Kucera v Qulliq Energy Corporation, 2015 NUCA 02

???? ?????????? ???????? Nunavunmi Apiqhuidjutainut Uuktuffaarutit Nunavut Court of Appeal Cour d'appel du Nunavut Citation: Kucera v Qulliq Energy Corporation, 2015 NUCA 02 Date: 2015-04-24 Docket: 08-14-02-CAC Registry: Iqaluit Between: Sarah Kucera Appellant -and- Qulliq Energy Corporation Respondent _______________________________________________________ The Court: The Honourable Mr. Justice Ronald Berger The Honourable Madam Justice Patricia Rowbotham The Honourable Mr. Justice Russell Brown Memorandum of Judgment of the Honourable Madam Justice Rowbotham and the Honourable Mr. Justice Brown; Dissenting Memorandum of Judgment of the Honourable Mr. Justice Berger

Appeal from the Judgment by The Honourable Madam Justice S. Cooper Dated the 17th day of January, 2014 (2014 NUCJ 2 , 2014 NUCJ 02, Docket: 08-10-749-CVC) MEMORANDUM OF JUDGMENT (NOTE: This document may have been edited for publication) I.

INTRODUCTION [1] An employee, concerned that she may have been constructively dismissed, wrote her employer that she was “reluctantly prepared toenter into negotiations for an appropriate termination package” and would continue “to fulfil her overall responsibilities for so long asnegotiations continue and appear to be making progress.” The trial judge concluded that the letter was a repudiation of her employmentcontract which the employer accepted. The trial judge also found that the employee had not been constructively dismissed. The employeeappeals and maintains that she was dismissed without cause.

We dismiss the appeal. II. BACKGROUND [2] Ms. Kucera was hired as the Executive Assistant to the President of Qulliq Energy Corporation [Qulliq], effective July 1, 2009. Shereported directly to the President. She moved from Toronto to take the job. Qulliq is a Crown corporation responsible for the delivery ofelectrical power in Nunavut. The President, Vice-president, Corporate Legal Counsel, Corporate Secretary, and Ms. Kucera worked inIqaluit. The departments of Human Resources and Finance are in Baker Lake. [3] Relatively early in her employment, there were difficulties between Ms.

Kucera and the Director of Human Resources. In meetings,the Director expressed to Ms. Kucera concerns about the trustworthiness of the Corporate Legal Counsel and the Corporate Secretary.These were two individuals who would be working closely with Ms. Kucera. In early September, Ms. Kucera forwarded to the CorporateSecretary an email from the Director regarding arrangements for an upcoming Board of Directors meeting. The Director reprimanded herfor so doing and reminded her of their earlier conversation about the Corporate Secretary. [4] In the fall of 2009, Ms.

Kucera’s position was one of three positions downgraded from a grade G to a grade F. The downgradingwas the result of a functional review of the company and did not affect her pay or salary increases. However, her duties changedregarding the collection and distribution of briefing notes for the Minister. When the position became vacant, Ms. Kucera assumed theduties of the Corporate Secretary. At the conclusion of the six month probationary period, Ms. Kucera’s evaluations were positive andshe received a salary increase.

She was also given additional monies for performing the work of the Corporate Secretary. [5] Despite these positive aspects, the relationship between the Director and Ms. Kucera continued to deteriorate. However, the Directordid ask Ms. Kucera to be a part of the company’s bargaining team for upcoming negotiations with the union, something which the trialjudge found earned her the respect of her employer. In April 2010, the Director drew up a “complaint” against Ms. Kucera allegingharassment which was never shared with Ms. Kucera.

Mediation was proposed by the Director, but it did not go ahead in part because, inMs. Kucera’s view, it was a “sham” since the proposed mediator reported to the Director. [6] Ms. Kucera enjoyed the support of the President until June 2010, when she received a stern letter from him clarifying the terms ofher employment. The letter addressed job expectations, and the process for reviewing performance and dealing with complaints. [7] While Ms.

Kucera was on vacation, she received an email from the Corporate Legal Counsel advising her that the position ofCorporate Secretary (in which she had expressed an interest) had been posted but the competition was closing before her scheduledreturn. When she returned, she took up the matter with the President, who extended the date for applications. In the end, Ms. Kucera

decided not to apply. [8] When Ms. Kucera returned to Iqaluit in July 2010, she took a period of sick leave. By this time she was considering her future withQulliq and was discussing looking for another job. She consulted a lawyer and contemplated commencing a lawsuit against Qulliq. [9] On August 5, 2010, Ms. Kucera’s counsel sent a letter to Qulliq. The letter began: Unfortunately, recent developments have witnessed the removal of core duties from her position and a process of progressivemarginalization from the decision making process of the Corporation.

In particular, we note the following events, which should be takenas a non-exhaustive list of actions upon which our client may be in a position to rely… Among the three-page list of the employer’s actions is the following: “Our client has been subjected to significant changes in terms ofher duties, responsibilities and reporting structure, such that her overall authority and position with the Corporation has beendiminished.” (emphasis added) [10] As the penultimate paragraph of the letter gives rise to the main issue on appeal, we set it out in full: After reviewing all of the foregoing circumstances with our client we have advised her that she is in a position to pursue a claim forconstructive dismissal.

In view of the fact that the Corporation does not wish to continue the employment arrangement that our client hadpreviously enjoyed, our client is reluctantly prepared to enter in negotiations for an appropriate termination package. She is prepared toassist the Corporation by remaining in her present position and continuing to fulfil her overall responsibilities for as long as negotiationscontinue and appear to be making progress, provided that it is understood that in doing so, she is not to be taken as having waived thelegal consequences of the changes or to have condoned them.

The performance of our client’s duties is, of course, subject to thelimitations imposed by her ongoing absence from the workplace on a certified medical leave. [11] Qulliq replied by letter the following day: Much of the content of your solicitors’ [letter] is untrue and expresses not only your unwillingness to remain loyal and committed to youremployment … but also demonstrates clear insubordinate behavior such that [Qulliq] [is] unable to continue to place any level of faith inyour intentions any longer. The critical relationship of trust and confidence which must exist … has been irreparably broken ….

Considering the seriousness of your employment offence, as well as several previous indiscretions [Qulliq] has just cause for your directdismissal. Effective August 23rd, 2010 you are terminated … III. TRIAL DECISION - Kucera v Qulliq Energy Corporation, 2014 NUCJ 2 , 2014 NUCJ 02 [Kucera] [12] The trial judge found that Ms. Kucera had not been constructively dismissed and that the letter was a repudiation of theemployment relationship. The employer accepted the repudiation and the employment contract ended. Given her conclusion on thoseissues, the trial judge did not address whether Ms.

Kucera was dismissed without cause or what damages she suffered. IV. GROUNDS OF APPEAL AND STANDARD OF REVIEW [13] The appellant’s thirteen grounds of appeal can be distilled to three.

Did the trial judge err by failing to address (1) the issue ofdismissal without cause; (2) finding that the August 5, 2010, letter was a repudiation of the employment agreement; and (3) concludingthat the appellant had not been constructively dismissed? [14] A trial judge’s statement of the law of constructive dismissal is reviewable on the correctness standard, but a finding that the testwas met is reviewable on the standard of palpable and overriding error. A failure to consider relevant evidence or considering irrelevantevidence may be an extricable error of law reviewable on the correctness standard.

A trial judge’s findings of fact may only be interferedwith if the appellant demonstrates palpable and overriding error (Alberta Permit Pro v Booth, 2009 ABCA 146 at paras 37-39, 460 AR129).

V. ANALYSIS A. Mischaracterization of the issues [15] The statement of claim alleged that Ms. Kucera had been dismissed without just cause and constructively dismissed. The statementof defence denied that and pleaded that Ms.

Kucera’s August 5, 2010, letter “purported to assert constructive dismissal for the solepurpose of extracting severance payment from the Defendant in the face of her own resignation” and that Qulliq “accepted the Plaintiff’sresignation.” Qulliq pleaded in the alternative that the letter amounted to a repudiation of the employment relationship of fidelity andtrust, amounting to grounds for termination with cause. There was no reply to the statement of defence. [16] Ms.

Kucera asserts that the trial judge erred in failing to adjudicate on the issue of whether she was dismissed without cause. [17] There is no obligation on a trial judge to adjudicate every pleaded issue. The statement of defence clearly raised the issue of theAugust 5, 2010, letter. The trial judge recognized that depending upon the resolution of repudiation and constructive dismissal, it mightnot be necessary to address whether the appellant had been dismissed without cause. [18] We find no error in how the trial judge approached the case.

Given her determination regarding the August 5 and 6 letters, it wasunnecessary to adjudicate the remaining issues. Failure to provisionally assess damages when no substantive liability has been found isnot a reviewable error. Although it may be helpful for appellate courts in the event that a trial judge’s liability assessment is overturned,it was not an error in law to fail to do so. B.

The August 5, 2010, letter [19] For the letter to be a repudiation it must contain a clear and unequivocal intention to terminate the employment relationship(Schumacher v Toronto Dominion Bank (1997), (ON SC), 147 DLR (4th) 128 at para 209, 29 CCEL (2d) 96(OnSC); aff’d (ON CA), 173 DLR (4th) 577; 120 OAC 303, leave to appeal to SCC dismissed [Schumacher]).

Is itclear from the circumstances, viewed objectively, that the employee intends the employment relationship to end? [20] The trial judge found: By the time the August 5th letter was sent to the employer, Kucera’s discontent in the workplace had been made known to the employer.The August 5th letter was not an attempt to resolve differences. It did not leave available as an option that issues would be resolved andKucera would return to the workplace indefinitely. Kucera had decided that she no longer wanted to be employed by QEC.

The August5th letter was copied to numerous people, including members of the Board of Directors and the Minister Responsible for QEC. I viewthis as an attempt to politicize the matter and exert political pressure on QEC to resolve the matter in a manner favourable to Kucera. Theonly issue to be resolved was the terms of her departure. Kucera worked in the office of the President and for the Board of Directors and was privy to sensitive and confidential information. Theposition required a high level of trust and required that she maintain the confidence of her superiors.

It would have been impossible forthis to have been achieved had there been a return to the workplace following the August 5th letter. Accordingly, I find that the August5th letter was a repudiation of the employment contract which the employer was entitled to accept, and did accept. While the employerresponded by using the terminology of having terminated for cause, the entire circumstances must be considered to determine if this wasa termination or an acceptance of a repudiation.

When read in its entirety, the letter uses language that better reflects an acceptance of arepudiation of the employment contract by the employee (Kucera, paras 70-71). [21] The appellant submits that the letter is indistinguishable from the employee’s letter in Schumacher. However, such a letter must beconsidered in the context of its surrounding circumstances. In Schumacher, some of the employee’s responsibilities had been abruptlyassumed by another employee. Mr.

Schumacher was not given an opportunity to advise those who reported to him of the change and thisformed the basis of his claim for constructive dismissal. Ms. Kucera had already indicated her intention to seek other employment.Moreover, as the Court of Appeal in Schumacher noted at para 29, the employer and employee continued to negotiate after the employeehad sent his letter. In other words, the employer did not initially interpret the letter as an unequivocal resignation. Finally, comments on

the employee’s letter in Schumacher are obiter, given the court’s finding that the employee had been constructively dismissed. [22] The appellant contends that the Supreme Court’s recent decision in Potter v New Brunswick Legal Aid Services Commission, 2015SCC 10 , [2015] SCJ No 10 (QL), supports her position.

However, in that case the employee had been constructively dismissedand Wagner J. observed that in light of that conclusion, it was unnecessary and inadvisable to determine whether commencing an actionfor constructive dismissal would amount to a resignation. [23] We agree with the trial judge that the August 5th letter was not an attempt to resolve differences. It did not leave open an option forissues to be resolved. The letter states that Ms. Kucera would continue to work “while the parties negotiated a severance package.” At nopoint does the letter indicate that Ms.

Kucera is prepared to remain in her employment; this is not the letter of an employee who wasready, able, and willing to continue in her current position. Rather, it was the letter of an employee who had purported to imposeunilaterally upon the employer a new agreement - that she would continue in her current position only so long as, first, the employerparticipated in negotiations designed to bring about an end to the employment relationship, and secondly, such negotiations appeared tothe employee to be “making progress”. [24] We also agree with the trial judge’s observation that Ms.

Kucera’s attempt to politicize the matter by copying members of theBoard and the Minister of Energy is incongruous with a continuing employment relationship. [25] The appellant also contends that the trial judge erred in interpreting Qulliq’s letter as an acceptance of her repudiation. The trialjudge concluded that while Qulliq’s response used language consistent with termination for cause, it was necessary to consider the entirecircumstance to determine whether the employer’s letter was acceptance of Ms. Kucera’s repudiation. The trial judge found that, read asa whole, the letter reflected an acceptance of Ms.

Kucera’s repudiation, rather than termination of her employment. In our view, whilethe letter alone may not have necessarily led to that conclusion, when placed in the context of the employee’s letter of August 5, 2010,the employer’s letter, sent the following day, can reasonably be construed as acceptance of repudiation. [26] Accordingly, we find no reviewable error in the trial judge’s determination that Ms. Kucera had repudiated the employmentagreement and Qulliq had accepted the repudiation. C.

Constructive Dismissal [27] To find that an employee has been constructively dismissed the court must find unilateral changes in the employee’s circumstancesthat substantially altered the essential terms of the employee’s contract of employment. Would a reasonable person in the same situationfeel that the terms of their employment had substantially changed (Farber v Royal Trust, (SCC), [1997] 1 SCR 846 atpara 26, 145 DLR (4th) 1 [Farber])? [28] Ms. Kucera alleged four factors that supported a finding of constructive dismissal. The trial judge addressed each of them.

Withrespect to the downgrading of her position from grade G to F, the trial judge noted that Ms. Kucera received a salary increase for herduties as Executive Assistant and an additional salary increase for performing the duties of the Corporate Secretary. Ms. Kucera allegedthat her position had been “red circled”, i.e. there would be no salary increases. The trial judge observed that Ms. Kucera gave noexplanation or support for her conclusion. The trial judge accepted the evidence of the President and the Director that Ms. Kucera wouldbe eligible for future salary increases. [29] Ms.

Kucera also contended that her change in responsibilities supported a finding of constructive dismissal. Ms. Kucera wasinitially responsible for the receipt and coordination of briefing notes for the Minister. This occupied her for two to three weeks prior toeach sitting of the Legislative Assembly. In the spring of 2010 as a result of a functional review, this responsibility was transferred fromthe President’s office to a new division. The trial judge found that Ms.

Kucera continued to be responsible for preparing materials for theMinister from the office of the President, and while she now spent less time on the task, that task was not eliminated from herresponsibilities. The trial judge noted that employers must have some flexibility to restructure in response to changes and ascircumstances demand. This was the only aspect of her job description that changed and it was not a change that impacted her status. [30] Ms. Kucera asserted that she was not provided with the opportunity to apply for the position of Corporate Secretary.

However, thefacts accepted by the trial judge were that the President had extended the competition to permit her to apply and she chose not to(Kucera, para 37).

[ 31 ] Ms. Kucera also alleged that the working environment was hostile. A hostile working environment can form the basis for constructive dismissal if characterized by conflict that goes well beyond interpersonal conflicts, workplace disagreements, or criticism. Conflict will not amount to constructive dismissal if it does not prevent the employee from doing her work (Danielisz v Hercules Forwarding Inc, 2012 BCSC 1155 at para 84 , 1 CCEL (4th) 76 ). The trial judge considered the incidents and accepted that the relationship between Ms. Kucera and the Director was difficult.

She observed that despite the difficulties, there were times when the relationship was both supportive and friendly. The Director had arranged an advance in salary to offset moving costs. Ms. Kucera had been given special leave to facilitate her wedding and honeymoon and the Director had authorized her to attend more than one out of jurisdiction conference in her first year of employment. [ 32 ] The trial judge’s conclusion that the incidents relied upon by Ms.

Kucera fell short of what was required to substantiate a claim of constructive dismissal based on a hostile working environment was well founded in the evidence and is entitled to appellate deference. [ 33 ] The trial judge applied the correct legal test. She considered the relevant factors from Farber. The appellant has not demonstrated any palpable and overriding error in the trial judge’s findings of fact, nor was there a misapprehension of the evidence. We find no basis upon which to interfere with the trial judge’s conclusion that Ms. Kucera had not been constructively dismissed. VI.

CONCLUSION [ 34 ] The appellant has not persuaded us that there are any reviewable errors in the trial judge’s conclusion that the appellant had not been constructively dismissed. When placed in context, the letter of August 5, 2010, was a repudiation of her employment contract. The plain reading of the letter does not support an intention to remain in the job. Rather, it demonstrates Ms. Kucera’s intention to remain during the negotiation of a termination package. The August 6th letter was the employer’s acceptance of the repudiation. The appeal is dismissed. Written submissions only.

Memorandum filed at Iqaluit, Nunavut this 24th day of April, 2015 ________________________________________ Rowbotham J.A. ________________________________________ Brown J.A.. Berger J.A. (dissenting): [ 35 ] The appellant, Sarah Kucera [Kucera] was on a certified medical leave with pay when the respondent, Qulliq Energy Corporation [the Corporation] terminated her “for cause”. [ 36 ] The central issue on appeal was whether the trial judge misstated and misapprehended the thrust and import of the August 5 and August 6, 2010, letters.

The August 5th letter reads in part as follows: After reviewing all of the foregoing circumstances with our client, we have advised her that she is in a position to pursue a claim for

constructive dismissal. In view of the fact that the Corporation does not wish to continue the employment arrangements that our clienthad previously enjoyed, our client is reluctantly prepared to enter into negotiations for an appropriate termination package.

She isprepared to assist the Corporation by remaining in her present position and continuing to fulfil her overall responsibilities for as long asnegotiations continue and appear to be making progress, provided that it is understood that in doing so, she is not to be taken as havingwaived the legal consequences of the changes or to have condoned them. [37] The response of the Corporation the very next day is clear and unequivocal.

It denies the truth of the content of the August 5th letterwhile referencing Kucera’s alleged “clear insubordinate behaviour”; her “unwillingness to remain committed to her employment”, theCorporation’s lack of faith in her intentions, and that “the critical relationship of trust and confidence [had been] irreparably broken.” Itconcluded: “Considering the seriousness of your employment offence, as well as several previous indiscretions [the Corporation] has just cause foryour direct dismissal.

Effective August 23, 2010, you are terminated ...” [38] It took no more than 24 hours for the Corporation to respond at a time when Kucera was still employed. It is apparent that longbefore the August 6th response from the Corporation was authored, the Corporation had concluded that there was just cause to terminateKucera. The Corporation had already decided that they no longer wanted to employ Kucera. Upon receipt of the August 5th letter fromKucera’s counsel, it was certainly open to the Corporation to resile from its pre-determined intention to terminate her.

It did not. [39] Having concluded that Kucera was not constructively dismissed (the alternative plea), the trial judge at no time considered whethernotwithstanding that finding, she had been wrongfully terminated for cause. In para 73 of her reasons, the trial judge stated: Given Kucera was not constructively dismissed and the August 5th letter was a repudiation of the employment contract, it is notnecessary to address the issue of whether Kucera was wrongfully dismissed or the issue of whether Kucera suffered damages. [40] The judge’s premises were two-fold: (

a) Kucera was not constructively dismissed, and (

b) The August 5th letter was a repudiation of the employment contract. [41] It follows that if repudiation of the contract of employment was not made out, whether Kucera was or was not constructivelydismissed is of no moment. The judge would have to turn her mind to whether the burden of demonstrating “termination for just cause”was discharged by the Corporation.

That analysis was not done, nor, accordingly, was there an assessment of damages for wrongfuldismissal on the basis of termination without just cause. [42] Repudiation occurs where one party to a contract, by words or conduct, indicates to the other party that he or she no longer intendsto be bound by, or to perform, his or her obligations under the contract. Preparation to enter into negotiations for a severance package isnot tantamount to resignation or repudiation.

The letter of August 5th is bereft of a clear and unequivocal statement of intention to resignor repudiate (See Schumacher v Toronto-Dominion Bank (1997), (ON SC), 147 DLR (4th) 128 (Ont SCJ), 29 CCEL(2d) 96; and Skidd v Canada Post Corp, [1993] OJ No 446 (1993), 47 CCEL 169 (Ont Gen Div)). [43] In her reasons for decision at para 72, the trial judge stated: “The August 5, 2010 letter was a repudiation of the employment[contract] and QEC was entitled to accept it as such.” QEC did not accept it as such. It terminated the appellant for “just cause”.

Theresponse of the Corporation’s solicitor of August 6, 2010, states clearly and unequivocally, “Qulliq Energy Corporation has just cause foryour direct dismissal.

Effective August 23, 2010 you are terminated from Qulliq Energy Corporation.” It added: “As you have beenterminated, you will no longer be eligible for employment with QEC or the GN for a period of two years.” [44] The trial judge acknowledged that the employer’s response of August 6th used terminology of having terminated Kucera for cause,but concluded: “When read in its entirety, the letter uses language that better reflects an acceptance of a repudiation of the employment contract by theemployee.” (at para. 71) [45] I respectfully disagree.

As I see it, there is no express or implied acceptance by the Corporation of the alleged repudiation by

Kucera. “[You] are terminated ... [for] just cause” means what it says. [ 46 ] I am of the view that the trial judge erred in construing the appellant’s counsel’s August 5, 2010, letter as repudiation of the employment arrangement. It was also an error to construe the letter as an assertion that the appellant had been constructively dismissed.

While it is true that following dismissal for cause the Statement of Claim alleges constructive dismissal, I see that as nothing more than an alternative plea which, as set out above, is rendered moot given the trial judge’s decision not to address the issue of wrongful dismissal and the issue of whether Kucera suffered damages. [ 47 ] What is clear to me is that the Corporation unilaterally elected to terminate the employment relationship alleging just cause, which Kucera denied. That issue was never addressed by the trial judge. Appellate intervention is warranted and there must be a new trial.

Written submissions only. Memorandum filed at Iqaluit, Nunavut this 24th day of April, 2015 ________________________________________ Berger J.A. Appearances: P.G. Hunt for the Appellant R.R. Beamish for the Respondent