Gail Martin PLAINTIFF And: Baker's Auto Body Defendant And: John BAKER v. Joan Baker, 2020 NLSC 22

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Martin v. Baker's Auto Body Shop Limited , 2020 NLSC 22 Date : February 06, 2020 Docket : 201801G7066 Between: Gail Martin PLAINTIFF And: Baker's Auto Body Defendant And: John BAKER and Joan Baker THIRD PARTIES Before: Justice Garrett A. Handrigan Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: January 31, 2020

Summary: Gail Martin sued Baker’s Auto Body Shop Limited for wrongful dismissal. Ms. Martin applied for

summary judgment after Baker’s Auto Body filed its defence to her claim. She maintained in her interlocutory application that Baker’s Auto Body failed to show that it had a bona fide defence to her statement of claim. The Court dismissed Ms. Martin’s interlocutory application, with costs to follow the cause. It was satisfied that Baker’s Auto Body showed in an affidavit that Junior Peddle, now of the company, filed in support of the company’s response to Ms. Martin’s interlocutory application that Baker’s Auto Body has a fair case for a defence. Appearances:

Gary P. Nolan Appearing on behalf of the Plaintiff Thomas F. Hutchings Appearing on behalf of the Defendant Philip C.W. Whalen Appearing on behalf of the Third Parties Authorities Cited: CASES CONSIDERED: RoyNat Inc. v. Lester (1993), (NL SC), 105 Nfld. & P.E.I.R. 151, 38 A.C.W.S. (3d) 771(Nfld. S.C. (T.D.)); LeDrew v. Brake (1999), (NL CA), 176 Nfld. & P.E.I.R. 288, 540 A.P.R. 288 (Nfld. C.A.);Crane Canada Inc. v. Titan Holdings Ltd. (1989), (NL SC), 77 Nfld. & P.E.I.R. 244, 1989 CarswellNfld 35 (S.C.(T.D.)); Bank of Nova Scotia v. Atlantic Ocean Dinner Cruises Ltd. , 2010 NLTD(G) 132; Collins v. St.

John’s Publishing Co. (1980), 27Nfld. & P.E.I.R. 45, 1980 CarswellNfld 154 (S.C. (T.D.)); Smith v. Tamblyn (1979), (AB KB), 9 Alta. L.R. (2d) 274),1979 CarswellAlta 135 (S.C. (T.D.)) RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D REASONS FOR JUDGMENT Handrigan, J.: INTRODUCTION [1] On October 17, 2018, Gail Martin filed a statement of claim in this Court claiming that Baker’s Auto Body Shop Limitedwrongfully dismissed her from their employment. She says that Baker’s Auto Body neither gave her reasonable notice of termination nordid it pay her in lieu of notice.

She claims damages for her dismissal. [2] Ms. Martin filed an interlocutory application on July 2, 2019, “…seeking an order striking out the Defence of the Defendantand granting

Summary Judgment in favor of the Plaintiff”. Ms. Martin argues that Baker’s Auto Body “…simply denies all theparagraphs of the Statement of Claim…”; and otherwise “…does not plead any facts on which to base its denials, nor does the Defenceprovide any specific information to refute the Statement of Claim” (See paragraphs 11 & 12 of the Interlocutory Application). [3] I heard Ms. Martin’s application for

summary judgment on January 31, 2020 and reserved my judgment until now. The Issue [4] Is Ms. Martin entitled to

summary judgment in her claim against Baker’s Auto Body for wrongful dismissal? The Law Rules of the Supreme Court, 1986 [5] Rule 17.01(1) of the Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D provides, as relevant to Ms. Martin’sapplication: 17.01 (1). Where the defendant has filed a defence…the plaintiff may, on the ground that the defendant has no defence to a claim in theoriginating document…, apply to the Court to enter judgment against the defendant. Case Law [6] Rule 17.01(1) offers a measure of expediency to plaintiffs who have claims to which there are no defences.

It provides thoseplaintiffs with ready access to court and ensures that they will not simply languish in the trial queue to find out the inevitable - thedefendant has no defence to their claim and has simply bought time by insisting on compliance with the usual pre-trial processesstipulated in the Rules. [7] While Rule 17.01(1) may be advantageous for plaintiffs, it can be equally perilous for defendants: the truncated process meansthat defendants do not get a chance to put forward their defences unless they make it clear when they oppose applications under Rule17.01(1) that there is a defence to consider.

Injustices can occur because of that possibility, and it is imperative for judges dealing withRule 17.01(1) applications to give them the “good hard look” that Barry, J. of this Court referred to in RoyNat Inc. v. Lester (1993), (NL SC), 105 Nfld. & P.E.I.R. 151, 38 A.C.W.S. (3d) 771 (Nfld. S.C. (T.D.)).

[8] Rule 17.01(1) involves a two-step process: the plaintiff must show by her affidavit that she has a valid claim, and further averthat the defendant has no defence to the claim. If the plaintiff succeeds in that, the onus shifts to the defendant to “resist the claim forsummary judgment” (LeDrew v. Brake (1999), (NL CA), 176 Nfld. & P.E.I.R. 288, 540 A.P.R. 288 (Nfld. C.A.), atparagraph 6). [9] The defendant may resist the claim for

summary judgment by affidavit, in which it must “disclose facts which, if proven,would constitute a defence. It is not intended that an application for

summary judgment require the applications judge to assesscredibility, weigh evidence or make findings of fact” (LeDrew, paragraph 6). [10] This is the law I will apply to Ms. Martin’s application for

summary judgment. Analysis Background [11] Gail Martin lives in Clarenville, NL. Baker’s Auto Body has its registered office on the Main Road, in Milton, NL. While thenature of Baker’s Auto Body business is not stated in the pleadings, it is self-evident that the firm does autobody repair and maintenance.Ms. Martin says in her statement of claim that she worked for Baker’s Auto Body for ten years between 2007 and 2017. [12] Ms.

Martin also says her employment with Baker’s Auto Body was exemplary and she claims that she was the “manager of thecompany” when Baker’s Auto Body terminated her employment on November 17, 2017. These are the circumstances of her terminationas Ms. Martin states them in paragraphs 6 and 7 of the affidavit she filed in support of her application for

summary judgment: 6. I was told on or about November 13, 2017, that the company had been sold to a new owner. Even then, less than a week prior to thedate I would ultimately be dismissed, I was given no notice that my dismissal was imminent, nor that I would be dismissed at all. All Iwas told was that I would get to meet the new owner of the company at a BBQ on November 17, 2017 to celebrate the new sale and newownership. Instead, I was dismissed on that date. 7. I was not provided with written notice of termination, rather I was told verbally the morning of the 17th that I had to be gone by 1:00pm.

I was provided with only two (2) weeks of pay in lieu of notice.

I was also forced to complete my own Record of Employment upontermination, and no pay or consideration was given to my other employment income, including my vacation pay, bonus, overtime pay,and medical benefits. [13] It appears that a numbered company, 56557 Newfoundland and Labrador Ltd., acquired Baker’s Auto Body Shop Limited by ashare purchase agreement it entered into with John Baker and Joan Baker, the former principals and shareholders of Baker’s Auto Body.Junior Peddle, who now describes himself as “the Director of Baker’s Auto Body Shop Limited”, filed an affidavit to support theresponse that Baker’s Auto Body made to Ms.

Martin’s interlocutory application for

summary judgment against the company. [14] This is how Mr. Peddle describes the transaction in paragraph 4 of his affidavit: 4. That 56557 Newfoundland and Labrador Ltd. entered into a Share Purchase Agreement to purchase one hundred percent (100%) of theshares of Baker’s Auto Body Shop Limited from the Third Parties, John Baker and Joan Baker. That the closing date of the transactionwas November 17, 2017. [15] Mr. Peddle refers to John Baker and Joan Baker as “the Third Parties” because Baker’s Auto Body issued a third-party noticeon December 18, 2018 joining the Bakers in the claim that Ms.

Martin filed against Baker’s Auto Body. Mr. Peddle also filed astatement of claim against the Baker’s on the same date claiming “…that if they [Baker’s Auto Body] are found liable to the Plaintiff[Gail Martin] for any form of liability, the Defendant [Baker’s Auto Body] claims contribution and indemnity from the Third Parties[John Baker and Joan Baker] in respect of the Plaintiff’s claim against the Defendant” (Paragraph 4 of the statement of claim thataccompanies the third-party notice). [16] This is the background to Ms. Martin’s interlocutory application.

I turn now to discuss against this background, the issue that Istated earlier in these reasons. Discussion [17] In Crane Canada Inc. v. Titan Holdings Ltd. (1989), (NL SC), 77 Nfld. & P.E.I.R. 244, 1989 CarswellNfld35 (S.C. (T.D.)), Hickman, C.J. discussed Rule 17, as it applies to

summary judgment: 26. The purpose of r. 17 is to enable a plaintiff to obtain

summary judgment without trial if he can prove his claim clearly, and if thedefendant is unable to provide a bona fide defence or raise an issue against the claimant which ought to be tried. … 27. In general, where a defendant, by way of his defence and any affidavit filed in reply to the plaintiff's application for

summaryjudgment, shows that he has a fair case for a defence, or reasonable grounds for setting up a defence, or even a fair probability that he hasa bona fide defence, he ought to have leave to defend. … 28. The real question to be answered is whether the defence and any supplementary affidavits establish a triable issue or issues whichshould be determined at trial rather than by way of application for

summary judgment. If the answer to such question is in the

affirmative, then the plaintiff's application must fail. (Underlining mine) [ 18 ] Ms. Martin bases her claim for

summary judgment on the scarcity of facts in the defence that Baker’s Auto Body filed on December 21, 2018 to her claim. She notes, in particular, that “[t]he Defence does not plead any facts on which to base its denials [of, almost without exception, all of the paragraphs of the Statement of Claim], nor does the Defence provide any specific information to refute the Statement of Claim” (Paragraph 12 of Ms. Martin’s Interlocutory Application). Otherwise, Ms.

Martin says that “…there is no defence disclosed to the Statement of Claim in the Statement of Defence filed by the Defendant” (Paragraph 14 of the Interlocutory Application). [ 19 ] Ms. Martin is right about the sparseness of the defence that Baker’s Auto Body filed to her statement of claim. It is, for the most part, just a catalogue of denial. Paragraph 4 of the defence typifies its tone: 4.

The Defendant [Baker’s Auto Body] has no knowledge of the alleged facts at paragraph 3 of the Statement of Claim and absolutely denies the alleged facts at paragraphs 4,5,6,7,8,9,10, 11 and 12 of the Statement of Claim and deny any claims made therein by the Plaintiff and the Defendant puts the Plaintiff to the strict proof thereof. [ 20 ] Lest there be any ambiguity about the message that Baker’s Auto Body wanted to send to Ms. Martin about her claim, the company added these denials in paragraphs 6 and 7 of its defence: 6.

The Defendant denies completely and absolutely that the Plaintiff is entitled to the relief sought at paragraph 13 of the Statement of Claim. 7. Unless otherwise specified hereinbefore, the Defendants (sic) deny every and all claims made by the Plaintiffs (sic) and put them to the strict proof thereof. [ 21 ] There is, however, one exception to the wholesale denials that Baker’s Auto Body relies on in its defence.

In paragraph 5, it notes that it “…entered into a Share Purchase Agreement to purchase one hundred percent (100%) of the shares of Baker’s Auto Body Shop Limited from the Third Party (sic), John Baker and Joan Baker”. Regrettably, for the purposes of the defence it filed, Baker’s Auto Body does not relate that fact to the merits of any defence it might claim to Ms.

Martin’s statement of claim. [ 22 ] But the relevance of how the numbered company acquired Baker’s Auto Body is a little clearer to me when I consider other facts articulated by Junior Peddle in his affidavit supporting the response that Baker’s Auto Body filed to Ms. Martin’s interlocutory application. Let me explain. [ 23 ] On July 22, 2019, Baker’s Auto Body filed its response to the interlocutory application. It noted that Mr. Peddle, who is now director of Baker’s Auto Body, knew practically nothing about the dealings between Ms. Martin and the company at the time of Ms. Martin’s termination.

Until he purchased the shares from John Baker and Joan Baker on November 17, 2017, the Bakers were in control of the company and it was they who terminated Ms. Martin’s employment. [ 24 ] Mr. Peddle elaborated in the affidavit he filed in support of the response to the interlocutory application. He noted, in particular: • He knew that Ms. Martin worked for Baker’s Auto Body previously and informed the Bakers that he would not require Ms. Martin’s services when he acquired the business: Paragraph 5. • He did not know how the Bakers terminated Ms. Martin’s employment: Paragraph 6. • He asked the Bakers for Ms.

Martin’s personnel file when he received her statement of claim on behalf of Baker’s Auto Body, but he did not get it: Paragraph 7. • He obtained a copy of Ms. Martin’s record of employment (ROE) with Baker’s Auto Body, which showed three things of significance to him: Ms. Martin’s last day of work was November 11, 2017 (not November 17, 2017, the date he purchased the business); the reason her employment terminated was “dismissal”; and Ms.

Martin completed the ROE herself: Paragraphs 8, 9, 10 and 11. • He reviewed the defence that John Baker and Joan Baker filed to the statement of claim that Baker’s Auto Body issued to the Bakers through the third-party notice and he noted that they claim Baker’s Auto Body “…terminated [Ms. Martin] for cause ”: Paragraph 12 (Underlining mine). [ 25 ] I acknowledge that none of the statements that Mr. Peddle makes in his affidavit have, as yet, been proved in court, other than by the oath that Mr. Peddle took when he swore to them on July 19, 2019.

However, that is not the obligation that Baker’s Auto Body bears at this point. I note again what Hickman, C.J. said in Crane Canada , about the respective burdens that parties bear when dealing with

summary judgment applications: 26. The purpose of r. 17 is to enable a plaintiff to obtain

summary judgment without trial if he can prove his claim clearly, and if the defendant is unable to provide a bona fide defence or raise an issue against the claimant which ought to be tried. … [ 26 ] Baker’s Auto Body may not be able to defend at trial Ms. Martin’s claim that she was wrongfully dismissed; that remains to be seen. But the company has offered the basis for a “bona fide” defence and it has “raised an issue that ought to be tried”. In these circumstances, Ms. Martin will not be able to “prove her claim clearly” on her application for

summary judgment and it cannot succeed. [ 27 ] I note Barry, J.’s observation in Roynat that:

28. …a

summary judgment should not be allowed if there is conflicting evidence or a question of law which, following a hard look, the judge concludes is not being put forward merely to set up a sham defence and which, if found factually established by the trial judge, would form the basis for an arguable case on a matter of substance…. [ 28 ] I am satisfied that Baker’s Auto Body and Junior Peddle have put forward sufficient facts in their response to the interlocutory application and Mr.

Peddle’s affidavit in support of it to conclude, paraphrasing Barry, J., in Roynat , that they are not trying to set up a sham defence but have presented what may form the basis for an arguable case on a matter of substance. [ 29 ] I will not dispose of this matter without addressing the position that Ms. Martin maintained resolutely throughout the application: That I should decide simply on the defence that Baker’s Auto Body filed and that I should not consider claims that Mr.

Peddle made in the affidavit that he filed with his response to the application. [ 30 ] Earlier in these reasons I quoted the relevant portions of paragraphs 11 and 12 from Ms. Martin’s interlocutory application. Each paragraph notes that the statement of defence discloses no “defence”. Paragraph 13 is to a similar effect: “Therefore, there is no defence disclosed to the Statement of Claim in the Statement of Defence filed by the Defendant”. [ 31 ] Ms. Martin relies on a quotation that Hall, J. referred to in Bank of Nova Scotia v.

Atlantic Ocean Dinner Cruises Ltd . , 2010 NLTD(G) 132 from a paper authored by former Chief Justice Derek Green and Christopher Curran, for the Law Society of Newfoundland and Labrador’s Bar Admission Course: 25. Additionally, Chief Justice Green and Mr. Curran point out that “…the current rule does not appear to allow, as an alternative to showing a good defence, the disclosure of other facts that could theoretically be a defence even if not pleaded. Rule 17 now enables a plaintiff to obtain

summary judgment unless the defendant can show a good defence within the pleadings as drafted. … (Italics in Bank of Nova Scotia , with underlining by Ms. Martin in the memorandum she filed with her interlocutory application). [ 32 ] In Bank of Nova Scotia , I note that Hall, J. refused to consider a potential defence that the second defendant tried to raise against the plaintiff in answer to the latter’s application for

summary judgment. In doing so, Hall, J. also noted several times, not only that the second defendant had failed to plead the defence he now wanted to argue, but he had not sought leave “…to amend…[his] defence to assert this ground” (paragraph 28). The implication in his further comment about the defendant not applying to amend his defence is that Hall, J. might have allowed the amendment, if the second defendant had asked leave to include it in his defence, before trying to assert it for the first time when answering the application for

summary judgment. [ 33 ] I acknowledge that it is important for a defendant to put all defences he intends to rely on in the defence that he files. But the position Ms. Martin takes is too rigid and dogmatic to withstand the scrutiny that a case like this requires. First, Ms. Martin’s position about the exclusivity of the filed defence as the only opportunity a defendant has to answer an application for

summary judgment does not arise by implication from Rule 17.01. I set out the relevant parts of Rule 17.01 (1) earlier in these reasons so I will not repeat it here. [ 34 ] Furthermore, I note that Rule 17.02 which sets out how this Court may deal with an application for

summary judgment gives some credence to the claim that Baker’s Auto Body makes to rely on Junior Peddle’s affidavit. For example, Rule 17.02 (

a) allows the Court to “…give such directions as may be required for the examination of any party or witness, or for the production of any book or document or copy thereof, or for the making of any further inquiries ”. Or the Court may, as Rule 17.02 (

k) says “…grant any other order as it thinks just”. (Underlining mine) [ 35 ] The whole of Rule 17.02 appears to afford a considerable latitude to this Court in dealing with applications for

summary judgment; but these two paragraphs, in particular, seem to confer a broad discretion in how it handles applications for

summary judgment, both procedurally and on their merits. [ 36 ] I quoted earlier from Hickman, C.J.’s judgment in Crane Canada. I underlined two parts in that quotation in which the learned chief justice stated that a defendant could meet a plaintiff’s application for

summary judgment by relying on “his defence and any affidavit filed in reply to the plaintiff's application for

summary judgment ” or on his “defence and any supplementary affidavits”. (Underlining here and in earlier quotation in this judgment is mine). It appears that Hickman, C.J. would have allowed Junior Peddle to rely on the affidavit he filed with his response to Ms. Martin’s interlocutory application. I do, too and I would not have been surprised if Hickman, C.J. had allowed him to resort to it to answer Ms. Martin’s application. Let me explain why. [ 37 ] Mr. Peddle’s numbered company, 56557 Newfoundland and Labrador Ltd., did not buy the business assets of Baker’s Auto Body Shop Limited.

It bought the shares of that company from John Baker and Joan Baker, the shareholders and principals of Baker’s Auto Body Shop Limited. Mr. Peddle advised the Bakers that he did not require Ms. Martin’s services when he took over the business, so they terminated her. However, Ms. Martin sued Baker’s Auto Body, not the Bakers. Mr. Peddle whose company now owns Baker’s Auto Body must now defend Ms. Martin’s claim, without it appears (not surprisingly), knowing fully what transpired between the Bakers and Ms. Martin over her termination. [ 38 ] Moreover, Mr.

Peddle and the Bakers are now at odds over who should be liable for Ms. Martin’s termination, such that Baker’s Auto Shop issued a statement of claim against the Bakers as third parties to Ms. Martin’s claim against the company. In the meantime, Mr. Peddle appears to have inquired about Ms. Martin’s termination, to the extent possible for him in the early stages of these proceedings; and he believes based on his inquiries that Baker’s Auto Body may have a defence to Ms. Martin’s claim or, alternatively may have a claim against John and Joan Baker if Baker’s Auto Body is liable to Ms. Martin.

It would be unfair to disallow Baker’s Auto Body, now owned by Mr. Peddle, to grant Ms. Martin’s

summary judgment application and not allow the company to maintain a substantial defence, if it has one. [ 39 ] Of course, to meet Ms. Martin’s application for

summary judgment, Baker’s Auto Body does not have to prove its defence. It must, as Hickman, C.J. said in Crane Canada , show “that…[it] has a fair case for a defence, or reasonable grounds for setting up a

defence, or even a fair probability that…[it] has a bona fide defence”; and if Baker’s Auto Body does that, it “ought to have leave todefend”. [40] I add one other observation: While Ms. Martin has claimed specified damages in her statement of claim, her claim is not for aliquidated amount. In the absence of contractual terms dealing with notice, employers are required to give employees reasonable noticeof their intention to terminate them. The reasonableness of the notice to terminate is critical to computing the quantum of damages theterminated employee receives. [41] In Collins v. St.

John’s Publishing Co. (1980), 27 Nfld. & P.E.I.R. 45, 1980 CarswellNfld 154 (S.C. (T.D.)), Goodridge, J.(relying on Smith v. Tamblyn (1979), (AB KB), 9 Alta. L.R. (2d) 274), 1979 CarswellAlta 135 (S.C. (T.D.)) set out 9factors that may be considered in deciding on the reasonableness of notice: age; length of service of the employee; responsibilities of theemployee; experience; status; training; qualifications of the employee; chances of alternate employment; and health of the employee(assuming that is not a factor leading to the dismissal).

Implicit in the eighth factor, “chances of alternate employment”, is theemployee’s obligation to mitigate her losses by seeking alternate employment. [42] So even if this Court ultimately finds that Baker’s Auto Body dismissed Ms. Martin wrongfully, it will then have to inquire intothe damages that Ms. Martin is entitled to, by considering some or all of the factors that Goodridge, J. set out in Collins, and otherpossible considerations as well. Additionally, it may happen during that inquiry that facts will emerge indicating that Baker’s Auto Bodymay have justifiably terminated Ms. Martin.

I will not countenance that risk. [43] Overall, I am satisfied that Baker’s Auto Body has met the onus articulated by Hickman, C.J. in Crane Canada of showing thatit has a fair case for a defence, and it should be able to defend the action. Accordingly, I dismiss Ms. Martin’s interlocutory application. Costs [44] I order that the costs of the interlocutory application are in the cause.

Summary and Disposition [45] Gail Martin sued Baker’s Auto Body Shop Limited for wrongful dismissal. Ms. Martin applied for

summary judgment afterBaker’s Auto Body filed its defence to her claim. She maintained in her interlocutory application that Baker’s Auto Body failed to showthat it had a bona fide defence to her statement of claim. [46] The Court dismissed Ms. Martin’s interlocutory application, with costs to follow the cause. It was satisfied that Baker’s AutoBody showed in an affidavit that Junior Peddle, now of the company, filed in support of the company’s response to Ms. Martin’sinterlocutory application that Baker’s Auto Body has a fair case for a defence.

Order [47] In the result, I order that: 1) The interlocutory application filed on July 2, 2019 is dismissed. 2) Costs are in the cause. _____________________________ Garrett A. Handrigan Justice