



COURT OF APPEAL FOR ONTARIO

CITATION: Manthadi v. ASCO Manufacturing,
    2020 ONCA 485

DATE: 20200728

DOCKET: C67556

Doherty, Juriansz and Paciocco
    JJ.A.

BETWEEN

Sandra Manthadi

Plaintiff (Respondent)

and

ASCO Manufacturing

Defendant (Appellant)

John S. Contini, for the appellant

Jonathan Pinkus, for the respondent

Heard: in writing, with questions by video
    conference on June 5, 2020

On appeal from the judgment of Justice Judy
    A. Fowler Byrne of the Superior Court of Justice, dated September 26, 2019,
    with reasons reported at 2019 ONSC 5572, 57 C.C.E.L. (4th) 232.

Juriansz J.A.:

A.

Introduction AND OVERVIEW

[1]

This appeal is from a motion for summary
    judgment in an action brought under Rule 76 of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194, awarding Ms. Manthadi, the respondent, damages for
    wrongful dismissal.

[2]

Ms. Manthadi was initially employed on February
    7, 1981 by one of the third parties to this action, 63732 Ontario Limited (637).
    On or about November 2, 2017, the appellant purchased the assets of 637 along
    with the business name ASCO. Ms. Manthadi worked for ASCO for approximately
    one month when she was placed on layoff on December 13, 2017 and never
    recalled. She sued ASCO for wrongful dismissal and ASCO brought a third party
    claim against 637.

[3]

The motion judge granted Ms. Manthadis motion
    for summary judgment. She held that Ms. Manthadi had been continually employed
    from 1981 to 2017, a period of 36 years, concluded that the proper notice
    period was 20 months, and awarded Ms. Manthadi $66,391.40 for damages for
    wrongful dismissal plus $11,958.96 for costs.

[4]

On appeal, ASCO argues that the motion judge erred
    by holding that:

a)

Summary judgment was appropriate when there were
    material facts in dispute and an outstanding third party claim;

b)

Ms. Manthadis employment with ASCO was a
    continuation of her employment with 637 for the purposes of calculating her
    entitlement to reasonable notice on termination;

c)

The proper notice period was 20 months; and

d)

The damages should not be reduced by the amount
    paid to Ms. Manthadi by 637 under a settlement and release agreement.

[5]

The parties agreed this appeal could proceed in
    writing. However, the court invited them to make oral submissions in response
    to certain questions.

[6]

For the reasons that follow, I agree with ASCO
    that summary judgment was not appropriate in this case. The motion judge
    concluded summary judgment was appropriate primarily because she proceeded on
    an incorrect understanding of the common law that governs an employees rights
    to reasonable notice from the purchaser of an ongoing business. This appeal
    presents the opportunity to review and restate the applicable law of Ontario. I
    would set aside the order below and remit the matter for trial.

B.

Facts

(1)

Ms. Manthadi is terminated by 637

[7]

Ms. Manthadi worked for 637  then known as ASCO
    Manufacturing Limited  as a braze welder from February 7, 1981 until early November
    2017 when the appellant purchased 637s assets and business name.

[8]

The Agreement of Purchase and Sale was dated
    November 1, 2017 and was said to take effect on November 3, 2017. In that
    agreement, the appellant obtained a warranty from 637 stating, among other
    things, that 637 had provided notice of termination and paid severance to all
    its employees. 637 also agreed to indemnify the appellant against all claims arising
    from a breach of its warranties.

[9]

Ms. Manthadis evidence is that 637 presented
    her with a Settlement and Release Agreement dated September 28, 2017 on or
    about that date. She states that 637 advised her the business was being sold
    and she would be offered continued employment with the appellant. In the Settlement
    and Release Agreement, Ms. Manthadi acknowledges receiving written notice her
    employment would terminate on November 24, 2017 and that she would be paid $5,900
    representing 8 weeks gross compensation in full satisfaction of all claims 
    including all severance pay, termination pay or other compensation howsoever
    arising. She released 637 (referred to as Asco in the Settlement and Release
    Agreement) from all liability in connection with the Employees employment
    with [637], including without limitation the cessation of such employment. In
    my view, nothing turns on a second version of the agreement that ASCO filed as
    fresh evidence in this court on consent showing different execution and
    termination dates.

[10]

It is common ground that Ms. Manthadi received
    the payment pursuant to the Settlement and Release Agreement, but there is no
    evidence as to when she did.

(2)

Ms. Manthadi is hired by ASCO

[11]

Ms. Manthadi was one of twenty of 637s
    employees who were employed by ASCO. The terms of her employment by ASCO and
    the capacity in which she was employed by ASCO are disputed.

[12]

ASCOs position is that it hired Ms. Manthadi along
    with nineteen other 637 employees for general labour work to pack and unpack
    the purchased assets for the move to ASCOs place of business. ASCO also says
    it did not assume the continuity of [637s] employees or recognize [637s]
    employees prior years of service rendered with [637].

[13]

Ms. Manthadi says she was offered and accepted
    employment by ASCO on an indefinite basis. She states she understood that ASCO
    would recognize her years of service with 637 and that she continued to work as
    a welder without interruption. However, she agreed that she assisted ASCO with
    moving the purchased assets to a new location from December 4, 2017 onward
    until she was laid off.

[14]

While the affidavits of ASCOs manager and Ms.
    Manthadi state their respective positions, neither alleges any specific
    communication between them to support those positions.

[15]

There
was no written
    agreement governing Ms. Manthadis employment. Ms. Manthadi was not required to
    apply or attend an interview before she was hired. Ms. Manthadi continued to
    work similar hours at a similar rate of pay until December 13, 2017, when ASCO
    laid her off citing shortage of work with an unknown date of recall.

[16]

Ms. Manthadi produced text messages from her
    supervisor in December advising she was not being recalled but that he would
    let her know when she was being recalled.

(3)

The wrongful dismissal action and the third party
    action

[17]

Ms. Manthadi brought an action against ASCO
    alleging wrongful dismissal after she was never recalled.

[18]

ASCO in turn brought a third party claim against
    637 and its officers. ASCO pled that 637

breached its obligations
    under the Agreement of Purchase and Sale by falsely representing that it had
    terminated Ms. Manthadi and paid her the applicable employment benefits. ASCO
    also relied on the indemnity provisions of the Agreement of Purchase and Sale.

[19]

The defence to the third party claim pled that 637
    entered into an agreement with Ms. Manthadi that gave Ms. Manthadi notice of
    termination and severance pay as required by the Agreement of Purchase and Sale.
    The defence also pled the parties entered into the agreement on September 28,
    2017, before the scheduled closing of the asset purchase on November 3, 2017.

C.

the motion judges decision

(1)

Summary judgment was appropriate

[20]

The motion judge observed that summary judgment
    remains appropriate in a simplified procedure action that is document-driven or
    where there is limited contested evidence. Summary judgment was appropriate in
    this case, she explained, because the material facts on this motion have
    either been admitted or not refuted by [ASCO]. She said that any matters in
    conflict were not material and would not impact on her decision. She found it unnecessary
    to resolve the disputes about whether Ms. Manthadi was hired as a temporary general
    labourer to move the purchased equipment or on an indefinite basis as a welder,
    and whether there was an express understanding of how her service with 637
    would be treated by ASCO.

[21]

The motion judge also determined that ASCOs
    outstanding third party claim against 637 did not make Ms. Manthadis motion
    for summary judgment inappropriate. Noting that 637 did not participate in the
    motion, she inferred that 637 did not consider the outcome of the motion
    relevant to the third party claim. She also found the dealings between 637 and Ms.
    Manthadi to be irrelevant to determining the issues between ASCO and Ms.
    Manthadi.

(2)

The common law mirrored the requirements of the
    ESA

[22]

The motion judge proceeded on the basis that, in
    determining the notice to which Ms. Manthadi was entitled, she was 
required
to consider her past years of employment with 637, commencing in 1981 (emphasis
    added). Thus, she held that Ms. Manthadi should be considered to have been
    continuously employed by ASCO from 1981 for the purposes of calculating her
    entitlement to reasonable notice under the common law.

[23]

The motion judge arrived at this conclusion by
    reasoning that the common law approach to assessing a successor employers
    obligation to provide reasonable notice mirrored the statutory dictates of the
Employment
    Standards Act, 2000
,
S.O. 2000, c. 41
.
She set out the terms
    of s. 9(1) of the ESA, noting there were only two preconditions to its
    application: (1) that an employer sells his business to a purchaser; and (2)
    that the purchaser employs an employee of the employer. She remarked that for
    the purpose of the ESA and the calculation of [Ms. Manthadis] notice period thereunder,
    [Ms. Manthadi] is considered to have been continually employed by [ASCO] since
    1981. In these reasons, I will refer to a purchaser of a business who employs
    an employee of the vendor as the successor employer, and to the vendor as the
    predecessor employer.

[24]

The motion judge did not apply s. 9(1) of the
    ESA to the facts of this case, as the appellant contends. However, she stated
    that [t]he law also supports this concept of continuous employment for the
    purposes of common law entitlement to damages for wrongful dismissal. Because Ms.
    Manthadis previous employer sold its assets and business and the purchaser
    employed Ms. Manthadi, the motion judge reasoned that she was required to
    consider Ms. Manthadi to have been employed by ASCO since 1981 for the purposes
    of determining her entitlement to common law notice.

(3)

Entitlement to notice and the length of the
    notice period

[25]

The motion judge rejected ASCOs argument that Ms.
    Manthadi, by executing the Settlement and Release Agreement, had
released
    any right to further damages under the ESA or pursuant to the common law.
The motion judge said ASCO could not rely on the Settlement and
    Release Agreement because of privity of contract. Ms. Manthadi, she said, never
    agreed that the Settlement and Release Agreement would be enforceable by ASCO.

[26]

The motion judge also found the Settlement and
    Release Agreement was not a relevant consideration in assessing the quantum of Ms.
    Manthadis damages. She rejected ASCOs argument that the $5,900 Ms. Manthadi
    had received from 637 under the Settlement and Release Agreement should be
    deducted from the damage award to avoid double dipping. She stated that the
    purpose of damages in a wrongful dismissal action is to compensate the employee
    for the notice they should have received on the day of their termination. She
    concluded that any monies [Ms. Manthadi] may have received previously from 637
    purporting to satisfy its obligation to [her], cannot be counted toward Ascos
    obligation as of December 13, 2017.

[27]

Applying the factors set out in
Bardal v. The
    Globe & Mail Ltd
.
(1960), 24 D.L.R. (2d) 140 (Ont. H.C.), and
    considering that [i
]n law, [
Ms. Manthadi]
had
    been continually employed from 1981 to 2017
, the motion judge
    found the proper notice period for Ms. Manthadi was 20 months.

D.

ISSUES

[28]

The errors alleged by the appellant can be
    considered under the following questions:

a)

Was summary judgment appropriate?

b)

Did the motion judge err in holding that the
    respondent was entitled to damages in lieu of reasonable notice of termination?

c)

Did the motion judge err in assessing the
    quantum of damages in lieu of reasonable notice?

[29]

For the reasons that follow, I agree with the
    appellant that the motion judge erred in concluding that summary judgment was
    appropriate. As summary judgment was not appropriate, the remaining questions are
    issues for trial. However, they are related to the first question because the
    motion judges conclusion that summary judgment was appropriate rested on an
    incorrect view of the applicable law on when and how much recognition should be
    given to an employees service with the predecessor employer. Consequently, a
    discussion of the applicable legal framework is necessary.

[30]

Below, I discuss:

a)

Why summary judgment was inappropriate given the
    disputed facts before the motion judge;

b)

Why the disputed facts were material to the
    existence and extent of Ms. Manthadis entitlements upon termination, and

c)

The common laws approach to reasonable notice
    by a successor employer.

[31]

I conclude by summarizing the relevant
    considerations for trial in this case.

E.

Analysis and discussion

(1)

Summary judgment was not appropriate in the circumstances

[32]

The motion judge cited the decision of Mulligan
    J. in
Commander Construction v. Sovereign General Insurance Co
., 2012
    ONSC 1075, for the observation that a motion for summary judgment in a
    simplified procedure action is appropriate where the case is document-driven or
    there is limited contested evidence. Almost the whole of Mulligan J.s reasons are
    devoted to explaining the need for circumspection in entertaining a summary
    judgment motion in a simplified procedure action, based on this courts
    decision in
Combined Air Mechanical Services Inc. v. Flesch
,
2011
    ONCA 764, 108 O.R. (3d) 1, revd on other grounds, 2014 SCC 7, [2014] 1 S.C.R.
    87. As a result, Mulligan J. concluded that summary judgment was inappropriate
    in the case before him.

[33]

In
Combined Air
, a five-judge panel of
    this court indicated, while a motion for summary judgment could be appropriate
    in some Rule 76 proceedings, such cases would be exceptional: at paras. 254,
    256; see also
Singh v. Concept Plastics Limited,
2016 ONCA 815, 2017
    C.L.L.C. 210-011, at para. 23. This was for two reasons.

[34]

First, it will often be more efficient to simply
    proceed to a summary trial as contemplated by the
Rules
:
Combined
    Air,
at para. 254. The court observed that the simplified procedure rules are
    designed to get the parties to trial with a minimum of delay and costs. One of
    the key objectives of the simplified procedure rules is to limit the extent of
    pretrial proceedings. Discovery is restricted and cross-examination on
    affidavits and examinations of witnesses on motions are not allowed. The
    summary trial procedure is designed to reduce the length of the trial.

[35]

This court directed that a judge faced with a
    contested motion for summary judgment in a simplified procedure action will
    need to assess whether entertaining the motion is consistent with the
    efficiency rationale reflected in the simplified procedures:
Combined Air
,
    at para. 255.

[36]

On appeal, the Supreme Courts foundational
    summary judgment decision in
Hryniak v. Mauldin
,

2014 SCC 7,
    [2014] 1 S.C.R. 87,

did not specifically address how summary judgment
    applies in a simplified procedure case. However, the court did affirm that the
    motion judge must assess, among other things, the relative efficiencies of
    proceeding by way of summary judgment, as opposed to trial and the impact of
    summary judgment on the litigation as a whole when determining whether it is in
    the interests of justice to exercise their fact-finding powers and grant
    summary judgment:
Hryniak
,
at paras. 58, 60.

[37]

Second, the simplified procedure rules, which
    are designed to allow the matter to be determined in an expedited fashion, also
    constrain the parties ability to marshal evidence on a summary judgment motion
    and meet their obligation to put their best foot forward.

[38]

In this case, ASCO submits it was hampered
    because it could not cross-examine Ms. Manthadi on her affidavit supporting the
    motion and did not have the evidence of the third party, 637. Ms. Manthadi responds
    that ASCO could have examined Ms. Manthadi and the third parties for discovery
    (though the parties had initially agreed to proceed without discoveries). These
    submissions illustrate that summary judgment motions should be discouraged
    where they would simply require the parties to prepare for and deal with
    additional procedures, expending resources and time that would have enabled
    them to proceed to a summary trial.

[39]

As this court observed in
Combined Air
,
at para. 4, the inappropriate use of Rule 20 has the perverse effect of
    creating delays and wasting costs associated with preparing for, arguing and deciding
    a motion for summary judgment, only to see the matter sent on for trial. The
    risk of this perverse consequence is greater in simplified procedure cases.

[40]

The motion judge in this case did find that the
    motion for summary judgment was the most proportionate, most expeditious, and
    least expensive method of adjudication of the issues. But apart from
    expressing that conclusion, the bulk of her analysis is directed to her ability
    to decide the issues. She held that she was able to decide the issues because
    she took the view that the matters in dispute were not material. However, in the
    next section, I explain how factual disputes that the motion judge could not
    and did not resolve on the record before her were genuine issues requiring a
    trial.

[41]

I conclude the motion judge erred in holding that
    summary judgment was appropriate in the circumstances. This was a case in which
    the parties had agreed to proceed without any discoveries but where
    cross-examination on the general assertions in both parties affidavits was
    necessary to resolve the competing evidence. Allowing the matter to proceed to
    a summary trial would have ensured a fair and just determination on the merits
    while also disposing of the third party claim.

(2)

The disputed facts were material to the
    existence and extent of Ms. Manthadis entitlements upon termination

[42]

While the common law implies a term in contracts
    of indefinite employment requiring an employer to provide reasonable notice
    upon terminating an employee without cause, there is no such implied term in
    fixed term employment contracts.

[43]

In this case, the motion judge did not resolve
    the dispute about the basis on which ASCO hired Ms. Manthadi. ASCOs argument
    that it hired Ms. Manthadi on a temporary basis for the specific task of moving
    the equipment amounted to a claim she was a fixed term employee, which, if
    accepted at trial, could support finding she was not entitled to notice of
    termination by ASCO at common law.

[44]

Fixed term employment may be defined not only by
    a definite period of time, but also by the duration of a specific task, or by
    reference to the happening of a specified event: Geoffrey England, Peter
    Barnacle, and Innis M. Christie,
Employment Law in Canada
, loose-leaf,
    4th ed. (LexisNexis Canada, 2005)
,
at § 12.2.

[45]

A fixed term employee who is terminated before
    the end of the term is entitled to payment of their wages to the end of the
    term, absent agreement otherwise:
Howard v. Benson Group Inc. (The Benson
    Group Inc.)
,
2016 ONCA 256, 129 O.R. (3d) 677,

at para. 22,
    leave to appeal refused, [2016] S.C.C.A. No. 240. An employer is not required
    to provide notice of termination at common law when the term expires, since the
    employment agreement simply terminates in accordance with the contract:
Ceccol
    v. Ontario Gymnastic Federation

(2001)
,
55 O.R. (3d) 614
    (C.A.), at para. 1.

[46]

On the other hand, if it is found that ASCO
    hired Ms. Manthadi on an indefinite basis, she would be entitled to reasonable
    notice and it would be necessary to assess the period of notice ASCO was
    required to provide.

[47]

The motion judge proceeded on the view that the
    common law supported the same concept of continuous employment as did s. 9(1)
    of the ESA. This explains why she found it unnecessary to resolve the disputes between
    the parties. The fact that Ms. Manthadi, an employee of the vendor of a
    business, was employed by the purchaser of the business was sufficient to
    establish she was continuously employed and entitled to reasonable notice from
    ASCO. The motion judge reasoned she had all the facts necessary to find the
    notice period. Ms. Manthadis length of service was 36 years, and there was no
    dispute about the dates of her employment, hours worked, rate of pay and age.

[48]

However, a sharp distinction must be drawn
    between termination of employment by a successor employer under the ESA and
    under the common law. While the ESA is clear that the employment of employees
    of the vendor of a business who are employed by the purchaser is deemed not to
    be terminated for the purposes of the ESA, the common law is equally clear that
    such employees are terminated (by constructive dismissal) when their employer
    sells the business and there is a change in the identity of the employer. Dubin
    J.A. stated the common law in
Addison v. M. Loeb Ltd
.
(1986),
    25 D.L.R. (4th) 151 (Ont. C.A.), at pp.

152-53,

as follows:

At common law, since a contract of personal
    services cannot be assigned to a new employer without the consent of the
    parties, the sale of the business, if it results in the change of the legal identity
    of the employer, constitutes a constructive termination of the employment.



If the employee is offered and accepts
    employment by his new employer, a new contract of employment is entered into.

[49]

In this case, no matter what is made of the
    Settlement and Release Agreement, Ms. Manthadis employment by 637 was
    terminated when 637 sold its assets and business name to ASCO. As such, it was
    necessary to make findings about the nature of the new employment agreement
    between Ms. Manthadi and ASCO.

[50]

I now turn to a general review of the common
    laws approach to reasonable notice by a successor employer, before discussing
    the application of the law to the material facts in dispute in this case.

(3)

The common laws approach to reasonable notice
    by a successor employer

(a)

How prior service with the predecessor employer
    is recognized in the length of the reasonable notice period:
Addison v.
M.
Loeb Ltd.

[51]

Long-time employees are placed in a difficult
    position when their employer sells the business as a going concern and the
    successor employer offers to employ them on an indefinite basis. The difficulty
    is due to the duty to mitigate.

[52]

Ordinarily, long-time employees who are
    terminated without reasonable notice can expect a substantial payment of damages
    in lieu of notice. Terminated employees, however, have a duty to mitigate their
    damages. In
Addison
,
Dubin J.A. adopted the description of the
    employees plight by M. Norman Grosman in Employee Continuous Service Rights:
    Here Today, Gone Tomorrow -
Addison v. M. Loeb Ltd.
" (1985) 5:4
    Adv. Q. 500, at p. 502, who observed that:

Once the employee accepts employment with the
    new employer, thereby establishing a new contract, he will probably
    "mitigate himself right out of his cause of action" against his
    former employer. If he fails to accept the new job and it is in all respects
    fundamentally the same as his old one, he is likely precluded by the doctrine
    of mitigation from recovering any loss sustained on the constructive
    termination on the basis that such loss could reasonably have been avoided. The
    unfortunate employee is caught in a bind and will inevitably suffer at least
    the loss of his perhaps lengthy service with the former employer. If, on the
    other hand, the new employer declines to employ the individual, the termination
    becomes express rather than constructive and the former employer will remain
    liable for any properly recoverable damage sustained by the employee.

[53]

Thus, long-term employees, who are employed by
    the purchaser of their employers business, have little prospect of obtaining
    damages for the termination of their employment. Damages aside, people need
    jobs. Employees terminated by the sale of a business often have no realistic
    option other than to accept the offer of a new contract of employment with the
    purchaser if such is offered. If they are subsequently terminated by the
    purchaser, the new start date of their term of service weighs in favour of a shorter
    notice period than had the business not been sold.

[54]

Addison

resolves this predicament by giving some recognition to the period
    of employment with the predecessor employer when determining the length of the notice
    period unless there is an express understanding to the contrary: at pp.
    155-56. It does so by attaching appropriate weight to the employees experience,
    one of the factors in the generally accepted formulation for the determination
    of reasonable notice: at p. 156. As stated by McRuer C.J.H.C. in
Bardal
,
    at p. 145:

There can be no catalogue laid down as to what
    is reasonable notice in particular classes of cases. The reasonableness of the
    notice must be decided with reference to each particular case, having regard to
    the character of the employment, the length of service of the servant, the age
    of the servant and the availability of similar employment, having regard to the
    experience, training and qualifications of the servant.

[55]

In
Addison
, the employee started
    working at an IGA store in Delhi, Ontario in May 1963. In September 1981, a
    receiver operated the business for approximately two weeks and then sold the
    assets of the business to the defendant, who continued to operate the store.
    The employee continued to perform the same duties until April 1983 when his
    employment was terminated. The trial judge found the employee was wrongfully
    dismissed and assessed his damages on the basis that he had been employed for
    some 18 and a half months only. The trial judge awarded damages equivalent to
    six months notice of termination. The employee appealed.

[56]

On appeal, Dubin J.A. thought it unfair to
    assess the appellants damages for wrongful dismissal in the same manner as if
    he had walked into the store for the first time after the respondent purchased
    the business and became a new employee of the respondent: at pp. 155-56. His
    examination of earlier cases disclosed no clear principle other than that in
    the majority of the cases some recognition is given to the period of employment
    with the predecessor employer: at p. 156.

[57]

Dubin J.A. then pointed out that length of
    service was not the only factor to be applied in determining the proper award
    for damages: at p. 156. The conduct of the parties was also relevant: at p. 156.
    Dubin J.A. observed that the purchaser, in hiring the employee, automatically
    received the benefit of the services of a very experienced assistant manager
    and one fully familiar with the operation of the store: at p. 156. Dubin
    J.A.s observation of the value of experienced employees to the purchaser is
    apt. A purchaser of an ongoing business who takes on the vendors employees avoids
    the burden, cost, and time of having to recruit a new employment force that is unfamiliar
    with the work, the working environment, and one another.

[58]

Dubin J.A. concluded that the trial judge had
    failed to give sufficient weight to the employees prior experience and had
    erred by assessing his damages on the basis that he was an employee of only 18
    and a half months: at p. 156. Dubin J.A. increased the damages from six months to
    12 months notice.

[59]

It is important to note that
Addison
did
    not stitch together the employees terms of service with the vendor and
    purchaser of the business and consider them one continuous period of employment,
    as they are deemed to be under the ESA. Rather, it recognized the employees
    service with the vendor by appropriately weighing the employees experience and
    the benefit of that experience to the purchaser.

[60]

The
Addison
approach differs somewhat
    from the approach taken by the British Columbia Court of Appeal in
Sorel v.
    Tomenson Saunders Whitehead Ltd.

(1987), 39 D.L.R. (4th) 460
    (B.C.C.A.),

relied on by Ms. Manthadi. In
Sorel
,
the court
    implied a term into the employment contract with the purchaser that the
    employee will be given credit for their years of service with the vendor,
    unless the purchaser advises or makes an agreement with the employee to the
    contrary: at p. 462.

[61]

I do not accept Ms. Manthadis submission that
Sorel
has overtaken
Addison
. In a short endorsement, this court upheld a
    trial judgment that relied on
Sorel
:
Debenham v. CSI-Maximus

(2003)
,
26 C.C.E.L. (3d) 32 (Ont.
    C.A.). While the court did not refer to
Addison,
or

to

Sorel
,
    the trial result upheld is not inconsistent with
Addison
. I do not
    read
Debenham

to abandon the
Addison
approach in
    favour of
Sorel.


[62]

Addison
remains
    the law in Ontario. In Ontario, reasonable notice is determined by applying the
    usual
Bardal
factors considering all the circumstances of the particular
    case and appropriately weighing the experience a long-time employee brings to
    the purchaser.

[63]

The application of the
Bardal
factors is well able to deal with
    a successor employer situation fairly. In other cases, this court has stated
    that the length of service factor should not dominate the application of the
Bardal
factors.
Minott v. OShanter Development Co
.
(1999), 168 D.L.R.
    (4th) 270 (Ont. C.A.), firmly rejected a so-called rule of thumb by which the
    starting point in determining reasonable notice would be to allow one month of
    notice for each year of service and then make adjustments for the particular
    circumstances of the case. Laskin J.A. held, at para. 73, that the rule of
    thumb approach risks overemphasizing one of the
Bardal
factors, length
    of service, at the expense of the others and that it gave unnecessary
    prominence to length of service. He concluded that the rule of thumb approach
    is not warranted in principle, nor is it supported by authority: at para. 73.
    See also
Love v. Acuity Investment Management Inc
.
, 2011 ONCA
    130, 89 C.C.E.L. (3d) 157, at para. 19, leave to appeal refused, [2011]
    S.C.C.A. No. 170.

[64]

That the
Bardal
factors can be applied
    to a successor employer case is evident because
Bardal
itself was a
    successor employer case. Mr. Bardal worked for the Globe Printing Co. Ltd. for
    13 years until the business was sold to the Globe & Mail Limited in 1955. He
    worked for the Globe & Mail Limited for just four years when he was
    terminated. His wrongful dismissal action was tried before McRuer C.J.H.C. in
    1960.

[65]

In 1960, six months was considered the
    unofficial ceiling for notice in Ontario: England, Barnacle, and Christie,
Employment
    Law in Canada
, at § 14.106. McRuer C.J.H.C. himself noted at p. 144 that
    the C.E.D. stated, In Ontario damages in cases of indefinite hiring are
    limited to wages for six months. Despite this, McRuer C.J.H.C. awarded Mr. Bardal
    12 months notice. In doing so, McRuer C.J.H.C. did not mention Mr. Bardals
    length of service.

[66]

A trial judge applying the
Bardal

factors
    is able to craft an appropriate award in a successor employer case without stitching
    together the employees two terms of service. The
Addison
approach
    does not use a notional length of service as the yardstick of appropriate
    notice. The
Addison
approach has the advantage of flexibility. Its
    flexibility enables the court to deal fairly with the endless variety of
    circumstances in which an employees claim may be presented. The court is able
    to recognize, under the rubric of experience, the equivalent of all or some of
    an employees service with the vendor employer in order to arrive at a fair
    result.

[67]

The fair result need not devalue the employees
    past service. The notice periods awarded in both
Addison
and
Bardal
were no less than had length of service been used as the yardstick. The
    appropriate notice period is assessed taking into consideration all of the
    circumstances.

(b)

The circumstances in which the common law
    recognizes
prior service with the predecessor employer

[68]

In both
Addison
and
Sorel
, an
    indefinite employee of the vendor was employed as an indefinite employee by the
    successor employer who had purchased the business as a going concern. In both
    cases, the employees connection to the work performed for the conveyed business
    remained continuous, with the only change being the identity of the employer.

[69]

In
Addison
, the appellant continued to
    perform the same duties as he had since 1963 after the respondent purchased
    the assets of the business from a receiver and took over operation of the store:
    at p. 152.

The employee had been the assistant manager of the store
    before the sale and continued as assistant manager of the store for the
    purchaser.

[70]

Sorel
likewise refers
    to the purchasers expectation that it will retain the employees of the vendor
    without alteration of their terms of employment and with the benefit of their
    experience: at p. 462.
Sorel
also holds that there is an implied term
    an employee will be given credit for their years of service with the vendor [w]hen
    a purchaser acquires a business as a going concern: at p. 462. See also
Hall
    v. Quicksilver Resources Canada Inc
.,
2015 BCCA 291, 80 B.C.L.R.
    (5th) 72, at paras. 33-34.

[71]

These parameters help explain why, after the
    sale of a business, the long-time employee who accepts re-employment with the
    purchaser will be in a better position than a long-term employee who is
    terminated and gets a job with an unrelated employer. Where a successor
    employer buys the business as a going concern, while the employee is terminated
    and enters into a new employment contract with a new employer, their connection
    to the ongoing business undertaking is continuous. Only in this situation does the
    common law give special recognition to the employees prior service with their previous
    employer.

[72]

In this situation the employees basic duties
    and responsibilities will usually remain the same after the sale, but that need
    not be the case. It is not unusual that a purchaser of an ongoing business
    offers a promotion to one or more of the vendors employees. What is necessary
    is that the employees relationship to the ongoing business undertaking continues
    uninterrupted despite the change in the identity of their employer.

(c)

The Settlement and Release Agreement is a
    relevant circumstance in the assessment of the length of the notice period

[73]

Another matter disputed before the motion judge
    was the relevance of the Settlement and Release Agreement between Ms. Manthadi
    and 637. The motion judge found it was not relevant, as it dealt with the
    relations between Ms. Manthadi and 637, not those between Ms. Manthadi and
    ASCO. In my view, the Settlement and Release Agreement is potentially relevant
    in several ways.

[74]

The termination clause in the Settlement and
    Release Agreement, on its own, did not make the Agreement relevant. At common
    law, absent express termination, an employee of the vendor is constructively
    dismissed when the business is sold. An express termination by the vendor, on
    its own, is simply redundant. Nor did Ms. Manthadis release of 637 from all
    claims in respect of her employment make the Settlement and Release Agreement
    relevant. The release clause applied only to 637. The motion judge was correct
    that the Settlement and Release Agreement with 637 did not disentitle Ms.
    Manthadi from making a claim against ASCO.

[75]

The Settlement and Release Agreement, while not
    relevant to Ms. Manthadis entitlement to notice by ASCO, was potentially
    relevant in other ways. The payment made under the Agreement could be
    considered relevant to the length of the notice period assessed against ASCO. The
    payment is part of those circumstances of the particular case the trial judge
    must consider. Both
Addison
and
Sorel
envisage a remedy that
    is fair to both parties. In my view, a payment, whatever its nature, received
    by an employee in respect of the termination of employment for which they are
    seeking some recognition from the successor employer is relevant in
    determining a remedy that is fair in all the circumstances.

[76]

As well, the factual matrix surrounding the
    making of the Agreement and the terms of the Agreement may be relevant to Ms.
    Manthadis understanding of how she would be treated on the sale of the
    business and the terms on which she entered the employ of ASCO. In this case, absent
    a valid agreement limiting her notice from 637 to her ESA entitlement, the fact
    that the amount of the payment was less than the notice a long-term employee
    might have expected could support the inference that Ms. Manthadi understood
    she would be employed by ASCO on an indefinite basis and that she would
    successfully mitigate all of the damages from her termination by 637.

[77]

The motion judge erred in concluding the
    Settlement and Release Agreement was not relevant.

(4)

Summary: applying the law to the material facts
    in dispute in this case

[78]

ASCO says it hired Ms. Manthadi as a general
    labourer on a temporary basis to help move the purchased equipment to its new location.
    Ms. Manthadi says it hired her as an indefinite employee to continue her duties
    as a welder. The parties also disagree as to whether there was an express understanding
    about whether Ms. Manthadi would be credited with her years of service with 637.
    These factual disputes were material to the application of the common law
    reviewed above.

[79]

At trial, the burden will be on ASCO to
    establish unambiguously Ms. Manthadi was a fixed term employee, engaged as a
    general labourer for the specific task of moving the purchased equipment:
Howard
,
    at para. 21.

[80]

If ASCO fails to prove Ms. Manthadi was a fixed
    term employee, it will bear the burden of displacing the presumption that Ms.
    Manthadis prior service with 637 should be recognized in the assessment of
    reasonable notice. It would be the task of the trial judge to assess the reasonable
    notice required on a consideration of all the particular circumstances, attaching
    sufficient weight to Ms. Manthadis prior experience, to arrive at a remedy
    that is fair to both parties. The Settlement and Release Agreement would be relevant
    to that assessment.

F.

Disposition

[81]

I would set aside the summary judgment granted
    by the motion judge and order that the matter proceed to trial.

[82]

The appellant, as the successful party on
    appeal, may make submissions about the costs of the appeal and of the
    proceedings below in brief submissions of no more than 3 pages to be served and
    filed within 10 days after the release of this judgment. Ms. Manthadi may serve
    and file her submissions 10 days after service of the appellants submissions.

Released: DD July 28, 2020

R.G. Juriansz J.A.

I agree. Doherty J.A.

I agree.
David M. Paciocco J.A.


