Accordingly,
    it was open to the motion judge to award damages on that basis. We see no error
    in his approach.

C.

disposition

[34]

The appeal is dismissed.

[35]

On the agreement of the parties, we award costs
    to the respondent in the amount of $15,000, inclusive of disbursements and applicable
    taxes.

K. Feldman J.A.

Fairburn J.A.

M. Jamal J.A.


