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Date: |
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Docket: |
S000872 |
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Registry: Vancouver |
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IN THE SUPREME COURT OF BRITISH COLUMBIA |
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BETWEEN: |
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JANICE CHRISTINE DEMUYNCK |
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PLAINTIFF |
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AND: |
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AGENTIS INFORMATION SERVICES INC. |
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DEFENDANT |
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REASONS FOR JUDGMENT
OF THE
HONOURABLE MR. JUSTICE EDWARDS |
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Counsel for the Plaintiff |
T. G. Keast |
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Counsel for the Defendant |
H. D. Edinger |
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Date and Place of Hearing/Trial: |
January 15, 2003 |
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Vancouver, B.C. |
[1] The plaintiff (“employee”), now age 45, claims judgment under Rule 18A for damages equivalent to sixteen to eighteen months’ salary in lieu of notice for wrongful dismissal. Hers was a “desk job”, collecting accounts receivable and administering employee benefits.
[2] The defendant (“employer”) alleges the employment contract was frustrated by the employee’s disability, so no damages are payable. Alternatively, the employer argues the appropriate period of notice was twelve months.
[3] The employee was continuously employed by the employer (or its predecessors) from December 1980 until April 8, 1999 when the employer terminated her employment without cause and without notice.
[4] In January 1996, the employee was injured in a “slip and fall” accident unrelated to her employment. She continued in her job for about a year and a half until July 14, 1997, when she ceased to work as a result of injuries, primarily to her right elbow, from the accident and began to receive short term disability benefits. Except for the period September 3 to 20, 1997, she never returned to work with the employer.
[5] The employee began to receive long term disability benefits, under insurance coverage arranged by the employer but paid for by her, on January 26, 1998. She received these long term disability benefits for the maximum two years until January 2000, when her coverage expired.
[6] The employee was entitled to long term disability benefits only if she was totally disabled. That is, only while unable to perform any gainful occupation for which she was or might become reasonably qualified by her training, education or experience. While she received long term disability benefits the employee made every attempt to recover from her injuries by attending for various therapies and retraining at the Academy of Learning as directed by the insurer.
[7] The employee was re-employed part time (3 to 4 hours per day) in a similar job with a different employer from January 2, 2001 until late November 2001. Although there was no evidence on the point, I believe counsel advised me the employee had not worked since. In any event, there is no evidence she is now working nor as to whether she is now fit or unfit for employment.
[8] When she received the employer’s letter of termination dated April 8, 1999, she had been absent from work, with the exception noted above, for about 88 weeks and had been determined by the insurer to be to be totally disabled as of January 26, 1998, that is for about 62 weeks.
[9] During the period from July 1997 to January 1998 when she was receiving short term disability benefits her doctor’s reports postponed the date when she was anticipated to be fit to return to work four times. A doctor’s report dated January 28, 1998, states “she will likely have surgery to her [right] elbow unlikely to work till approx Sept. 98” (underlining in original).
[10] The employer was aware of these reports on April 8, 1999. The letter of termination did not state the employee’s disability frustrated and thereby terminated the contract of employment. It stated the employer was “undergoing a great deal of change” as the reason for terminating the contract and offered the employee twelve months severance.
[11] The severance offer was that her long term disability benefits would be “topped up” by about $2400 per month to her pre-disability salary for twelve months unless she no longer qualified for the benefits. In that case she would be paid her full salary if unemployed or the difference between any salary she earned at another job and her salary until the twelve months expired.
[12] The employee rejected the severance offer and started this action ten months later, on February 9, 2000. On March 13, 2000, the employer filed a Statement of Defence alleging that the employment contract was frustrated because “at the material times prior to termination of her employment [she] was not medically fit to carry out her duties at that time or in the foreseeable future.”
[13] Counsel for the employer relied on MacLellan v. H.B. Contracting Ltd. [1990] B.C.J. No 935 (S.C.). In that case the employee, a labourer/supervisor, hurt his ankle in a work-related accident in 1980. By late 1984 arthritis developed. He had surgery and was off work five months. During that period, he remitted short term disability benefits to the company which continued to pay his full salary. He returned to work in 1985, but after an extended Christmas vacation told the employer in early 1986 he wouldn’t return to work until his doctor “gave the okay” and that he couldn’t say “when I might be back”.
[14] The plaintiff in McLellan then submitted a claim for long term disability benefits. He refused to resign, saying he was “cautiously optimistic” he might return to work. On February 27, 1986, he was fired ostensibly on the basis of his employer’s “current economical situation and the uncertainty of [its] ability to maintain a position for [him]”.
[15] The plaintiff in McLellan testified at the trial that “I have never returned to work ... I don’t foresee ever going back to work. I am permanently disabled”. He refused job offers from other employers and continued to receive long term disability benefits at the time of the trial.
[16] In McLellan, Mr. Justice Coultas found the plaintiff was permanently disabled at the time he was fired although neither he nor the defendant employer knew it. He stated the applicable law as follows:
“Justification for termination of employment based on disability depends on whether the disability is temporary or permanent. Termination based upon permanent disability is founded on the principal of frustration, not on the concept of ‘just cause’.”
[17] Coultas J. rejected the plaintiff’s submissions that because the permanence of the disability was unknown at the time of the firing and because it was not then advanced as a ground for termination it could not be relied on as a defence at trial, relying on Carr v. Fama Holdings Ltd. (1989), 40 B.C.L.R. (2d) 125 (C.A.).
[18] On the question of what constitutes “permanent” disability to support the defence of frustration, Coultas J. referred to the decision of Mr. Justice Wood in Yeager v. R.J. Hastings Agencies Ltd., [1985] 1 W.W.R. 218 (B.C.S.C.).
[19] In Yeager, Wood J. found the plaintiff hosiery salesman had in 1979, after 27 years on the job, begun to develop a mental illness, which by the time he was fired in 1982 caused him to be “occupationally disabled” for two subsequent years and that he had recovered from it by the date of trial (not disclosed in the reasons for judgment) sometime in 1984.
[20] Wood J. concluded this disability was not sufficiently “permanent”, as that term is explained in relevant cases, to frustrate the contract of employment at the time the plaintiff was fired.
[21] In reaching that conclusion, Wood J. adopted the test and considerations set down by the National Industrial Relations Court in Marshall v. Harland and Wolff Ltd., [1972] 2 All E.R. 715 (N.I.R.C.) per Sir John Donaldson [at pp 718-19] as follows:
In the context of incapacity due to sickness, the question of whether or not the relationship has come to an end by frustration sounds more difficult than it is. The tribunal must ask itself: was the employee’s incapacity, looked at before the purported dismissal, of such a nature, or did it appear likely to continue for such a period, that further performance of his obligations in the future would either be impossible or would be a thing radically different from that undertaken by him and agreed to be accepted by the employer under the agreed terms of his employment? In considering the answer to this question, the tribunal should take account of:
(a) The terms of the contract, including the provisions as to sickness pay – The whole basis of weekly employment may be destroyed more quickly than that of monthly employment and that in turn more quickly than annual employment. When the contract provides for sick pay, it is plain that the contract cannot be frustrated so long as the employee returns to work, or appears likely to return to work, within the period during which such sick pay is payable. But the converse is not necessarily true, for the right to sick pay may expire before the incapacity has gone on, or appears likely to go on, for so long as to make a return to work impossible or radically different from the obligations undertaken under the contract of employment.
(b) How long the employment was likely to last in the absence of sickness – The relationship is less likely to survive if the employment was inherently temporary in its nature or for the duration of a particular job, than if it was expected to be long term or even lifelong.
(c) The nature of the employment – Where the employee is one of many in the same category, the relationship is more likely to survive the period of incapacity than if he occupies a key post which must be filled and filled on a permanent basis if his absence is prolonged.
(d) The nature of the illness or injury and how long it has already continued and the prospects of recovery – The greater the degree of incapacity and the longer the period over which it has persisted and is likely to persist, the more likely it is that the relationship has been destroyed.
(e) The period of past employment – A relationship which is of long standing is not so easily destroyed as one which has but a short history. This is good sense and, we think, no less good law, even if it involves some implied and scarcely detectable change in the contract of employment year by year as the duration of the relationship lengthens. The legal basis is that over a long period of service the parties must be assumed to have contemplated a longer period or periods of sickness than over a shorter period.
[22] In applying these considerations, Wood J. used hindsight, to conclude the disability was not “permanent”. The plaintiff’s recovery from disability at the time of trial, rather than his diagnosis (which proved incorrect) of incurable organic brain disease and prognosis “before the purported dismissal”, was determinative.
[23] The prognosis before termination was pessimistic, including premature dementia and memory loss and a doctor’s warning not to take on new challenges or additional stress at work. If this state of the plaintiff’s disability, as known at the time of his termination, had been the basis for Mr. Justice Wood’s decision on the likely permanence of the disability viewed from the date of termination, I believe he would have concluded the contract of employment was frustrated by disability at that date.
[24] The consideration of post-termination evidence about the employee’s disability by Wood J. in Yeager is consistent with Carr, as applied in McLellan, which held a defendant employer may rely on any “just cause” or frustration due to disability discovered up to the time of trial, but unknown at the time of termination.
[25] In White v. F.W. Woolworth Co. (1996), 22 C.C.E.L. (2d) 110 at paragraphs 28-33, the Newfoundland Supreme Court [Appeal Division] expressly declined to follow McLellan on this point.
[26] In doing so, the court pointed to the “incongruity” of allowing the employer, which in that case terminated the contract of employment “claiming frustration” to argue that evidence of subsequent events justified that claim.
[27] In my view, this is no more incongruous than permitting an employer who has not asserted “just cause” at the time of firing an employee from alleging subsequently discovered evidence of just cause, which as pointed out by Wallace J.A. in Carr, supra, at paragraphs 131-133 has been settled law at least since McIntyre v. Hockin (1889), 16 O.A.R. 498 at 501.
[28] In White, the court also noted a “ring of unfairness” in taking post-termination evidence into account because the termination might have exacerbated the disability. There is no evidence of that in this case.
[29] I find the reasoning in White on the point of an employer’s reliance on post-termination evidence of frustration unpersuasive and regard myself bound to follow McLellan on this point.
[30] In White, the court adopted the Marshall range of 18 to 24 months disability as the limit of “temporary absence”. In White, the plaintiff had been absent for 10 months prior to termination with no prognosis as to how much longer anticipated surgery might extend that period off work.
[31] In this case, the employee was disabled for over twenty months at the time of termination with a prognosis of at least another seven months disability. Applying the Marshall range as was done in White to the facts known at the date of termination in this case, that is without the benefit of hindsight at the date of trial, puts the employee’s disability well beyond the “temporary absence” range and into the “permanent” category.
[32] Here, the employee exhausted her short and long term disability entitlements, the equivalent of “sick pay” under paragraph (a) of the Marshall considerations. She did not return to work for a further year after doing so and then worked only part time for less than a year. She provided no evidence she was working or capable of working at the time of the trial, almost five years after termination.
[33] While this evidence does not amount to evidence of a “permanent”, in the sense of lifelong, disability of the sort found by Coultas J. in McLellan, in my view it is one of sufficient duration, applying the Marshall considerations to the facts of this case, to make the “further performance” of the employee’s obligations under the contract of employment either “impossible” or “radically different” from those contemplated by the “agreed terms of employment”, according to the Marshall test.
[34] Accordingly, I find the employer’s plea of frustration of the employment contract is supported by the evidence. It follows the employee’s claim must be dismissed.
[35] If I am wrong about that, on the basis of the nature and duration of her employment, in light of the cases cited by counsel on the question of notice, the employee would be entitled to twelve months salary in lieu of reasonable notice of termination.
[36] The employer’s costs will be on scale three.
“E.R.A. Edwards,
J.”
The Honourable Mr. Justice E.R.A. Edwards