r v. Defence Construction Canada, 2017 ONSC 4994

CITATION : Fortier v. Defence Construction Canada , 2017 ONSC 4994 COURT FILE NO.: 16-67317 DATE: 2017/08/22 SUPERIOR COURT OF JUSTICE - ONTARIO RE: Marc Fortier, Plaintiff AND Defence Construction Canada, Defendant BEFORE: Madam Justice Robyn M. Ryan Bell COUNSEL: Melynda Layton for the Plaintiff Stephen Bird for the Defendant HEARD: May 25, 2017 reasons for decision Overview [ 1 ] Marc Fortier was employed by Defence Construction Canada (“DCC”) from May 1, 2006 until March 31, 2014 when his position as Team Leader, Construction Services, was identified for elimination and his employment was terminated. Mr.

Fortier was 63 years old. Mr. Fortier maintains that he is entitled to both his retirement allowance benefits under DCC’s retirement policy and compensation for termination of his employment in accordance with his employment contract. DCC’s position is that the parties agreed to treat the termination as a retirement. DCC has paid Mr. Fortier his retirement allowance benefits under DCC’s retirement policy and maintains that Mr. Fortier is not entitled, in addition, to payment in respect of termination of his employment. DCC seeks to recover approximately $2500 paid to Mr.

Fortier in lieu of notice on the basis that these funds were paid in error. [ 2 ] The parties agree to have their claims determined by a

summary judgment. The documents in the record are not in dispute. What is in dispute is their

interpretation. I am satisfied that I can fairly and justly adjudicate the dispute and that a

summary judgment is a timely, affordable and proportionate procedure. [ 3 ] The issues to be determined are: (

i) Is Mr. Fortier entitled to both retirement allowance benefits and compensation for termination of his employment? (ii) If Mr. Fortier is entitled to both retirement allowance benefits and compensation for termination of his employment, how is the termination payment to be calculated? Issue 1: Is Mr. Fortier entitled to both retirement allowance benefits and compensation for termination of his employment? (

a) Mr. Fortier’s employment contract [ 4 ] DCC’s original offer of employment to Mr. Fortier provided that his employment could be terminated at any time, without cause, on the provision of notice or payment in lieu of notice and severance pay in accordance with the provisions of the Canada Labour Code . The offer letter also provided for additional severance pay equivalent to one day regular wages per month of continuous service to a maximum of 130 days wages, if Mr. Fortier was employed for three months or more continuous service.

The offer letter incorporated DCC’s Human Resources “Policy and Process Manual,” found on DCC’s intranet, and set out the expectation that Mr. Fortier would familiarize himself with and abide by the policies contained in the manual. [ 5 ] Subsequent offers of reclassification and/or position to Mr. Fortier confirmed that “all other terms and conditions of [his] employment remain as stated in [Mr. Fortier’s] original letter of offer or in accordance with the policy and process manual as amended from time to time by DCC at its discretion and upon notice to the employees.” (

b) DCC’s retirement policy [ 6 ] Until March 31, 2012, DCC had a written retirement policy that provided a retirement allowance to employees who retired from DCC. DCC’s retirement policy is reproduced below: POLICY In recognition of retirement as an important turning point for all Employees, DCC recommends that Employees seek information related to their retirement well in advance of the intended date of retirement. For this reason, retirement seminars may be offered to those Employees aged 40 and over to assist in managing this transition.

Employees planning to retire from DCC are required to provide a minimum of six (6) months’ written notice to their Supervisor in order to ensure a smooth conversion of salary to pension, and the timely selection of benefits and other options which may be available to an

Employee. • Where an employee of DCC retires with an immediate annuity or an immediate annual allowance under the Public Service Superannuation Act, accrued and unused vacation leave and furlough leave will be paid out to the employee or the estate of the employee as appropriate. • DCC Employees who are hired on an indefinite basis, who are retiring with an immediate annuity or an immediate annual allowance under the Public Service Superannuation Act and who have a minimum of one (1) year of service are entitled to a retiring allowance calculated as follows:

i) One day of regular wages per month of service, calculated at the regular daily rate of wages (non-overtime), up to a maximum of one hundred and thirty (130) days regular wages; ii) Employees who have completed 25 years of continuous service will receive a maximum of one hundred and forty (140) days in lieu of the 130 days regular wages referred to above. PROCESS 1. An Employee must provide at least six (6) months of written notice of the date on which they intend to retire to their Supervisor, and a second copy of that notice to Human Resources. 2.

An Employee will arrange to meet with Human Resources to discuss Superannuation arrangements, eligibility for benefits, which may, where applicable, be continued upon premium contribution from an Employee, and any other retirement entitlements. [ 7 ] On March 13, 2012, DCC sent a memorandum to all of its employees, advising of DCC’s intention to eliminate its retirement allowance effective March 31, 2012. The memorandum stated in part: As a result of this government directive, DCC will be eliminating the Retirement Allowance policy effective March 31, 2012.

However, all entitlements you have accrued under this policy, up to that date, will be retained by you. Likewise, the resignation severance for those who were grandfathered when that policy was eliminated in July 1993, will also be retained.

As compensation for the elimination of this future entitlement after March 31, 2012, DCC will be providing additional salary increases for this that will be detailed in the upcoming memo on annual salary increases effective April 1, 2012. [ 8 ] The March 13, 2012 memorandum distinguished between DCC’s retirement allowance policy and “resignation severance” under another DCC policy predating Mr. Fortier’s employment with DCC.

DCC employees were provided with a 0.5% salary increase to compensate for the elimination of the retirement allowance benefits. [ 9 ] Employees were required to elect whether to take an immediate pay-out of their accumulated retirement benefits based on a sliding scale, or to defer payment until retirement from DCC with no further accumulation. DCC’s July 6, 2012 memorandum described the risk associated with deferring payment as follows: If you accept this offer, you will receive a definite payment now instead of waiting for a possible payment of a retirement allowance in the future.

This offer gives you the certainty that you will receive a payment now because there is no guarantee that you will choose to retire with DCC. [ 10 ] The July 6, 2012 memorandum continued: If you do not wish to receive a pay-out, your accumulated retirement allowance amount as of March 31, 2012 will be preserved and you will maintain your eligibility to receive this amount in the future, if you meet the requirements under the Retirement Policy. The amount you will receive when you retire will be calculated using your base salary as of the date of your retirement from DCC.

Of course, pursuant to the Retirement Policy, no accumulated retirement allowance will be payable upon resignation or other voluntary or involuntary termination of employment, either for cause or without cause. [ 11 ] As in the March 13, 2012 memorandum, the July 6, 2012 memorandum distinguished between resignation severance and a retirement allowance: Resignation severance provides a guaranteed payment of termination of employment, whereas a retirement allowance is only payable if an employee actually retires based on defined requirement of age and/or length of service.

Some government organizations have both of these benefits, DCC has only the retirement allowance benefit.” (

c) Mr. Fortier’s rejection of the immediate pay-out of his retirement allowance [ 12 ] Mr. Fortier did not elect to receive an immediate pay-out of his retirement allowance. His written rejection of the offer stated that he had read and understood the terms and conditions of the early pay-out offer of his accumulated retirement allowance. [ 13 ] Mr. Fortier’s evidence is that he had indicated to his supervisors that he intended to retire from DCC at age 65 and that in preparation for Mr. Fortier’s retirement, his manager registered him in a retirement seminar which Mr. Fortier attended in March 2014.

Less than a month later, DCC terminated his employment. Mr. Fortier’s position is that DCC prevented him from giving six months’ written notice by terminating his employment and that Mr. Fortier met the criteria for receipt of the retirement allowance benefits. I disagree. The retirement policy expressly requires that the employee provide a minimum of six months’ written notice and explains why written notice of this length of time is required. In the process

section of the policy, the six months’ written notice requirement is reiterated. Mr. Fortier did not provide six months’ written notice. His attendance at a retirement seminar may have signaled that he was considering whether to retire. That, however, is not the same as providing written notice of his intention to do so as he was required to

do under DCC’s retirement policy. (

d) DCC’s termination of Mr. Fortier’s employment [ 14 ] On March 31, 2014, DCC advised Mr. Fortier that his position had been identified for elimination and that his employment with DCC was terminated. Mr. Fortier was provided with a termination letter. During the March 31, 2014 meeting, Mr. Fortier made inquiries about the value of his retirement allowance benefits. Mr. Fortier was advised by DCC’s representative at the meeting and in subsequent correspondence that he was not entitled to payment of both a retirement allowance benefit and the termination payment. Mr.

Fortier maintained that he was entitled to both. Mr. Fortier then advised that “as I qualify for and am entitled to the retirement allowance of $26,087.26, I am taking that option.” Mr. Fortier elected to do so without prejudice to his right to pursue any additional entitlements. [ 15 ] At the time of his termination, Mr. Fortier had not provided six months’ written notice as required by the retirement policy. I find that for this reason, he was not entitled to the retirement allowance but for DCC being prepared to treat the termination as a retirement. (

e) Analysis [ 16 ] As the Court of Appeal for Ontario stated in Arnone v. Best Theratronics Ltd. , 2015 ONCA 63 at para. 25 , “[t]he determination of whether a contract of employment entitles an employee to the receipt of a retirement allowance where his employment has been terminated without cause is an inherently fact specific exercise.” Mr. Fortier’s position is that his employment contract does not state that he cannot receive termination pay and retirement allowance benefits; therefore, he is entitled to receive both. This was the case in Arnone , where there was no dispute that it was a term of Mr.

Arnone’s contract of employment that he would receive a retirement allowance of one week for each year of service up to 30 weeks. The Court of Appeal found that there was an implied term of the contract of employment that if an employee was terminated without cause, he would be entitled to payment of the accumulated retirement allowance; in the absence of any written term to the contrary, effect should be given to this implied term of the employment contract. (at paras. 25-27.) No written restriction existed in the contract of employment between the company and Mr.

Arnone. [ 17 ] The Court of Appeal contrasted Mr. Arnone’s employment contract with the employment contract in Moody v. Lafarge Canada Inc. , 2000 BCSC 1847 . The employment contract in Moody contained an express limitation in writing on the employee’s entitlement to receive a retirement allowance.

The offer letter to each of the employees stated that the employee was entitled to receive a retirement allowance “at your retirement (as defined in our pension plan) or in the event of your death prior to your retirement…If your employment with Lafarge is terminated for any other reason, you will not be eligible to receive this benefit.” The company terminated the employment of the plaintiffs and the court concluded that they were not entitled to the retirement allowance. [ 18 ] Mr.

Fortier’s original offer of employment incorporated, by reference, “benefits and other aspects of your employment” contained in DCC’s Policy and Process Manual. I find that the six months’ written notice requirement in the retirement policy is inconsistent with termination of an employee’s employment. I do not find that Mr.

Fortier’s contract of employment included an implied term that if he were terminated without cause, he would also be entitled to payment of the accumulated retirement allowance. [ 19 ] Even if such a term could be implied, there were express written limitations on an employee’s entitlement to receive retirement allowance benefits which made clear that an employee would not be entitled to receive both retirement allowance benefits and compensation for termination of employment. There is no dispute that DCC was entitled to eliminate its retirement allowance in March 2012.

DCC provided compensation to the affected employees and employees were offered the opportunity to take an immediate pay-out of their accumulated retirement benefits. I rely on the following for my conclusion that Mr. Fortier was provided with notice that he would not be entitled to receive retirement allowance benefits and compensation for termination: • DCC distinguished between resignation severance and a retirement allowance in its March 13 and July 6, 2012 memoranda.

In the July 6, 2012 memorandum, DCC stated that a retirement allowance would only be payable if an employee actually retires based on defined requirements of age and/or length of service. • In describing the risk associated with deferring payment of accumulated retirement benefits until retirement, DCC emphasized that the immediate pay-out offer gave the employee certainty of payment “because there is no guarantee that you will choose to retire with DCC.” • Most significantly, the July 6, 2012 included the following express limitation: “pursuant to the Retirement Policy, no accumulated retirement allowance will be payable upon resignation or other voluntary or involuntary termination of employment, either for cause or without cause.” [ 20 ] Mr.

Fortier relies on the Supreme Court of Canada’s decision in IBM Canada Limited v. Richard Waterman , 2013 SCC 70 to support his position that he is entitled to both retirement allowance benefits and termination pay. IBM had dismissed Mr. Waterman without cause on two months’ notice. At the time he was dismissed, Mr. Waterman had a vested interest in IBM’s defined benefit pension plan. The issue before the Supreme Court of Canada was whether the retirement pension benefits should be deducted from wrongful dismissal damages. Mr.

Waterman’s employment contract was silent on the issue, but it did not contain any general bar against the employee receiving full pension entitlement and employment income. The majority concluded that the employee’s benefits should not be deducted from his wrongful dismissal damages because the pension benefits were not an indemnity for wage loss, but rather a form of retirement savings. In addition, the employee’s interest in the pension bore many of the hallmarks of a property right. [ 21 ] Mr. Fortier says that like the employee in IBM , he has an accrued property right in the retirement allowance benefits.

In my view, IBM does not assist Mr. Fortier. At the time he was dismissed by IBM, Mr. Waterman had a vested interest in the pension plan. Mr. Fortier’s interest in the retirement allowance benefits was contingent upon him retiring from DCC and complying with the requirements of the retirement policy, including the notice provision. The risk that Mr. Fortier would not actually retire from DCC was drawn to his attention in DCC’s memoranda dealing with the optional immediate pay-out. Mr. Fortier read and understood the terms and conditions of the immediate pay-out option. By so doing, Mr.

Fortier acknowledged the risk that he would not retire from DCC and the limitation that no retirement allowance would be payable on resignation or voluntary or involuntary termination of his employment.

[ 22 ] In addition, I am not persuaded that the parties intended the retirement allowance benefits to be used to indemnify the employee in the event of termination of employment. As set out in the memoranda of March 13 and July 6, 2012, the parties intended to maintain the distinction between the concepts of termination and retirement, and that on termination, with or without cause, no retirement allowance benefits would be payable. The corollary is also true: in the event of retirement from DCC, compensation for termination of employment would not be payable. I have found that Mr.

Fortier was not entitled to retirement allowance benefits but for DCC being prepared to treat his termination as a retirement. Mr. Fortier has received his retirement allowance benefits. He is not entitled to receive, in addition, compensation for termination of his employment. Issue 2: If Mr. Fortier is entitled to both, how is the termination payment to be calculated? [ 23 ] When Mr. Fortier’s employment with DCC was terminated in March 2014, DCC’s Human Resources Policy and Process Manual included an involuntary termination policy. Mr.

Fortier’s position is that his entitlement on termination is governed by his 2006 offer letter, not the involuntary termination policy, because he did not receive notice of any change to the termination provisions in his employment contract. Given my finding that Mr.

Fortier is not entitled to receive compensation for termination of his employment in addition to the retirement allowance benefits he has already received, I need not determine whether DCC’s involuntary termination policy or his offer of employment governs the calculation of the termination payment. [ 24 ] The evidence before me is that DCC erroneously underpaid Mr. Fortier three days of regular salary. DCC also paid Mr. Fortier ten days of pay in lieu of notice. Based on my findings and conclusions, Mr. Fortier was not entitled to payment in lieu of notice, resulting in a net overpayment to Mr.

Fortier of seven days of salary or $2,571.98. DCC is entitled to

summary judgment in this amount. Disposition [ 25 ] For the above reasons, I grant

summary judgment to DCC (

i) dismissing Mr. Fortier’s claim for termination payments; and (ii) in the amount of $2,571.98. [ 26 ] If Mr. Fortier and DCC are unable to agree on costs, they may make brief written submissions on costs within 10 days of the release of these reasons. Madam Justice Robyn M. Ryan Bell Date: August 22, 2017 CITATION : Fortier v. Defence Construction Canada , 2017 ONSC 4994 COURT FILE NO.: 16-67317 DATE: 2017/08/22

ONTARIO SUPERIOR COURT OF JUSTICE RE: Marc Fortier, Plaintiff, AND Defence Construction Canada, Defendant BEFORE: Madam Justice Robyn M. Ryan Bell COUNSEL: Melynda Layton for the Plaintiff Stephen Bird for the Defendant REASONS FOR DECISION Justice Ryan Bell Released: August 22, 2017