Gillespie v., 2012 ABQB 105

Court of Queen ’ s Bench of Alberta Citation: Gillespie v. 1200333 Alberta Ltd., 2012 ABQB 105 Date: 20120216 Docket: 1103 09982 Registry: Edmonton Between: Bonita Gillespie Appellant - and - 1200333 Alberta Ltd. Respondent _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice J.M. Ross _______________________________________________________ Appeal from the Judgment by The Honourable Judge J.L. Skitsko Dated the 17 th day of May, 2011 ( 2011 ABPC 167 , Docket: P1090300692) Introduction

[ 1 ] This is an appeal of a Provincial Court of Alberta decision in a wrongful dismissal action. [ 2 ] The grounds of appeal are that the Trial Judge erred in law, fact, or mixed law and fact in concluding: 1. that the Appellant’s post-termination conduct was sufficient to ground termination for cause; 2. that the Appellant’s post-termination conduct should factor into the calculation of reasonable pay in lieu of notice; and 3 that two weeks’ pay in lieu of termination notice provided to the Appellant was reasonable.

Facts [ 3 ] The facts referred to below are those found by the Trial Judge in his written Reasons for Judgment. [ 4 ] The Appellant (Plaintiff) is an Occupational Therapist. The Appellant had a Bachelor’s Degree in Occupational Therapy, was a member of the College of Occupational Therapists of Alberta, and had extensive experience in the healthcare field, particularly in mental health and psychiatry. [ 5 ] The Respondent operates a group of clinics known as the Primary Care Network (“PCN”). The Appellant’s supervisor until October 2007 was Mr. Mel Snihurowich. At that time, Mr.

Snihurowich left PCN and was replaced by Colleen Enns, who became the Appellant’s supervisor. [ 6 ] The Appellant was hired by the Respondent on February 1, 2007 at an annual salary of $80,000. On November 30, 2007, group benefits were added as a benefit of her employment.

When she was dismissed on February 15, 2008, her salary had increased to $83,600. [ 7 ] The circumstances leading to the dismissal as found by the Trial Judge were as follows. [ 8 ] On February 6, 2008, one of the doctors that the Appellant reported to expressed reservations about the way she had dealt with his nurse and the way in which a patient form was completed. Following this event, the Appellant’s supervisor, Ms.

Enns, met with the Appellant to discuss the issue. [ 9 ] On February 11, 2008, the Appellant, when speaking to a newly hired social worker for one of the PCN clinics, used harsh words in expressing her surprise over the hiring of the social worker. The incident was reported to a supervisor, and on February 12, 2008, the Appellant met with Ms. Enns and Ms. Diane Walker, Manager of an associated clinic. The Appellant admitted the statements and was chastised by Ms. Enns and Ms. Walker. The Appellant became extremely agitated during the course of the meeting to the point that she was sent home for two days by Ms.

Enns and told to return on February 15, 2008. [ 10 ] Prior to her departure from the office on February 12, 2008, the Appellant was given a letter of reprimand which stated: “if immediate and sustained improvement in your behaviour is not realized, you will be subject to disciplinary action up to and including termination of your employment.” [ 11 ] When the Appellant returned to the office on the morning of February 15, 2008, she was dismissed effective immediately.

She was given two weeks’ pay and instructed to clear out her office and vacate the office. [ 12 ] The Appellant returned to her office and “literally cleaned out her office and desk, taking many personal items and

memorabilia.” She was stunned and devastated. [ 13 ] One of the groups of items taken by the Appellant was a number of letters from patients, saying complimentary things about her. The Trial Judge found that some of the letters identified PCN patients by name and contained their address, Alberta Health Care number, and other identification numbers.

This was confidential information that the Appellant was not entitled to remove from the clinic, including after termination of her employment, pursuant to Non-disclosure Agreements signed by the Appellant on February 1, 2007 and April 25, 2007. [ 14 ] Initially, the Respondent relied on communication difficulties and interpersonal conflicts as the reason for the Appellant’s dismissal. At this time, the Respondent was not aware that the Appellant had removed documents containing confidential information.

Many months later, the Respondent discovered that “letters containing such confidential and sensitive information had been permanently removed from the office.” The Respondent relied upon this post-dismissal discovery of this information as further cause for dismissal. [ 15 ] The Trial Judge held that the evidence of communication difficulties and interpersonal conflicts was insufficient to constitute grounds for

summary dismissal, and further, that the Respondent’s termination of the Appellant on these grounds was unreasonable in that she was not given a reasonable opportunity to correct her behaviour. This holding is not challenged in this appeal. Standard of Review [ 16 ] On questions of law, the standard of review is correctness. On findings of fact, appellate courts are to defer to a Trial Judge’s findings and should not interfere unless the Trial Judge made a palpable and overriding error.

Questions of mixed fact and law are subject to a standard of review of palpable and overriding error, unless the Trial Judge has made an extricable error in principle, which would amount to an error of law subject to review on the standard of correctness ( Housen v. Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235 at para. 36 ).

Ground of Appeal #1: The Trial Judge erred in law, fact, or mixed law and fact in concluding that the Appellant ’s post-termination conduct was sufficient to ground termination for cause. [ 17 ] The Trial Judge indicated that the Appellant’s removal of documents raised a question as to “whether the employer had cause to terminate the Plaintiff’s employment by virtue of knowledge acquired after the dismissal” (emphasis in original). [ 18 ] The Trial Judge relied on “well settled law that an employer can rely on the after-acquired knowledge of misconduct of an employee to support an allegation that just cause for the dismissal existed at the time of the dismissal” (see Nelson v.

Champion Feed Services Inc. , 2010 ABQB 409 at paras. 57-73 ). He concluded that the Appellant’s breach of the Non-disclosure Agreements, by removing documents from the office following her termination, was a breach of a material term of her contract with the employer that justified her

summary dismissal. [ 19 ] The Trial Judge noted the arguments of Plaintiff’s counsel that, as the Plaintiff had already been terminated, the Non-disclosure Agreements were no longer binding on her, and that her removal of the documents was innocent and inadvertent.

He rejected the first argument on the ground that it “would negate the very purpose of the non-disclosure agreement once an employee was dismissed” and that “even the wording of the non-disclosure agreement counters this argument.” He held that the second argument did not assist the Plaintiff, because the removal of the documents violated a written agreement. [ 20 ] It is common ground between the Appellant and the Respondent that there is an important distinction in law between after-acquired knowledge and post-termination conduct in relation to grounds for dismissal, and that the Trial Judge did err in law in failing to draw this distinction.

After-acquired knowledge of misconduct that existed at the time of dismissal may be relied on in support of a

summary dismissal. On the other hand, there are limits on when post-termination conduct, also referred to as subsequent event evidence, can be relied upon to establish grounds for dismissal. [ 21 ] While the Respondent concedes that the Trial Judge erred in law, it argues that the error did not affect the result, as the post-termination conduct could properly be relied on in the circumstances of this case. There are two aspects to this argument. First, the

Respondent argues that, had the Trial Judge applied the correct law in relation to the admissibility of evidence of subsequent eventevidence, he would still have concluded that the evidence was properly admissible in the circumstances of this case.

Second, theRespondent argues that misconduct that occurs during the notice period should be held to constitute grounds for dismissal in the sameway as pre-termination conduct. [22] The case law with regard to the admissibility of subsequent event evidence indicates that there are two circumstances inwhich evidence of post-termination conduct can be relied upon to establish grounds for dismissal: first, when the post-terminationconduct sheds light on the reasonableness of the dismissal for cause at the time it was implemented (Cie minière Québec Cartier v.Quebec, (SCC), [1995] 2 S.C.R. 1095 at para. 13); and second, when the post-termination conduct reveals anundesirable aspect of the employee’s character, such as deceitfulness, that would itself justify his or her dismissal (Lake OntarioPortland Cement Co.

Ltd. v. Groner, (SCC), [1961] S.C.R. 553 at 564). This second category of cases in whichpost-termination conduct can be relied on is perhaps not without controversy: see the discussion in Saskatchewan Assn. of HealthOrganizations v. C.U.P.E., Local 3967, 203 L.A.C. (4th) 1 (Sask. Arb. Bd.).

However, for purposes of this appeal, I will assume thatpost-termination conduct can be relied upon in both of these circumstances. [23] The Respondent argues that the post-termination conduct of the Appellant, in removing confidential documents, demonstratedthat her dismissal on grounds of communication difficulties and interpersonal conflicts was reasonable.

The Respondent submits that theAppellant’s pre-termination conduct demonstrated a lack of tact, sensitivity, and professionalism, and that her post-termination conductof removing confidential information, which the Respondent describes as “theft”, demonstrates the reasonableness of her dismissal onthese grounds. Additionally, the Respondent argues that the “theft” demonstrates that the Appellant was capable of conduct that was notappropriate for a mental health coordinator and was incompatible with her position. [24] The problems with this argument are two-fold.

First, there is no obvious connection between an insensitive communicationstyle and removing documents in contravention of the Non-disclosure Agreements. Second, the Trial Judge made no finding that therewas such a connection or that the post-termination conduct revealed an undesirable aspect of the Appellant’s character that would justifyher dismissal.

His findings of fact are to the contrary. [25] The Trial Judge found that the evidence of personality conflicts and communication problems did not demonstrate that theAppellant’s conduct and demeanor was so incompatible with her duty or so prejudicial to the employer’s business that a dismissal waswarranted. He also made no finding that the Appellant’s removal of documents was indicative of a character flaw.

He accepted theAppellant’s evidence that she was stunned and devastated when she “literally cleaned out her office and desk, taking many personalitems and memorabilia.” [26] The ground for dismissal, as found by the Trial Judge, was that the Appellant’s breach of the Non-disclosure Agreements wasa breach of a material term of her employment contract which would prejudice the proper conduct of the employer’s business.

Thisfinding of breach of contract cannot be equated with a finding of a character flaw that would justify dismissal, especially in view of theTrial Judge’s earlier finding that the Appellant was stunned and devastated when she removed the documents from the office. [27] The Respondent has not taken issue with the Trial Judge’s factual findings, and certainly has not pointed to anything in theevidence that would indicate a palpable and overriding error by the Trial Judge.

In my view, the Trial Judge’s findings of fact do notsupport the Respondent’s argument that the subsequent event evidence was properly admissible. [28] The Respondent’s second argument that the post-termination conduct in this case constituted grounds for dismissal builds onthe Trial Judge’s finding that, even though the Plaintiff had already been terminated, the Non-disclosure Agreements continued to bebinding upon her and breach of the Agreements was grounds for dismissal.

The Respondent submits that, had the Appellant been givenworking notice, misconduct during the notice period could clearly constitute grounds for dismissal. The Appellant does not disagree.However, the Respondent adds that employees who receive pay in lieu of working notice should be held to the same standard of conductas employees who receive working notice.

The Respondent does not cite any authority for this point, which is strenuously disputed bythe Appellant. [29] In my view, the case law that deals with post-termination conduct makes it clear that the relevant dividing line in examiningconduct is the time of termination of the employment contract (whether immediate or at the conclusion of a period of working notice).Misconduct before termination and misconduct after termination are subject to different analyses in terms of relevance to the issue ofgrounds for dismissal. This is a matter of both logic and fairness.

No contracting party is entitled to fundamentally repudiate obligations

under a contract, as the employer has certainly done in terminating employment, and to afterwards require the other contracting party tocontinue to comply with his or her contractual obligations. [30] The Respondent argues that the Non-disclosure Agreements make this a special situation, as the Agreements specificallycontemplate post-termination duties not to remove documents.

The Respondent relies on the comments of the Trial Judge that a holdingthat the Non-disclosure Agreements no longer bind the employee after termination would render the Agreements meaningless. [31] I do not accept that a finding that a post-termination breach of the Non-disclosure Agreements does not constitute grounds fortermination renders the Agreements meaningless. It may be that the Non-disclosure Agreements should be treated as distinct from theemployment agreement and intended to continue to bind the Appellant after termination of her employment agreement.

If so, theRespondent could seek damages against the Appellant for breach of the Non-disclosure Agreements. Breaches of the Non-disclosureAgreements may also be relevant in professional disciplinary proceedings against the Appellant, or in proceedings against the Appellantunder privacy legislation.

There are other ways to enforce the Non-disclosure Agreements, that do not involve the illogic and unfairnessof permitting an employer to retroactively justify its repudiation of an employment contract by an employee’s post-repudiation breach. [32] I conclude that the Trial Judge erred in law in concluding that the Appellant’s post-termination conduct was sufficient toground termination for cause. The first ground of appeal has been made out.

Ground of Appeal #2: The Trial Judge erred in law, fact, or mixed law and fact in concluding that the Appellant’spost-termination conduct should factor into the calculation of reasonable pay in lieu of notice. Ground of Appeal #3: The Trial Judge erred in law, fact, or mixed law and fact in concluding that two weeks’ pay in lieu oftermination notice provided to the Appellant was reasonable. [33] I will deal with these grounds of appeal together. [34] The Trial Judge cited the factors relevant to determination of a reasonable notice period from Bardal v. Globe & Mail Ltd.(1960), (ON SC), 24 D.L.R. (2d) 140 (Ont.

H.C.J.), including the nature of the employment, the length of service, theage of the employee, and the availability of suitable similar employment.

He then listed “the most salient factors in this case”, in whichhe included not only the Bardal factors, but also the following: “[a]t the time of her dismissal the Plaintiff was dismissed without causebut after acquired knowledge gave the employer just cause for her dismissal.” He then found that the two weeks’ pay in lieu of noticewas reasonable. [35] Whether the dismissal was or was not for cause is not a factor in the Bardal list, and is not relevant to the calculation of areasonable notice period.

The reasons for judgment expressly include this in a list of factors considered by the Trial Judge in coming tothe conclusion that two weeks’ notice was reasonable. The Respondent argues that the calculation of a reasonable notice period is aquestion of mixed fact and law, and that the Trial Judge’s conclusion should be accorded deference.

But relying on cause for dismissal asa “salient factor” in determining a reasonable notice period constitutes an extricable error in principle, which is an error of law subject toreview on the standard of correctness. [36] The Trial Judge having erred in law, his assessment of reasonable notice is not entitled to deference. It, therefore, “falls to thisCourt to apply the appropriate test and determine the appropriate notice period”(Hnatiuk v. R.W. Gibson Consulting Services Ltd., 2005ABQB 78 at para. 26).

This Court’s authority to determine the period of reasonable notice where a trial judge has made an error of law isgrounded in the provisions of the Provincial Court Act, R.S.A. 2000, c. P-31, ss. 46-55. This authority is necessarily implied, because s.53(1)(

a) states that this Court “shall hear and determine an appeal”, s. 53(1.1) prohibits this Court from referring this matter back to theProvincial Court for a new trial, and s. 53(2) states that “[t]he decision of the Court of Queen’s Bench is final and cannot be furtherappealed.” Since this is a appeal on the record, pursuant to ss. 46 and 51 of the Provincial Court Act, I will re-assess the reasonablenotice period on the basis of the record before me. [37] The Appellant refers to the following factors as relevant to the assessment of reasonable notice:

1. At the time of her termination the Appellant was 52 years of age; 2. She was a highly skilled professional who held a Bachelor of Science degree in Occupational Therapy and was a member of the Alberta College of Occupational Therapists, with particular training in mental health andpsychiatry; 3. She occupied a position of responsibility and authority as the Mental Health Coordinator; 4. She received significant remuneration for her position, earning $83,600 per year (plus benefits) at the time of her dismissal; and 5.

She was unable to find comparable employment from February 2008 to September 2010, despite her best efforts and attempts atmitigation. [38] The Respondent does not take issue with any of these proposed factors, and they are consistent with the factual findings of theTrial Judge. The Trial Judge also noted the following relevant factors: 6. She held no managerial positions but would have been in a position of trust given her daily contact with patients. 7. Her length of employment was 12 months. 8.

She was not enticed or induced from her previous employment. [39] The Respondent submits that the following additional factors are also relevant: 9. The Respondent’s Policies and Procedures Reference manual stated that a termination notice would be in accordance withAlberta employment standards. The Respondent submits that this provision reflected the parties’ intention that the Appellant would beprovided with the minimum notice provided under the Alberta Employment Standards Code. 10.

The Respondent provided the Appellant with two weeks’ notice, which is double the notice required in the minimum standardscontained in the Alberta Employment Standards Code for an employee who has been employed for more that three months but less thantwo years. [40] I reject the Respondent’s argument that the minimum notice provisions of the Employment Standards Code, R.S.A. 2000, c.E-9, are determinative in this case.

A contractual provision that termination notice will accord with legislated provincial standards shouldbe interpreted as an agreement regarding minimal notice, not an agreement to exclude the implied contractual term that dismissal withoutcause requires reasonable notice. Although employers are free to make contracts that limit an employee’s notice entitlement to thestatutory minimums (see Machtinger v. HOJ Industries Ltd., (SCC), [1992] 1 S.C.R. 986, 1992 CarswellOnt 892 atparas. 33-35), any such agreement to exclude the employee’s common law protection must be clear and unambiguous.

Requiring suchclarity where an employer intends to rely on its strict rights under the Employment Standards Code accords with the objectives of theCode as summarized by the Alberta Court of Appeal in Vrana v. Procor Ltd., 2004 ABCA 126 at para. 10: The Code contains a detailed

preamble setting forth its legislative objectives. In particular, those objectives stress the importance ofemployment legislation encouraging the “fair and equitable resolution of matters arising over terms and conditions of employment”.Further and most important for purposes of this appeal, the

preamble expressly recognizes the salutary effect of open communication

between employer and employee and the vital need for each to understand their respective rights and obligations. [ 41 ] In Vrana , the Court of Appeal considered the temporary layoff provisions of the Code . It held that where an employer intends to rely on its strict rights under the Code , it needs to ensure the employee is properly advised of this intention. As such, it must inform the employee of this and point to the relevant sections of the Code on which it intends to rely in its notice to the employee ( Vrana at para 13 ). [ 42 ] In Kosowan v.

Concept Electric Ltd. , 2007 ABCA 85 , the Alberta Court of Appeal considered a termination provision in an employment contract. A clause of the employee’s employment contract provided that “[s]hould [he] be terminated for reasons other [than] cause then [he] will be entitled to advance notice or severance pay thereof in accordance with the Employment Standards Act of Alberta” ( Kosowan at para. 1 ). He was terminated without cause and was given four weeks pay in lieu of notice. He brought an action for wrongful dismissal.

Both a Master and a Justice of the Court of Queen’s bench summarily dismissed his claim on the basis that it was bound to fail, since the clause of his employment contract limited him to the monies provided for in ss. 56 and 57(1) of the Employment Standards Code . The Court of Appeal set aside the

summary judgment disposition, noting that s. 3 of the Code preserves the common law remedies of employers and employees notwithstanding any other provision in the Code ( Kosowan at para. 4 , emphasis added): The question to be decided is whether the termination clause in the letter agreement renders inapplicable s. 3(1) of the Code .

As we read it, the term of the agreement provides only that in the event of termination without cause, the Appellant is entitled to severance pay “in accordance with the Employment Standards Act of Alberta .” (It is conceded here that the reference is to the Code.) The clause does not, on its face, confine the Appellant to compensation pursuant to ss. 56 and 57(1) of the Code. On the contrary, the choice of language leaves open to the employee the ability to pursue an action.

To do so, in our opinion, would be “in accordance with the Employment Standards Code . ” The provision is clear and unambiguous . [ 43 ] Similarly, the Court in Joseph v. June Warren Publishing Ltd. , 2007 ABPC 309 , held that a clause stating “that the employer may terminate the employment without cause, subject to the employer ‘complying with its minimal obligations, if any, under the [Code]’” did not confine the employee to the notice provided for under ss. 56 and 57(1) of the Employment Standards Code (at para. 16). [ 44 ] In a subsequent case, Carrell v.

Worley Parsons Canada Ltd. , 2008 ABPC 345 , the Court held that a clause stating “that ‘the notice period or (pay in lieu of notice) will be limited to the terms of Division 8' of the Code” was enforceable and did confine the employee to the notice provided for in ss. 56 and 57(1) of the Employment Standards Code .

This suggests a clause that references the division or sections of the Code dealing with termination notice, combined with the wording “will be limited to”, is sufficiently clear and unambiguous to confine the employee to the statutory minimums and oust his or her ability to claim for higher damages for wrongful dismissal at common law.

Of course, the parties are never at liberty to contract below the statutory minimums ( Employment Standards Code , s. 4). [ 45 ] In this case, the Respondent’s Policies and Procedure Manual contained a termination clause providing that “[n]otice of termination for regular full or part-time employees will for (sic) the guidelines as set out by Albert (sic) Labour - Employment Standards.” As in Kosowan , this clause makes general reference to the Employment Standards Code , although it also references “guidelines.” “[G]uidelines”, however, is not specific enough so as to put the employee on notice that his or her rights are limited to those under Division 8 of the Code .

The Code includes s. 3, which preserves the Appellant’s ability to pursue damages for wrongful dismissal at common law. The Respondent’s choice of language is does not clearly and unambiguously confine the Appellant to the notice provided for in ss. 56 and 57(1) of the Code . [ 46 ] The Appellant submits that she was entitled to reasonable notice of her termination in the range of at least four to six months. [ 47 ] The reasonableness of the range proposed by the Appellant is supported by MacLean v. Cae Newnes Ltd. , 2001 BCSC 1515 .

The Plaintiff in that case was 48 years old and worked as a library records system coordinator. She worked for her employer for 16 months and held a Master's Degree in Library Science. She had no supervisory role. In calculating reasonable notice, the Court paid special attention to the Plaintiff’s education and age and the limited availability of employment in her field of expertise. The Court awarded six months’ reasonable notice. [ 48 ] Similar considerations in relation to a top level management position led to a longer period of reasonable notice following a

short period of employment in Wright v. Chilliwack Community Services , 2000 BCSC 972 . In that case, the Plaintiff worked for three years as the Chief Executive Officer of a social work agency. At the time of her dismissal, the Plaintiff was 56 years old and held a Master’s Degree in Social Work. In calculating the notice period the Court paid particular attention to the limited availability of similar work. The Court awarded 12 months reasonable notice. [ 49 ] The Appellant has a university degree, although a Bachelor’s Degree rather than a Master’s Degree.

She had extensive experience as an Occupational Therapist. She has many years of experience, particularly in the field of mental health and psychiatry. Despite her efforts at mitigation, she was not able to find an equivalent position for 18 months. I would assess the period of reasonable notice at the lower end of the range suggested by the Appellant, four months. [ 50 ] The Appellant is entitled to judgment in the amount of four months’ salary and benefits, less the two weeks’ pay that she received on termination and less any amount she did earn during the notice period.

If the amount so calculated exceeds the Provincial Court’s monetary jurisdiction, she is entitled only to the limit of that jurisdiction. She is also entitled to interest under the Judgment Interest Act , R.S.A. 2000, c. J-1, and to costs of the appeal and the Provincial Court trial. [ 51 ] For greater certainty,

Section 1(

a) of the Judgement Interest Act , R.S.A. 2000, c. J-1 , defines “court” as including the Provincial Court of Alberta. As such, the Provincial Court has authority to grant Judgment Interest Act interest. Under s. 9.6(1)(a)(i)(

B) of the Provincial Court Act , the Provincial Court has the jurisdiction to hear and adjudicate on any civil claim or counterclaim “for damages, including damages for breach of contract, if the amount claimed or counterclaimed, as the case may be, exclusive of interest payable under

an Act or by agreement on the amount claimed, does not exceed the amount prescribed by the regulations” (emphasis added). As such, the Provincial Court may award pre-judgment interest even though it may raise the total value of the damage award above the amount prescribed by the regulations. The award of pre-judgment interest is, therefore, made on top of the monetary limit of the Provincial Court and is not capped by that limit. Heard on the 13 th day of February, 2012. Dated at the City of Edmonton, Alberta this 16 th day of February, 2012. J.M. Ross J.C.Q.B.A. Appearances: Robert P. James Parlee McLaws LLP for the Appellant Ronald T. Smith Duncan & Craig LLP

for the Respondent