Phillips v Epcor Utilities Inc, 2017 ABQB 781

Court of Queen’s Bench of Alberta Citation: Phillips v Epcor Utilities Inc, 2017 ABQB 781 Date: 20171218 Docket: 1603 11653 Registry: Edmonton Between: Alexander Phillips Appellant - and - Epcor Utilities Inc Respondent _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice J.S. Little _______________________________________________________

Appeal from the Judgment by Assistant Chief Judge L.D. Young Filed on the 10 th day of June, 2016 Dated the 30 th day of May, 2016 ( Docket: P1490305285) I. Application [ 1 ] Mr. Phillips appeals the dismissal by AC Judge Young, following a five day trial, of his claim for payment of a bonus and return of the unvested employer contributions to his pension as a result of his constructive dismissal by Epcor. II. Factual Findings [ 2 ] Mr. Phillips is a lawyer with a number of degrees including a doctorate in juridical science. He was introduced to Epcor by a headhunter in June, 2011.

He had several meetings and discussions with Epcor personnel and did his own research on the company including its pension arrangements and bonus structure. Before signing, he reviewed an employment contract which, among other things, described his job as a Senior Policy Analyst, stated that if he left his employment before payment of his bonus he forfeited that bonus, and stated that his pension had a two year vesting period. He was hired by Epcor in late 2011.

He received a bonus in 2012 in about April when Epcor’s financials had been approved, prorated for his four months employment in 2011. [ 3 ] Shortly after his hiring, he felt some discomfort with one of the senior people at Epcor he felt treated him poorly in two meetings. In mid-2012, he reached out to another utility company, inquiring about opportunities there. Also in mid-2012, he heard rumours of a restructuring and discussed those rumours with one of his associates, Mr. Kassam, who informed him that he would likely lose his job by November 30, 2012.

He then discussed the rumours with his supervisor who told him that they were just rumours. November 30, 2012 came and went with no change to his job. [ 4 ] In December, 2012, Mr. Phillips talked to Mr. Kassam again, who told him that his department was being disbanded. By then he had heard from his contact at the other utility company that they were putting together an employment offer for him. He received that offer on his company e-mail account December 24, 2012. He accepted it January 4, 2013 with a start date of February 4, 2013. It was conditional on his security clearance and a drug test.

He did not inform Epcor of his acceptance of this offer. [ 5 ] On January 18, 2013, he inadvertently saw a fax showing a draft Epcor reorganizational chart and did not see his position on it. He then had a meeting with his supervisor who told him that nothing in the reorganization was firmed up. On January 28, 2013, he received a company-wide e-mail from the Epcor CEO explaining the rationale for the corporate restructuring. There was no mention of elimination of any jobs. That same day, Mr. Phillips served notice to Epcor that he was terminating his employment effective February 4, 2013.

His notice was headed “Notice of Employment Termination” and referred to his “anticipation” that his position would be eliminated or changed and that he wanted to discuss severance pay, holiday pay, and unpaid wages including his bonus.

Epcor responded with an e-mail that his “position had not been declared redundant and that there is no change to your current employment status” and that if he failed to return to work it would assume that he had voluntarily resigned. [ 6 ] These findings of fact are all supported by the documentation and excerpts from the trial transcripts to which the trial judge referred to support her findings that: 1 . His bonus was not within the definition of unpaid wages in the Code which covers only wages payable to the date of termination or payable to the end of a notice period.

Pursuant to his employment contract, the bonus was not payable unless Mr. Phillips was employed by Epcor at the time it became payable. It would have become payable in about April, 2013. He was not employed at Epcor in April, 2013. 2 . Had he been constructively dismissed by Epcor, he would have been entitled to a one week statutory notice or pay in lieu period under the Code and his bonus would not have been payable then either since such period would have expired in early February, 2013.

But he would have been entitled to a four month common law notice period which would have taken him to May, 2013 which would then entitle him to that bonus. 3 . Pursuant to his employment contract, the employer contributions to his pension did not vest until he had been employed for two years. He was not employed for two years and would not have been employed for two years even assuming a four month notice period. He did not provide any authority for his proposition that there was some inequity or unjust enrichment in a standard two year vesting clause, and the facts did not support his estoppel argument. 4 .

He had not been constructively dismissed by Epcor. III. Grounds of Appeal [ 7 ] Mr. Phillips argues five errors by the trial judge: 1 . That she erred in law by failing to apply the correct legal test in determining whether a bonus constituted wages under the Employment Standards Code (Code);

2 . That she erred in law by failing to apply the correct legal test for determining whether Epcor should be estopped from retaining all employer contributions to his pension plan; 3 . That she erred in her application of the second branch of the legal test for anticipatory constructive dismissal set out by the Supreme Court of Canada in Potter v New Brunswick Legal Aid Services Commission , 2015 SCC 10 ( Potter ); 4 . That she made palpable, overriding, and manifest errors in her factual findings; and 5 .

That she erred in refusing his application to proffer rebuttal evidence and thus denied the Appellant procedural fairness. IV. Standard of Review [ 8 ] The parties agree that errors of law and procedural fairness are reviewable on a standard of correctness and that errors of fact or inferences from facts are reviewable on a standard of palpable and overriding error. V. Bonus as Unpaid Wages [ 9 ] Mr.

Phillips argues that the clause in his contract that he would forfeit his bonus (STIP) if he was not employed by Epcor when it became payable is void under s. 4 of the Code: Minimum standards cannot be avoided An agreement that this Act or a provision of it does not apply, or that the remedies provided by it are not available for an employee, is against public policy and void. [ 10 ] The trial judge in considering

section 4 of the Code found: Furthermore, the Plaintiff’s employment contract does not offend

section 4 of the Code . The Plaintiff’s employment contract establishes what his wages are and is not “an agreement that [the Code] or a provision of it does not apply.” The Plaintiff was well aware that the STIP was not part of his wages if he was not employed by the Defendant at the time the STIP was paid. (Trial transcript, para 206) [ 11 ] Mr. Phillips relies on Rosscup v Westfair Foods Ltd ., 1999 ABQB 629 ( Rosscup ). The Court there found that a non- discretionary bonus, which Epcor concedes is how Mr.

Phillips’ bonus ought to be categorized, forms part of wages and must therefore be included in calculating the amount of wages payable to an employee as part of an employee’s statutory entitlement for severance under the Code.

That is one distinction the trial judge found – she was dealing not with calculating the amount of wages due during a notice period but whether in fact a bonus contractually payable only after financial statements came out constituted wages. [ 12 ] The trial judge considered a Queen’s Bench decision ( Styles v AIMCO , 2015 ABQB 621 ) where that court found that a dismissed employee was entitled to an incentive bonus on the basis of a form of bad faith on the part of an employer. But the trial judge found that Epcor in no way breached its duty to act in good faith in its contractual dealings with Mr.

Phillips that would entitle him to payment of that bonus. [ 13 ] The trial judge did not have the benefit of our Court of Appeal decision in Styles v AIMCO , 2017 ABCA 1 ( Styles ) which reversed the Queen’s Bench decision. In Styles , the Court of Appeal found that a long term incentive bonus, the payment of which is deferred and which is contingent on remaining an employee at the time of scheduled payment, did not constitute wages for the purposes of the Code and that such a provision did not offend the Code. There is no merit in Mr.

Phillips’ attempt to distinguish Styles on the basis that it dealt with a long term as opposed to a short term bonus. [ 14 ] There is no reviewable error in the trial judge’s

interpretation of the law respecting the bonus. VI. Estoppel [ 15 ] Mr. Phillips argues that the trial judge failed to properly consider his argument respecting “estoppel by shared assumption” respecting the employer’s pension contributions retained by the employer when he left Epcor because he had not been employed for the two year vesting period, even allowing for a notional four month notice period.

His argument on appeal is that when he and Epcor were negotiating his employment, because they spent considerable time evaluating his new pension entitlement against that from his previous employment, there was a shared assumption that he would receive his pension. If there is such a branch of estoppel, the trial judge found that the facts did not support it: Lastly, as to estoppel, I have already determined that the Defendant did not make representations to the Plaintiff that the Plaintiff has set out in its written argument, upon which he argues that there is some “shared assumption” between the parties.

As a result, I find there to be no basis on which the Plaintiff can argue estoppel. (Trial transcript, para 268). [ 16 ] There is evidence in the trial transcript that the two parties discussed the pension and did so on the basis of assuming that Mr. Phillips stayed to retirement age, both parties recognizing that that assumption did not amount to a “guarantee”. It is not my function here to reassess the weight given to that evidence to conclude that any representations made did not amount to a “shared assumption”. This second ground of appeal therefore fails. VII.

Anticipatory Constructive Dismissal [ 17 ] The issue as to whether Mr. Phillips was constructively dismissed is relevant only for a determination as to whether the trial

judge’s provisional assessment of damages was correct. She determined that no “salary” severance was payable because, of course, Mr. Phillips had a job before he was allegedly dismissed. But she found that had he been dismissed, Mr. Phillips would have been entitled to a four month notice period which would take him to May, 2013 and would therefore entitle him to the short term incentive plan payment which was payable in April, 2013. [ 18 ] On the issue of constructive dismissal, Mr.

Phillips argues that the trial judge erred in her application of the second branch of the test established by the Supreme Court of Canada in Potter , a case rendered after conclusion of the evidence in this trial but before argument. [ 19 ] Potter first confirms that the employee bears the burden of establishing constructive dismissal (para 31). It then sets out two branches by which this burden may be met. The first branch itself has two steps: there must be a unilateral change by the employer which is found to breach a term of the employment contract, and that term must be material.

This first branch might be considered the pre- Potter standard for constructive dismissal. [ 20 ] In Mr. Phillips’ case, he argued at trial that the single unilateral act of the employer was the December 18, 2012 Board decision to implement a restructuring plan. The trial judge properly found this not to have constituted a unilateral change to his employment contract. In fact, her decision contains the following: I am rather perplexed as to why the Plaintiff would make this argument.

As at December 18, 2012, the Plaintiff had only heard rumours of a potential restructuring, as there had been no information disseminated from the Defendant respecting same. Rather than making inquiries of his direct supervisor, Mr. Gerke, as to the validity of the rumours, the Plaintiff chose to speak to Mr. Kassam, who was not called to testify on the Plaintiff’s behalf. Mr. Kassam was not part of the regulatory affairs department … (para 218) [ 21 ] She went on to express puzzlement as well that Mr. Phillips as a highly educated professional would rely on anything Mr.

Kassam told him, as it will be remembered that he was the one who told Mr. Phillips that he would be out of a job by the end of November, 2012. [ 22 ] Potter adds a second means of determining whether constructive dismissal has occurred: 42. The second branch of the test for constructive dismissal necessarily requires a different approach. In cases in which this branch of the test applies, constructive dismissal consists of conduct that, when viewed in the light of all the circumstances, would lead a reasonable person to conclude that the employer no longer intended to be bound by the terms of the contract.

The employee is not required to point to an actual specific change in compensation, work assignments, or so on, that on its own constitutes a substantial breach. The focus is on whether a course of conduct pursued by the employer “evinces an intention no longer to be bound by the contract”…A course of conduct that does evince such an intention amounts cumulatively to an actual breach. [ 23 ] The trial judge was alive to this branch of the test, but really was left with the same actions of the employer as are relied on by Mr. Phillips under the first branch, namely the proposed reorganization.

She found (Trial transcript, para 225) that a “reasonable person” in Mr. Phillips’ position might have been concerned after receiving the January 28, 2013 e-mail, even though it asked employees to “stay the course”, but would have made inquiries as opposed to taking the risk of serving notice and later relying on having been constructively dismissed. [ 24 ] Mr. Phillips argues that Potter stands for the proposition that an employee is entitled to rely also on information unknown to him at the time to buttress a claim for constructive dismissal.

At best, this requirement comes from the minority concurring decision in Potter (para 171 ) and does not properly form a part of the second branch of the Potter test. [ 25 ] What Mr. Phillips further argues on this appeal is that Potter requires that a court look at the subsequent actions of the employer to retroactively justify the reaction of the employee. That reading of Potter is not supportable. [ 26 ] The trial judge properly analyzed the facts and drew from them justified conclusions in light of the tests established in Potter . [ 27 ] In his argument on this appeal, Mr.

Phillips relies on MacGregor v Lethbridge College , 2016 ABPC 72 which was not released at the time AC Judge Young released her decision. In MacGregor , the plaintiff was a Director of Applied Research at a college from 2008 until May, 2014. In January, 2014, he was told that the college was restructuring his department and that he would have an as yet undetermined role in that restructured department. He was invited to re-write his job description.

At a later meeting in January, he was told that his current position would be eliminated but that he would be offered what sounded like the same position, though he would report to a newly created dean position and that person would report to the body to which MacGregor formerly reported. In other words, he was being demoted. He accepted an offer from another college and successfully sued for his moving costs on the basis of constructive dismissal. [ 28 ] The case at hand bears little resemblance to MacGregor . Mr. Phillips acted on supposition about a reorganization as opposed to formal notice.

He did not sit with his employer to discuss his new role. He in fact rejected written confirmation from his employer that his job was secure. Perhaps most importantly, although not relied on by the trial judge, Mr. Phillips already had a new job when he served his notice. [ 29 ] MacGregor , of course, would not have been binding on the trial judge in any event and merely shows that constructive dismissal cases are fact driven. [ 30 ] Thus the third ground of appeal fails. VIII. Rebuttal Evidence [ 31 ] The bulk of the trial was conducted during four days from January 26 – 29, 2015.

After the defendant closed its case on the

fourth day, the plaintiff was permitted to re-take the stand to testify with respect to what counsel considered new evidence about thetoxic work environment suffered by the plaintiff. Following that brief rebuttal, the parties were discussing a date for closing argumentswhen counsel for the plaintiff advised that he might want to call additional brief rebuttal evidence and would advise opposing counsel ifthat were the case.

The trial judge reminded him that if opposing counsel did not consent, he would have to make application. [32] The matter was adjourned to February 26, 2015 but somehow did not find its way back into court until November 5, 2015. Atthat time, counsel for Mr. Phillips applied to call rebuttal evidence. The trial judge raised her concerns about the plaintiff splitting itscase and confirmed that the two proposed new witnesses had been available for the first part of the trial. Counsel for the plaintiff arguedthat their evidence was required to rebut certain denials of witnesses for the defence.

Counsel for the defence argued that it was simplyan attempt to bolster the plaintiff’s case now that the plaintiff had heard the defendant’s evidence and that the point counsel was reallytrying to make about a toxic work environment was not properly before the court, having not been pled. [33] AC Judge Young ruled that the plaintiff had been leading evidence respecting a toxic work environment during the trial – itwas not something that arose from the defendant’s case. Further, he had had an opportunity to call the proposed rebuttal witnesses whenhe originally put in his case.

She therefore refused the application to lead rebuttal evidence. [34] This ruling of the trial judge is entirely consistent with the general rules for rebuttal evidence set out by the SCC for both civiland criminal cases in R v Krause, (SCC), [1986] 2 S.C.R. 466, namely that it can be permitted where a new issue arisesin the presentation of the other’s case that could not reasonably have been anticipated and where it is necessary to ensure that “at the endof the day each party will have had an equal opportunity to hear and respond to the full submissions of the other.” In this case, the trialjudge held that the entire gist of Mr.

Phillips’ case was that he had been constructively dismissed or anticipated being dismissed forreasons that included that a senior officer did not like him. This was not something that arose from the defendant’s case. [35] Accordingly this fifth ground of appeal fails. IX. Palpable Errors in Fact Finding [36] This ground of appeal underlays the others but was argued more specifically on the basis that the trial judge focused onmitigation and failed to recognize the importance to the analysis of constructive dismissal of Mr. Phillips’ role as a policy analystcompany wide, ie.

Epcor in its reorganization planned to embed his regulatory role within just the electricity division. The trial judgefound that that is where in fact he did the bulk of his work. The Appellant argues that the evidence was that it accounted only for about50% of his work. I find that distinction to be one of degree only which is not reviewable. [37] Explicit in the trial judge’s findings of fact is that Mr. Phillips had no reason to consider himself constructively dismissedbecause there had in fact been no decision to change his role.

This determination is supportable based on the trial transcript, and thisfourth ground of appeal fails. X. Conclusion [38] AC Judge Young heard a five day trial. She received over 60 pages of written argument from the plaintiff. She issued a 60page written decision which meticulously reviewed the testimony and documentary evidence and in which she assessed that evidence inlight of the applicable legal tests.

There is nothing in the material of the Appellant to suggest that she made any errors that would justifyappellate intervention. [39] The appeal is dismissed. [40] Counsel are free to return to me within 30 days of release of this decision if they cannot agree on costs. Heard on the 14th day of December, 2017. Dated at the City of Edmonton, Alberta this 18th day of December, 2017. J.S. Little J.C.Q.B.A. Appearances: R. James/A. Phillips for the Appellant

C. Neuman, Q.C. for the Respondent