Zaranski v. JR Canada Restaurant Group Ltd., 2020 BCPC 49

Citation: Zaranski v. JR Canada Restaurant Group Ltd. 2020 BCPC 49 Date: 20200319 File No: C-170408 Registry: Victoria IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: TAMI ZARANSKI CLAIMANT AND: JR CANADA RESTAURANT GROUP LTD. DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE L. MROZINSKI Counsel for the Claimant: T. Martens, M.D. Raymond, Articled Student Counsel for the Defendant: M. Mark, M. Raymond, Articled Student Place of Hearing: Victoria , B.C. Dates of Hearing: February 24, 25, 26, 2020 Date of Judgment: March 19, 2020 I. Introduction

[ 1 ] On April 26, 2017, Tami Zaranski accepted the position of Financial Controller with the defendant, JR Canada Restaurant Group Ltd. (“JR Canada”). Ms. Zaranski’s employment contract (the “Contract”) set out various details of her employment including wages and benefits, and a provision entitling her to severance totalling three month’s salary in the event of dismissal without cause. [ 2 ] Lewis Gelmon is the CEO and guiding mind of JR Canada. Mr. Gelmon hired Ms. Zaranski, negotiated the terms of her Contract, and met and/or spoke with her frequently over the course of her employment.

He was also responsible for approval of all employee expense claims, including Ms. Zaranski’s. [ 3 ] From May 1, 2017 through to June 27, 2017, Ms. Zaranski worked for JR Canada out of her home office. During this period, Ms. Zaranski familiarized herself as best she could with the company, performed some of the duties and responsibilities defined in the Contract, furnished and supplied her home office, attended meetings at various locations in Victoria, and carried out other sundry errands as requested by her employer. Ms.

Zaranski filed two expense reports in May and June 2017 in which she charged her employer for various expenses associated with her employment duties, including mileage at the CRA vehicle rate of 0.54 cents per kilometre. In her first expense claim, covering the dates May 1 to May 23, 2017, Ms. Zaranski claimed mileage in the amount of $165.65. The claim was reviewed and approved by Mr. Gelmon. In the afternoon of June 24, 2017, Ms. Zaranski’s submitted her second expense report for review and approval by Mr. Gelmon. This expense report included a claim for mileage totalling $770.41. Mr.

Gelmon approved the claim but not before commenting to Ms. Zaranski that the mileage charges seemed excessive. Ms. Zaranski agreed but advised to the effect that she was not going to use her personal vehicle to do company work for free. That afternoon, both parties knew Ms. Zaranski’s mileage claims would be the subject of further discussion. [ 4 ] On Sunday, June 25, 2017, Mr. Gelmon emailed Ms. Zaranski, inviting her to meet with him the next day at 9 a.m. to discuss her expense claim. He asked her to bring her last two expense reports and the Contract. Ms.

Zaranski accepted the request by email the following morning just before 8 a.m. The June 26 meeting was, from the perspective of both parties, acrimonious. It ended abruptly and not without confusion. Ms. Zaraski was left with the impression Mr. Gelmon had told her to resign, though she testified she thought he would eventually cool off. Mr. Gelmon testified he thought Ms. Zaranski might have quit. Later that day, he sent her an email to confirm his thinking. Mr. Gelmon testified he got no response. Ms. Zaranski testified she responded in less than two hours indicating she had not quit.

She produced an email to that effect in this trial. [ 5 ] Under the impression that Ms. Zaranski had not responded to his email the previous day, Mr. Gelmon emailed Ms. Zaranski at her personal email address early in the morning of June 27 seeking a prompt meeting. He received no reply and sent another email at 10:24 a.m. requesting a meeting sometime between 1 p.m. and 3:30 p.m. Ms. Zaranski replied by email at 3:27 p.m. proposing that they meet the next day. By then, Mr. Gelmon had decided to terminate her employment. He sent Ms. Zaranski a letter of termination by email just after 6 p.m. on June 27, 2017.

The termination notice sets out two reasons for Ms. Zaranski’s dismissal. At trial, JR Canada resiled from at least one of the reasons. Ultimately, it submits it terminated Ms. Zaranski’s employment for dishonesty, insubordination and lack of response. Ms. Zaranski submits all of the defendant’s reasons for termination are without merit. [ 6 ] Ms. Zaranski brings this claim for damages for wrongful dismissal. She submits JR Canada lacked just cause to terminate her employment. Further, Ms.

Zaranski submits that the manner in which JR Canada went about dismissing her was egregious, and caused her to suffer mental and emotional distress. That is exacerbated, Ms. Zaranski submits, by the manner in which JR Canada has conducted this litigation. She seeks aggravated and punitive damages, as well as three month’s salary totalling $20,000, unpaid wages and vacation pay totalling $1,906.17, payment for invoices not yet reimbursed in the amount of $13.46, and filing and service fees. II. Issues to be Decided [ 7 ] At issue herein firstly is whether JR Canada has proven it had just cause to terminate Ms.

Zaranski’s employment. Specifically, the onus is on JR Canada to show on balance that Ms. Zaranski was dishonest “to the required degree and appropriate circumstances to permit a conclusion that (her) termination was justified.” Porta v. Weyerhaeuser Canada Ltd ., 2001 BCSC 1480 , at para. 115 . [ 8 ] If Ms. Zaranski’s dismissal was not justified, it must be determined whether the manner in which Ms. Zaranski was dismissed and/or JR Canada’s subsequent conduct merits an award for aggravated or even punitive damages. III.

Cause for Dismissal [ 9 ] In its termination notice dated June 27, 2017, JR Canada advised Ms. Zaranski her employment was terminated effective immediately for two reasons. The first was because of dishonesty, the second because of a failure to perform work as per the Contract. The author of the letter, Mr. Gelmon, charges that Ms. Zaranski breached her “duty of honesty to the company by submitting expenses which were not previously approved, and falsely stating that (she) had received such approval from an officer of the company.” Mr.

Gelmon added that “in addition, you have breached other material terms of the contract including your failure to provide regular hourly wage reconciliations and regular bank reconciliations for each restaurant as required, and failure to manage payroll as necessary.” [ 10 ] Mr. Gelmon added further that JR Canada “reserved the right to recover payments made on the basis of false information.” It is not entirely clear what Mr. Gelmon meant by this statement but it is the case that up until its closing submission, JR Canada sought damages from Ms. Zaranski to recover wages paid to her for work not performed.

At the close of the evidentiary portion of the trial, JR Canada submitted it was not proceeding on its counterclaim. Moreover, it acknowledged it owed Ms. Zaranski $1,906.17 for unpaid wages and vacation pay. JR Canada submits this should constitute the entirety of the judgment against it. [ 11 ] What I take from this, in conjunction with JR Canada’s closing submission at trial that Ms. Zaranski was dismissed for “dishonesty, insubordination and a lack of response”, is an acknowledgment by the defendant that it did not prove Ms.

Zaranski breached the terms of the Contract by failing to provide wage and bank reconciliations or managing payroll properly. In any event, having considered the evidence, I find insufficient proof on these grounds to justify Ms. Zaranski’s dismissal. [ 12 ] The only question is whether Ms. Zaranski was dismissed with cause for dishonesty and/or insubordination, in which I would include the alleged lack of response. That question requires an examination of the circumstances under which Ms. Zaranski was hired and subsequently fired.

[ 13 ] By way of background, and to place matters in context, JR Canada is a Canadian franchise owner of the American restaurant chain known as ‘Johnny Rockets’. In or around the spring of 2017, JR Canada was on the verge of opening two restaurant locations here in Victoria. It sought expressions of interest for the position of Financial Controller, and in March 2017, Ms. Zaranski submitted a resume expressing an interest in the position. [ 14 ] Ms. Zaranski had, by March 2017, been a Chartered Professional Accountant for some thirty years. In her resume, Ms.

Zaranski writes that over the previous decade, she amassed “extraordinary experience ….upholding high standards of financial management, analysis and reporting.” She was quickly hired on by JR Canada and her Contract of employment complete and signed by April 26, 2017. [ 15 ] As the parties each agree, the initial plan was that Ms. Zaranski would work out of a downtown office operated by JR Canada. In reality, she was asked and agreed to work out of her home office, for some time at least. In the result, JR Canada agreed Ms. Zaranski could purchase office furniture and supplies.

JR Canada contracted to provide Ms. Zaranski with a computer. Ms. Zaranski understandably expected the company would provide her with a printer and other items. Most importantly, Ms. Zaranski had to have access to the company’s bookkeeping software, its bank accounts, cheques and so forth. [ 16 ] When Ms. Zaranski was hired, JR Canada’s bookkeeping, banking and accounting was being performed by Ms. Bente Birchall. Like Ms. Zaranski, Ms. Birchall was working out of her home. Unlike Ms. Zaranski, Ms. Birchall was a self-employed bookkeeper who had worked for Mr. Gelmon since around 2016. [ 17 ] Ms.

Birchall testified that she started with JR Canada when it was a new company. Her job was to set up some accounting systems, ensure the bills were paid, and undertake bank reconciliations. Eventually Ms. Birchall became responsible for employee information, though never for processing payroll. By the time Ms. Zaranski was hired, Ms. Birchall was hoping to finish her work with JR Canada and retire. She expected to assist Ms. Zaranski to become oriented with all of the work she was doing with a view to taking over for her by the end of fiscal 2017. [ 18 ] Ms. Birchall testified in direct that Ms.

Zaranski did not, as she had expected, come in and take on all of her bookkeeping functions. Still, as Ms. Birchall agreed in cross-examination, she was not familiar with Ms. Zaranski’s day-to-day role in the company. I accept that Ms. Zaranski was performing many functions for JR Canada that Ms. Birchall knew nothing about. More importantly, while it is the case Ms. Zaranski did not take over general accounting or bookkeeping duties from Ms. Birchall, I accept there was never any realistic prospect of this happening as JR Canada had agreed to and was in the process of adopting a new accounting program.

That program was never available to Ms. Zaranski during her employment with the defendant. [ 19 ] There is, in my view, no basis to support Ms. Zaranski’s termination for anything related to her work product. As I have noted, while this seemed to be an issue at trial, in the end, JR Canada appears to have conceded the point. [ 20 ] The question of Ms. Zaranski’s alleged dishonesty has little bearing on her work product other than that it relates to work done, or errands done, and meetings attended while in the employ of JR Canada. In the course of carrying out these duties, Ms.

Zaranski used her personal vehicle, and charged mileage at the CRA vehicle rate. [ 21 ] As Ms. Zaranski notes, the defendant takes no issue with the substance of her mileage claim. That is, that despite both parties agreeing the mileage was high for the May 24 to June 22 period, it is not disputed that Ms. Zaranski made the trips claimed. At issue, at least initially, was whether Ms. Zaranski had received approval to claim for mileage. [ 22 ] Certainly Ms. Zaranski made no secret of her claim for mileage at the CRA vehicle rate.

In her first expense report, entered to the right of each of her claims for mileage is a reference to the CRA rate. That is missing from the second claim for reasons that went unexplained at trial. In any event, Ms. Zaranski’s mileage claims were transparent. After having her first claim reviewed and approved by Mr. Gelmon at the end of May 2017, Ms. Zaranski would have had every confidence she could continue to claim mileage, which she did again up to June 22, 2017. When Mr. Gelmon expressed concern about the high cost of this second claim, Ms.

Zaranski was clear: she had no intention of using her personal vehicle to attend to company business for free. Ms. Zaranski’s expectation, going into the June 26 meeting, was that JR Canada would resolve things by giving her a car allowance. Still, she must have wondered why Mr. Gelmon asked her to bring along her Contract. [ 23 ] The June 26 meeting took place just before 9 a.m. in a room at the Union Club where, it is apparent, Mr. Gelmon often conducted business. Both agree that as Mr. Zaranski entered, Mr. Gelmon was making notes which he continued to do even as she entered and sat down. Ms.

Zaranski thought it rude; Mr. Gelmon accepted it could have been perceived that way but that was not his intention. In any event, both agree the door was then closed and the meeting began and the subject of Ms. Zaranski’s expenses was instantly discussed. Both parties also concede they quickly and mutually acknowledged that Ms. Zaranski’s mileage claims were excessive. Where they disagree is on how the other conducted themselves during the meeting, and what was said regarding Ms. Zaranski’s mileage claim. [ 24 ] In direct examination, Ms. Zaranski described the meeting as one in which Mr.

Gelmon was instantly angry, telling her he felt he was being ripped off. She testified that as the meeting progressed, Mr. Gelmon raised his voice; he was yelling and at one point actually screamed at her. When this occurred, she testified that she lifted her hand toward Mr. Gelmon and said something like “please don’t speak to me like that or we are done here” to which Mr. Gelmon replied, “we’re done”. Ms. Zaranski recalled that as she walked out of the meeting, Mr. Gelmon said he wanted her resignation by the end of the day. She denied ever interrupting Mr.

Gelmon. [ 25 ] When cross-examined with respect to this meeting, Ms. Zaranski was asked to recall what was said about her mileage claim at the CRA vehicle rate. She said that in reply to a question from Mr. Gelmon about the claim, she told him she had discussed her mileage with Barry Lang-Hodge, an officer of JR Canada at the time she negotiated the Contract. At trial, Ms. Zaranski recalled that at some point, as she discussed her Contract with Mr. Lang-Hodge, the issue of running errands came up. She remembered telling Mr. Lang- Hodge that she would charge the CRA vehicle rate for mileage and that Mr.

Lang-Hodge said that sounded reasonable. She denied ever telling Mr. Gelmon that Mr. Lang-Hodge had given her approval to claim mileage expenses.

[26] Mr. Gelmon recalled the meeting differently. He testified that Ms. Zaranski was combative “right out of the gate” as hedescribed it. He recalled Ms. Zaranski gave him every reason why she was entitled to the expenses claimed; she was, he recalled,adamant everything she was doing was right. He recalled Ms. Zaranski telling him that Mr. Lang-Hodge had given her approval to claimmileage expenses. When he asked her to stop interrupting him, he testified that Ms. Zaranski put up her hand and said words to the effectthat “if that’s the way this is going to be, I’m out of here.” Ms.

Zaranski then left. [27] Both parties ended the meeting feeling deeply upset. Ms. Zaranski testified she left shaken, upset and surprised. She hadexpected the meeting to go quite differently. Moreover, later that afternoon she discovered she had been locked out of all of JR Canada’ssystems, including its email. She received an email message at her home email address from Mr. Gelmon just before 3 p.m., seekingconfirmation that she had resigned and seeking an immediate response. In that email, Ms. Zaranski was advised not to take any furthersteps for or on behalf of the company.

Still, she testified she was nonetheless optimistic. Even the next day, she assumed Mr. Gelmonwould cool down a bit and the two could forge on. [28] Mr. Gelmon testified that in his two decades of work he had never had an employee speak to him in the manner he says he wasaddressed by Ms. Zaranski at the June 26 meeting. When it ended, his first impression, he testified, was “did she quit?” He sat down andmade some notes of the meeting, which were entered into evidence in the trial. Within hours of the meeting, Mr. Gelmon wrote an emailto Ms.

Zaranski asking for confirmation of her “expressed intention to terminate (her) employment agreement…” Mr. Gelmon makes nomention in his notes of any such expression in the brief, approximately six minute meeting. [29] What Mr. Gelmon’s notes do reference is that Ms. Zaranski told him she had discussed her mileage charges with Mr. Lang-Hodge. Mr. Gelmon emailed Mr. Lang-Hodge right after the meeting to seek clarification. Mr. Lang-Hodge replied quickly with a notestating he had no recollection of having any kind of conversation with Ms.

Zaranski about “her mileage charging.” He added in theemail, as he also testified in court, that if he had had such a conversation, he would not have agreed without first confirming it with Mr.Gelmon, a person with whom Mr. Lang-Hodge had had a long and apparently fruitful association. [30] Having received Mr. Lang-Hodge’s note, Mr. Gelmon formed the view that Ms. Zaranski had lied to him. The thought madehim nervous as Ms. Zaranski, in her capacity as Financial Controller for JR Canada, had access to the company’s bank accounts, amongother things. Mr.

Gelmon took immediate steps to secure the company’s corporate and bank accounts and its email account. Thus Ms.Zaranski found herself shut out of the company’s email account that very afternoon. [31] Ms. Zaranski did receive Mr. Gelmon’s email around 3 p.m. on June 26, 2017. She testified she responded by email at 4:20 p.m.and produced that response, entered in this trial as Exhibit 8. Mr. Gelmon testified he did not receive the email and does not believe Ms.Zaranski actually sent it. [32] Mr. Gelmon’s next email to Ms.

Zaranski, following his missive of 3 p.m. on June 26, 2017, was sent at 9:09 a.m. on June 27,2017. In it, Mr. Gelmon asks Ms. Zaranski if she is able to meet him at the Union Club around 10 a.m. Both agree Ms. Zaranski did notreply. Mr. Gelmon sent a second email at 10:24 a.m. pointing out the lack of response to his first email, and suggesting a meetingbetween 1 p.m. and 3:30 p.m. that afternoon at the Union Club. At 3:27 p.m., Ms. Zaranski replied stating she had just seen his email.She proposed a meeting the next day, at a time convenient for Mr. Gelmon. By then, as I have noted, Mr.

Gelmon had already decided toterminate Ms. Zaranski’s employment. That termination letter was sent by email to Ms. Zaranski’s personal email address as well at 6:16p.m. on June 27, 2017. [33] In this trial, JR Canada submits that Ms. Zaranski was untruthful when she told Mr. Gelmon that Mr. Lang-Hodge had“approved” her mileage claims. It maintains that while Ms. Zaranski was insubordinate in the meeting with Mr. Gelmon, she made heremployment untenable when she subsequently failed to respond to Mr. Gelmon’s emails after the meeting until 3:27 p.m. on June 27,2017. [34] Ms. Zaranski submits she never told Mr.

Gelmon that Mr. Lang-Hodge had approved her mileage claims; only that he agreed itwas reasonable to use the CRA vehicle rate. Ms. Zaranski agrees that her meeting with Mr. Gelmon at the Union Club on June 26, 2017was acrimonious, but not on her part. Moreover, Ms. Zaranski maintains she responded to Mr. Gelmon’s email of June 26 and only sawhis penultimate email of June 27 just before responding at 3:27 p.m. Proof of Dishonesty [35] Fundamentally, this case is about dishonesty; specifically the alleged dishonesty of Ms.

Zaranski concerning the approval of hermileage claims, and her response or lack of response to Mr. Gelmon’s emails following their meeting on June 26, 2017. At issue iswhether JR Canada was justified in dismissing Ms. Zaranski for dishonesty in the circumstances. In particular, the question is whether JRCanada has proven dishonesty on Ms. Zaranski’s part, and, if so, whether it follows her dismissal is justified. [36] The question of dishonesty as a ground for dismissal is definitively considered in McKinley v. BC Tel, 2001 SCC 38 ,[2001] 2 S.C.R. 161.

At issue in McKinley is whether any dishonesty on the part of an employee is sufficient to warrant dismissal. Atparas. 48 and 49, Justice Iacobucci, writing for the whole court, held that the question whether an employer is justified in dismissing anemployee for dishonesty is contextual, and so not every instance of dishonesty will suffice.

The court holds at para. 49 that in decidingwhether dismissal for dishonesty is justified, a court must consider first whether the evidence establishes the employee’s deceitfulconduct on a balance of probabilities and secondly, if so, whether the nature and degree of the dishonesty warranted dismissal. [37] For the most part, this case turns on the first consideration; that is whether JR Canada has proven on balance that Ms. Zaranskiwas dishonest about Mr. Lang-Hodge’s alleged representation, or about having responded to Mr. Gelmon’s email on June 26, 2017. Ifthis court could be satisfied Ms.

Zaranski was untruthful about Mr. Lang-Hodge’s comments, or about her response to Mr. Gelmon’semail of June 26, 2017, in my view, in context and particularly given Ms. Zaranski’s position as Financial Controller for the defendant –a position clearly carrying a high degree of trust – there would be cause for dismissal. My view on Ms. Zaranski’s delayed response toMr. Gelmon’s two emails of June 27, 2017 is different, and I will address that later in these reasons. [38] The issue with respect to Ms. Zaranski’s alleged dishonesty is largely one of proof, or the degree of proof necessary to make out

a case of employee dishonesty. In Ram v. The Michael Lacombe Group Inc ., 2017 BCSC 212 , the court was called upon to determine whether Ms. Ram’s employer had cause to dismiss her from her lengthy employment as a cook at one of its Burger King franchises because Ms. Ram took a fish sandwich, an order of fries and a pop at the end of a shift. It was evident in that case that Ms. Ram was entitled to take the fish sandwich; at issue was whether she was dishonest in also taking the pop and fries or whether through miscommunication Ms.

Ram understood she was entitled to take those other items as well. [ 39 ] As in this case, the basis for dismissal was one of dishonesty. At para. 59, Justice Warren writes with respect to the question of proof of dishonesty as follows: 59 Where criminal conduct or dishonesty is relied on as a ground for termination, the court must engage in a vigorous assessment of the evidence and will require "particularly cogent evidence" to conclude that it is more likely than not that the misconduct actually occurred: Price v. 481530 BC Ltd. , 2016 BCSC 1940 at para. 180 ; Porta v.

Weyerhaeuser Canada Ltd. , 2001 BCSC 1480 at para. 10 . [ 40 ] The court in Ram found no just cause for Ms. Ram’s dismissal largely because her employer’s failure to properly investigate the allegations of theft. [ 41 ] In Porta v. Weyerhaeuser Canada Ltd . , 2001 BCSC 1480 , Justice Cullen also considers the question of proof on the part of an employer.

Justice Cullen writes as follows at para. 14: [ 14] In my view, the requirement of a contextual approach and an analysis of the nature and circumstances of the misconduct established by McKinley places an onus on a defendant asserting just cause to take a similar contextual approach in its investigation of misconduct and in its determination of the appropriate sanction.

Where the investigation conducted in the first instance by a defendant asserting just cause is insufficiently broad to establish the full nature and circumstances of the misconduct and thereby the ability of the court to conduct the sort of analysis envisaged in McKinley is impaired, it follows that the defendant will similarly be impeded in discharging its onus of proof in connection with its claim of just cause. [ 42 ] The investigation undertaken by the employer regarding Mr. Porta’s alleged dishonest conduct was seriously flawed as the following findings of Justice Cullen at paras. 135 and 136 evidence.

As Justice Cullen writes: [135] …the defendant's representatives went from learning of the allegation on July 9 to final judgment on July 10.

During that time they met with Porta for no more than ten to 15 minutes, failed to provide him with the information that they had, implied that he had to account for a quantity of missing cedar, failed to follow-up obvious issues touching on his authority, or at least his belief in his authority, to take the lumber, failed to inspect the wood he took, misconstrued and discounted the import of his comments about a co-employee possessing some of the wood they were apparently concerned about, and failed to review or preserve records (e.g. material release forms or sales records) that would help contextualize his conduct. [136] In considering this issue I am alive to some of the inconsistencies and apparently misleading comments that Porta made in the course of the investigation.

Against that, however, it must be remembered that he was never made fully aware of what the accusation was against him, was not given a full opportunity to give an explanation in light of the prevailing information in the possession of the defendant and may in fact have been mislead as to what the concerns giving rise to the investigation were (e.g. missing cedar). [ 43 ] In this case, JR Canada relies on Mr. Gelmon’s view that Ms. Zaranski was dishonest with him about Mr. Lang-Hodge’s so- called approval of her mileage claims.

The difficulty I find with this allegation, given how it was ultimately handled, is the uncertainty remaining over what exactly was said and by whom. In his notes made shortly after the June 26, 2017 meeting, Mr. Gelmon writes that Ms. Zaranski said she discussed her “charges” with Mr. Lang-Hodge. Both Mr. Lang-Hodge and Mr. Gelmon agree Mr. Gelmon then asked Mr. Lang-Hodge if he agreed to pay Ms. Zaranski mileage at the rate of 0.34 cents per kilometre. Of course, Mr. Lang-Hodge was certain he would not have agreed without first confirming it with Mr. Gelmon.

That, however, is a different question than whether Mr. Lang-Hodge and Ms. Zaranski ever briefly touched on the question of mileage, and whether Mr. Lang-Hodge simply stated that the CRA vehicle rate for mileage would have been a reasonable rate at which to charge for mileage. Apart from being certain he would not have approved any rate for mileage claims, viewing that as a business agreement outside of his brief, Mr. Lang-Hodge simply had no recollection of discussing mileage with Ms. Zaranski. [ 44 ] On the evidence before this court, I cannot be satisfied on balance that the evidence of Ms.

Zaranski’s dishonesty regarding her mileage is particularly cogent. In some regards, she and Mr. Gelmon are like two ships passing in the night with Mr. Gelmon certain he heard Ms. Zaranski say Mr. Lang-Hodge approved her mileage rate while Ms. Zaranski is equally certain she said only that Mr. Lang- Hodge agreed the CRA vehicle rate was reasonable. Accepting, as I do, that Mr. Lang-Hodge would not have approved or agreed that Ms. Zaranski could charge any rate for mileage, it does not follow, given his recollection, that the matter did not come up. It is possible, given Ms.

Zaranski’s evidence, that it did and Mr. Lang-Hodge simply has no recollection since he was not approving anything. [ 45 ] The evidence of Ms. Zaranski and Mr. Gelmon regarding their June 26 meeting cannot be reconciled in the most important respects. If I could be satisfied on balance that either party was lying regarding their recollections of the meeting, it would be easy to resolve this impasse. However, while both parties concluded the June 26 meeting seeing themselves in the best light, I cannot be satisfied one or the other is being entirely untruthful.

Certainly I do not accept all of the evidence of either party. For example, I find it unlikely that Mr. Gelmon was screaming at Ms. Zaranski as she testified. For one, the venue makes that prospect very unlikely: for another, having listened to Mr. Gelmon testify, it seems less likely he would have screamed or yelled at Ms. Zaranski, which is not to say he would not have raised his voice. I am convinced that Mr. Gelmon went into the meeting on the morning of June 26, 2017, upset. He summoned Ms. Zaranski to the meeting by email sent the previous day – a Sunday. This was unusual for Mr.

Gelmon; it suggests it quite likely that he did spend at least part of his weekend ruminating about the claims. I find it likely that Mr. Gelmon felt “ripped off” as Ms. Zaranski testified he told her. For her part, Ms. Zaranski is said to have been adamant her expenses were legitimate. As Ms. Zaranski testified, she told Mr. Gelmon in no uncertain terms the Friday before the meeting she was not going to use her car for company business for free. I do not doubt Ms. Zaranski put forth her views strongly as Mr. Gelmon recalls. [ 46 ] What I find most likely is that the meeting was acrimonious on both sides.

There is, in this environment, room for misunderstanding.

[ 47 ] To paraphrase from Justice Cullen’s reasons in Porta , the lack of any sort of follow up investigation in this case by JR Canada regarding Ms. Zaranski’s alleged misrepresentation means there is insufficient evidence on which this court can conclude Ms. Zaranski was dishonest to the point of justifying her dismissal. In the circumstances, once Mr. Gelmon heard from Mr. Lang-Hodge, Ms. Zaranski ought to have been given the opportunity to clarify her comments. It may have cleared matters up; it may have led to justification for her dismissal. [ 48 ] JR Canada submits it tried to give Ms.

Zaranski a chance to meet again, though Mr. Gelmon never put it to her that she lied to him about Mr. Lang-Hodge until the termination letter. Still, Mr. Gelmon sought clarification from Ms. Zaranski and a meeting twice the next day. JR Canada relies on Ms. Zaranski’s lack of response, as well as her reply email sent at 3:27 p.m. on June 27, 2017 as supporting her dismissal. [ 49 ] Again, these are issues of dishonesty and JR Canada bears the burden of proof. Mr. Gelmon does not believe Ms. Zaranski replied to his email of June 26, 2017. Ms. Zaranski entered into evidence an email she said was sent.

In the absence of any basis to suggest Ms. Zaranski not only lied about the email but also fabricated evidence before this court, what is left is Mr. Gelmon’s suspicion – far short of cogent proof on balance. Failure to Respond [ 50 ] JR Canada also asserts that Ms. Zaranski lied when she told Mr. Gelmon in her email sent at 3:27 p.m. on June 27, 2017, that she had just seen his email. I accept, as Mr. Gelmon submits, it seems unlikely Ms. Zaranski did not see his emails of that day much earlier. Ms.

Zaranski’s testimony that she was working on spreadsheets and not paying attention to her email account rings hollow. Only the day before, she was told by Mr. Gelmon in an email sent to her home email address to do no more work on behalf of the company. She responded, she testified, by saying she had not quit. In her mind, she was still working for JR Canada, yet she knew she had been locked out of JR Canada’s email account. Clearly Ms. Zaranski did not just look at her home email late in the day of June 27, 2017. It is clear, and I find that Ms. Zaranski did see Mr.

Gelmon’s first email at 9:09 am on June 27, 2017, sometime that morning. It prompted her to seek legal advice, though not necessarily because of that email. [ 51 ] Ms. Zaranski relies on Liebreich v. Farmers of North America , 2019 BCSC 1074 , at para. 88 , as authority for the proposition that employees cannot be faulted for seeking legal advice, particularly when dismissal is a distinct possibility. To paraphrase the court in McKinley at para. 54 , this would have been a particularly difficult time for Ms. Zaranski; a time where she was at her most vulnerable, and in need of legal advice.

Still, the question remains; if Ms. Zaranski did lie to Mr. Gelmon about her reason for not responding until 3:27 pm to his two emails on June 27, would that alone justify her dismissal? [ 52 ] I find it likely on balance that Ms. Zaranski did not see Mr. Gelmon’s email just before responding to it at 3:27 p.m. on June 27, 2017. I accept, as Mr. Gelmon suspected, that Ms. Zaranski was deliberately not responding to him but was obviously ready to do so by 3:27 p.m.

She was, very likely, avoiding a meeting with him that day but in my view that fact, and her prevarication in that regard, cannot serve to justify her dismissal. Given the power imbalance inherent in the employee/employer relationship, it is hardly surprising Ms. Zaranski would be reluctant to engage in person with Mr. Gelmon only the day after a very acrimonious meeting, and knowing, as she must have, that her employment relationship with JR Canada was at risk. In context, Ms.

Zaranski’s last email, even if untrue, does not rise to the level of dishonesty such that the entire employment relationship can be said to have been undermined. [ 53 ] At the same time, I accept that Mr. Gelmon had decided he was no longer interested in employing Ms. Zaranski even before her 3:27 p.m. email of June 27, 2017. For Mr. Gelmon, the lack of response by the late afternoon was too much, but that is in part because he does not believe Ms. Zaranski responded to his email the day before. In his mind, Ms. Zaranski did not communicate with him from approximately 9 a.m. on June 26, 2017.

However, I cannot be satisfied on balance that is the case: Ms. Zaranski may well have responded to Mr. Gelmon’s email in the late afternoon of June 26 as she testified. Emails are sometimes lost, or misplaced or misfiled. In the end, I find that Mr. Gelmon’s decision to terminate Ms. Zaranski’s employment was precipitous. It was based on imperfect and hastily amassed information, some of which was erroneous, such as Ms. Zaranski’s alleged breach of her Contract terms. [ 54 ] For all these reasons, I am not satisfied JR Canada has discharged its onus to prove that Ms. Zaranski was terminated with just cause. IV.

Damages for Dismissal Without Cause [ 55 ] The parties agree that s. 5.1(

d) of the Contract governs where Ms. Zaranski is dismissed by JR Canada without just cause. Pursuant to that section, JR Canada is obligated to pay to Ms. Zaranski the equivalent of three months’ salary, calculated by Ms. Zaranski to total $20,000. Additionally, as noted at the outset of these reasons, JR Canada concedes it owes Ms. Zaranski unpaid wages and vacation pay totalling $1,906.17. In the result, at a minimum, JR Canada must pay Ms. Zaranski $21,906.17 arising out of her wrongful dismissal. [ 56 ] Ms. Zaranski also claims $13.46 as payment for invoices not yet reimbursed.

There was no evidence of such an invoice at this trial, at least no one brought to the court’s attention though the matter was raised. In the result, I would dismiss this claim although if the receipt is provided to JR Canada, I expect it would be paid. In any event, this leaves Ms. Zaranski’s final claim for both aggravated and punitive damages. V. Aggravated Damages [ 57 ] Ms. Zaranski described her feelings upon be dismissed as shocking, traumatizing and emotionally devastating.

She was devastated, she testified, by the allegations of dishonesty, and the further allegation in the termination notice that she had not performed the work in the Contract. This was particularly galling as Ms. Zaranski knew, and in my view, proved at trial – though it was not her onus – that she was unable to perform the bulk of the work in question through no fault of her own. For a time, Ms. Zaranski found herself out of work and out of money. JR Canada had refused to pay out her vacation entitlement and final pay, as well as to provide her with her Record of Employment (“ROE”).

[58] As JR Canada’s early correspondence makes clear, the company took the position Ms. Zaranski had in her possession companyproperty. It withheld Ms. Zaranski’s unpaid wages and vacation pay, as well as her ROE until the property was returned. It thencounterclaimed for the return of wages it says it paid for work not performed. Still, JR Canada simply conceded it owed Ms. Zaranskiher unpaid wages and vacation pay at the end of trial; at the same time it abandoned its counterclaim. [59] Ms.

Zaranski submits that all of these actions, including the callous manner in which she was dismissed, justify as award in bothaggravated and punitive damages. [60] At para. 112 of Ram v. The Michael Lacombe Group Inc., Justice Warrant describes each head of damages as follows: [112] …Aggravated damages are compensatory; punitive damages are not. While there may be some overlap in the facts relevant toestablishing each of these heads of damage, each rests upon a different foundation and the purpose of awarding each is different.

In awrongful dismissal case, aggravated damages are awarded to compensate a plaintiff for actual damage that is caused by unfair or badfaith conduct of the employer in the manner, as distinct from the fact, of the dismissal. In contrast, the objects of punitive damages areretribution, deterrence and denunciation as opposed to compensation, and punitive damages are restricted to cases where an employer'sconduct is so malicious and outrageous that it is deserving of punishment: Vernon v. British Columbia (Liquor Distribution Branch),2012 BCSC 133; Rodrigues v.

Shendon Enterprises Ltd., 2010 BCSC 941. [61] At para. 114, Justice Warren also sets out the following lengthy but useful articulation of conditions under which an award inaggravated damages may be awarded, quoting extensively from the reasons of Skolrood, J. in George v. Cowichan Tribes, 2015 BCSC513: [236] The principles governing aggravated damages in an employment law context have been canvassed in detail by the Supreme Courtof Canada in the well-known decisions in Wallace v. United Grain Growers Ltd., (SCC), [1997] 3 S.C.R. 701 andHonda Canada Inc. v. Keays, 2008 SCC 39. [237] Recently, in Vernon v.

British Columbia (Liquor Distribution Branch), 2012 BCSC 133, Mr. Justice Goepel (as he then was)summarized the law as follows at paras. 369 - 370: [369] Aggravated damages in wrongful dismissal cases are compensatory in nature. It is an implied term of an employment contract thatan employer will act in good faith in the manner of dismissal: Beggs v.

Westport Foods Ltd., 2011 BCCA 76, 14 B.C.L.R. (5th) 1 at para48. [370] In Honda, the Supreme Court of Canada reviewed the history of the law relating to damages in case of employment termination,noting that aggravated damages must be considered in the context of a breach of the employment contract.

The court held that aggravateddamages were recoverable for breach of contract if such damages were contemplated by the parties at the time they entered the contract.As an employment contract is inherently subject to cancellation on notice, or payment in lieu of notice, damages for mental distresscaused merely by the dismissal are not recoverable since dismissal is a clear legal possibility. [238] Mr.

Justice Goepel then cited a number of passages from Honda dealing with aggravated damages (at para. 371): In Honda, Bastarache J. summarized the discussion of aggravated damages at paras. 57 to 59: [57] Damages resulting from the manner of dismissal must then be available only if they result from the circumstances described inWallace, namely where the employer engages in conduct during the course of dismissal that is "unfair or is in bad faith by being, forexample, untruthful, misleading or unduly insensitive" (para. 98). [58] The application of Fidler, 2006 SCC 30 , [2006] 2 S.C.R. 3, makes it unnecessary to pursue an extended analysis of thescope of any implied duty of good faith in an employment contract.

Fidler provides that "as long as the promise in relation to state ofmind is a part of the bargain in the reasonable contemplation of the contracting parties, mental distress damages arising from its breachare recoverable" (para. 48). In Wallace, the Court held employers "to an obligation of good faith and fair dealing in the manner ofdismissal" (para. 95) and created the expectation that, in the course of dismissal, employers would be "candid, reasonable, honest andforthright with their employees" (para. 98).

At least since that time, then, there has been expectation by both parties to the contract thatemployers will act in good faith in the manner of dismissal. Failure to do so can lead to foreseeable, compensable damages.

Asaforementioned, this Court recognized as much in Fidler itself, where we noted that the principle in Hadley "explains why an extendedperiod of notice may have been awarded upon wrongful dismissal in employment law" (para. 54). [59] To be perfectly clear, I will conclude this analysis of our jurisprudence by saying that there is no reason to retain the distinctionbetween "true aggravated damages" resulting from a separate cause of action and moral damages resulting from conduct in the manner oftermination.

Damages attributable to conduct in the manner of dismissal are always to be awarded under the Hadley principle. Moreover,in cases where damages are awarded, no extension of the notice period is to be used to determine the proper amount to be paid. Theamount is to be fixed according to the same principles and in the same way as in all other cases dealing with moral damages.

Thus, if theemployee can prove that the manner of dismissal caused mental distress that was in the contemplation of the parties, those damages willbe awarded not through an arbitrary extension of the notice period, but through an award that reflects the actual damages.

Examples ofconduct in dismissal resulting in compensable damages are attacking the employee's reputation by declarations made at the time ofdismissal, misrepresentation regarding the reason for the decision, or dismissal meant to deprive the employee of a pension benefit orother right, permanent status for instance (see also the examples in Wallace, at paras. 99-100). [62] Echoing Justice Warren’s

summary at para. 115 of the reasons in Ram, in order to establish the claim to aggravated damages inthis case, Ms. Zaranski must show JR Canada’s conduct in dismissing her was unfair or in bad faith, in the sense it was untruthful,misleading or unduly insensitive. If so, Ms. Zaranski must also show she suffered mental distress because of the way in which she wasdismissed. Employer’s Conduct

[ 63 ] Ms. Zaranski submits JR Canada was both untruthful and misleading when it stated in its termination letter that it was dismissing her both for dishonesty and breach of her employment contract. Moreover, Ms. Zaranski points out that JR Canada maintained both allegations all the way through trial, only to resile from the allegation of breach of contract in its closing submissions. Additionally, Ms.

Zaranski points to JR Canada’s withholding of her unpaid wages and vacation pay up to the present, though it conceded also at the end of trial that those were owing, and that it withheld her ROE on dubious grounds relating to the return of some alleged company property. [ 64 ] While punitive damages are an entirely separate head of damages, these same submissions are made in support of a claim for punitive damages as well. [ 65 ] With respect to the reasons for termination, there are, as Ms. Zaranski submits, two articulated in her termination letter. In the first, JR Canada writes that Ms.

Zaranski has “breached (her) duty of honesty to the company by submitting expenses which were not previously approved, and falsely stating that (she) had received such approval from an officer of the company.” This relates to Ms. Zaranski’s mileage claims, approved of by Mr. Gelmon, and Mr. Gelmon’s understanding at least that Ms. Zaranski told him Mr. Lang- Hodge had given her approval to claim the CRA vehicle rate for mileage. [ 66 ] As Mr. Gelmon made clear at trial, though he felt personally offended by Ms.

Zaranski’s claim for mileage, particular her last claim totalling $770.41, he had no intention of terminating her for that reason. Rather, he explained, he intended to outline the company’s perspective to Ms. Zaranski at their fateful meeting at the Union Club on June 26, 2017. In the event, it is clearly misleading to state, as JR Canada does in its termination notice, that Ms. Zaranski was being terminated for submitting her mileage claims. The letter goes on to state also that Ms.

Zaranski breached her duty of honesty by “falsely stating (she) had received such approval from an officer of the company.” This, of course, is a reference to what Mr. Lang-Hodge may or may not have said to Ms. Zaranski as the two were negotiating the wording of the Contract. [ 67 ] I have found JR Canada has not proven, on balance, that Ms. Zaranski lied to Mr. Gelmon. Even after trial, it is not apparent the Mr. Lang-Hodge did not, as Ms. Zaranski testified, agree that it was not unreasonable for her to charge the CRA vehicle rate for her mileage.

The matter could have been clarified had JR Canada investigated further, and even confronted Ms. Zaranski with Mr. Lang- Hodge’s email response to Mr. Gelmon. While I accept Mr. Gelmon tried to set up a meeting with Ms. Zaranski the following day, I find also that he acted hastily in terminating her employment when she suggested at 3:27 p.m. on June 27, 2017, that they meet the following day. [ 68 ] This situation is not unlike that in Ram , where at para. 116 , Ms. Ram asserts that the investigation into her dismissal was handled in an insensitive manner in that: (

a) she was not given an opportunity to explain; and (

b) the employers’ failure to ask questions might well have indicated the likelihood of a misunderstanding. [ 69 ] In this case, JR Canada took the significant step of dismissing Ms. Zaranski for dishonesty. Given her position of trust, JR Canada ought to have been much more careful before making such allegations. It ought to have been careful to include in its termination letter only those reasons for termination, rather than, as here, adding reasons such as the submission of mileage claims, that were baseless. [ 70 ] In my view, JR Canada exacerbated matters when it also alleged Ms.

Zaranski breached other material terms of the Contract, including her failure to provide regular hourly wage and bank reconciliations, as well as her failure to manage payroll. These allegations were obviously quickly and poorly examined, as Mr. Gelmon essentially concedes. It was clear at trial that there was nothing to them: something that a more than cursory investigation at the material time would have evidenced. [ 71 ] I am satisfied that JR Canada conducted itself in an unduly sensitive manner in its termination of Ms. Zaranski’s employment. In at least one regard, the notice of termination is misleading.

JR Canada never had cause to dismiss Ms. Zaranski for filing her mileage claims; this was known to Mr. Gelmon even as he authored the termination letter. Mental Distress [ 72 ] I accept, as Ms. Zaranski testified, that she was shocked by her dismissal. She described feeling traumatized, more specifically feeling emotionally devastated, particularly by the allegations of dishonesty, though not much less so by the allegations she did not do her job when it was clear – as it would have been to Ms. Zaranski at the time - that this allegation lacked merit. [ 73 ] Mr.

Gelmon may have been left in a state of confusion after the June 26 meeting at the Union Club. He may well have been left with the impression, erroneous or not, that Ms. Zaranski told him Mr. Lang-Hodge approved her use of the CRA vehicle rate. He may not have received, or seen Ms. Zaranski’s reply to his email of that day. He was clearly and not entirely unjustifiably perplexed and angered by Ms. Zaranski’s long silence on June 27, 2017, at least until 3:27 p.m. Still, I have found that Mr. Gelmon acted precipitously in dismissing Ms. Zaraski, and with undue insensitivity. I accept this caused Ms.

Zaranski significant mental distress such that an award of aggravated damages is appropriate. I award Ms. Zaranski $5,000 in aggravated damages as a result of the manner of her dismissal. VI. Punitive Damages [ 74 ] Ms. Zaranski seeks an award for punitive damages for many of the same reasons outlined above. Additional reasons include the counter claim filed by JR Canada in response to Ms. Zaranski’s claim for damages for wrongful dismissal, as well as JR Canada’s continued reliance on its original stated reasons for termination. Ms. Zaranski relies on Bailey v.

Service Corporation International (Canada) ULC , 2018 BCSC 235 , at paras. 222 to 223 , as authority for the proposition that punitive damages are available where an employer carries meritless allegations of cause for dismissal, including those that carry the taint of dishonesty, from termination to trial. [ 75 ] In Ram , at paras. 131 and 132 , Justice Warren writes as follows: [131] … unlike aggravated damages, which are compensatory in nature, punitive damages are directed towards punishment.

An award of punitive damages is "very much the exception rather than the rule" and such damages are awarded "only if there has been high-handed,

malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behavior" and where compensatory damages are insufficient to accomplish the objectives of retribution, deterrence and denunciation: Whiten v. Pilot Insurance Co. , 2002 SCC 18 at para. 94 . [132] As stated by Justice Goepel in Vernon at para. 385 : As noted in Honda , in the context of damages for conduct in the course of dismissal, care must be taken when aggravated damages have been awarded to avoid the pitfall of double compensation or double punishment for the same actions.

Punitive damages are restricted to advertent wrongful acts that are so malicious and outrageous that they are deserving of punishment on their own. [ 76 ] In Ram , Justice Warran found Ms. Ram’s employer acted impulsively and treated Ms. Ram unfairly and with undue insensitivity, but acknowledged he had awarded Ms. Ram aggravated damages for those reasons. Even though Ms.

Ram’s employer maintained it had just cause for her termination throughout the trial, Justice Warren found the employer’s level of maliciousness did not rise to the level required for an award of punitive damages. [ 77 ] By way of contrast, the court in Bailey surmised at para. 81 , that Mr. Bailey’s employer, far from having cause to terminate his employment, most likely fabricated cause. The employer’s conduct in dismissing Mr.

Bailey, an already vulnerable employee, was, the court found at para. 220, one of those exceptional cases where punitive damages are necessary and just. [ 78 ] In this case, I find the award for aggravated damages compensates Ms. Zaranski for JR Canada’s conduct in dismissing her. I find no conduct that rises to the level required to also warrant an award of punitive damages. VII. Conclusion [ 79 ] Based on the above reasons, I find Ms. Zaranski was dismissed by JR Canada without cause, in a manner that caused her to suffer undue mental distress. Ms.

Zaranski is entitled to compensation under the Contract in the amount of $20,000, aggravated damages totalling $5,000, and her unpaid wages and vacation pay in the amount of $1,906.17. Ms. Zaranski is also entitled to her reasonable costs and expenses in this litigation including filing and service fees, as well as court ordered interest. [ 80 ] If the parties are unable to agree on a time for payment, they may set the matter down for a payment hearing. ______________________________ The Honourable Judge L. Mrozinski Provincial Court of British Columbia