Belton v. Liberty Ins., (2004) 189 O.A.C. 173 (CA)

• Judge: Goudge, Simmons and Juriansz, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: April 29, 2004
• Jurisdiction: Ontario
• Citations: (2004), 189 O.A.C. 173 (CA)

Belton v. Liberty Ins. (2004), 189 O.A.C. 173 (CA)

MLB headnote and full text

Temp. Cite: [2004] O.A.C. TBEd. AU.022

Lance Belton, Michael Bonito, Joe Ciaravella, Joe Citrigno, Blake Cole, Brian Leach, Daniel Lemire, Donald MacDonald and Donald Robbins (plaintiffs/appellants) v. Liberty Insurance Company of Canada (defendant/respondent)

(C38968)

Indexed As: Belton et al. v. Liberty Insurance Co. of Canada

Ontario Court of Appeal

Goudge, Simmons and Juriansz, JJ.A.

August 17, 2004.

Summary:

The plaintiffs, property and casualty insurance agents, sued Liberty Insurance Company of Canada (Liberty) for wrongful dismissal. They alleged that they were constructively dismissed when Liberty, inter alia, amended their commission schedule.

The Ontario Superior Court, in a decision reported at [2002] O.T.C. 701, dismissed the action. The plaintiffs appealed. Liberty cross-appealed the trial judge's finding that the plaintiffs were employees and not independent contractors.

The Ontario Court of Appeal allowed the appeal and dismissed the cross-appeal.

Master and Servant - Topic 303

Nature of relationship - What constitutes an employer-employee relationship - The plaintiffs, property and casualty insurance agents, sued an insurer (Liberty) for wrongful dismissal - Liberty argued that the plaintiffs were not employees but independent contractors - An agent agreement stated it did not create an employer/employee relationship - A centralized call centre effectively eliminated direct contact between the agents and their customers regarding policy changes and renewals - All of the agents had Liberty managers - The agents were not permitted to advertise using the Liberty Mutual name - The agents were not permitted to sell any property and casualty insurance other than Liberty's - Liberty owned the agents' books of business - The agents had no ownership or legal entitlement to their customers - The agents also had an employment relationship with a life insurer (with Liberty's knowledge and agreement) - The Ontario Court of Appeal refused to disturb the trial judge's finding that the plaintiffs were in an employer-employee relationship with Liberty - See paragraphs 11 to 15.

Master and Servant - Topic 7578

Dismissal of employees - Grounds - Refusal to negotiate change in terms of employment - The plaintiffs, property and casualty insurance agents, sued an insurer (Liberty) for wrongful dismissal - They alleged that Liberty's action in terminating their prior agent agreement requiring them to sign a new agent agreement, which they claimed reduced their commissions and introduced new minimum production levels, was a fundamental breach of contract amounting to constructive dismissal - The Ontario Court of Appeal held that Liberty had the right to terminate the prior agreement - However, it was obliged to provide the plaintiffs with reasonable notice for doing so - The plaintiffs had no obligation to acknowledge Liberty's right to change the compensation schedule - Their failure to do so did not constitute a repudiation of their agreement with Liberty - See paragraphs 16 to 28.

Master and Servant - Topic 7578

Dismissal of employees - Grounds - Refusal to negotiate change in terms of employment - A trial judge's view that employees' failure to acknowledge the employer's right to change the compensation schedule in their employment agreement constituted a repudiation of the agreement justifying their dismissal - The Ontario Court of Appeal held that the employees had no obligation to acknowledge the employer's right to change the compensation schedule - The court stated that "the vulnerability of employees who believe they may have been constructively dismissed and the difficulty of making the life-altering decisions they face must be recognized. In this context, it is understandable that such employees may wish to try to adjust to the new terms and conditions without affirming the employer's right to make these changes and before taking the radical step of advancing a constructive dismissal claim. Allowing employees reasonable time to assess the new terms before they are forced to take an irrevocable legal position not only addresses their vulnerability, but also promotes stability and harmonious relations in the workplace." - See paragraph 26.

Master and Servant - Topic 8064

Dismissal without cause - Damages - Mitigation - The Ontario Court of Appeal held that the trial judge erred in her views regarding damages because, in effect, she placed the burden on the employees to prove that they had mitigated any losses they suffered by not receiving reasonable notice of dismissal - The burden was on the employer to prove that the employees had failed to mitigate their damages - In any wrongful dismissal case, it might be said that the loss of employment leaves the employees with additional free time to earn other income - However, the burden always remained on the employer to show a failure to mitigate - See paragraph 34.

Cases Noticed:

London Life Insurance Co. v. Doyle (1985), 23 D.L.R.(4th) 443 (B.C.C.A.), leave to appeal refused (1986), 64 N.R. 318 (S.C.C.), refd to. [para. 11].

Jaremko v. LePage (A.E.) Real Estate Ltd. (1989), 69 O.R.(2d) 323 (C.A.), refd to. [para. 14].

Ceccol v. Ontario Gymnastic Federation (2001), 149 O.A.C. 315; 55 O.R.(3d) 614 (C.A.), refd to. [para. 22].

Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701; 219 N.R. 161; 123 Man.R.(2d) 1; 159 W.A.C. 1, refd to. [para. 23].

Lefebvre v. HOJ Industries Ltd.; Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986; 136 N.R. 40; 53 O.A.C. 200, refd to. [para. 23].

Reference Re Public Service Employee Relations Act (Alta.) - see Reference Re Compulsory Arbitration.

Reference Re Compulsory Arbitration, [1987] 1 S.C.R. 313; 74 N.R. 99; 78 A.R. 1, refd to. [para. 23].

Davidson v. Slaight Communications Inc., [1989] 1 S.C.R. 1038; 93 N.R. 183, refd to. [para. 24].

Michaels et al. v. Red Deer College, [1976] 2 S.C.R. 324; 5 N.R. 99, refd to. [para. 33].

Authors and Works Noticed:

Cheshire, C.G., Fifoot, C.H.S., and Furmston, M.P., Law of Contract (8th Ed. 1972), p. 599 [para. 33].

Reiter, B.J., and Swan, J., Studies in Contract Law (1980), 357, p. 363 [para. 23].

Swinton, K., Contract Law and the Employment Relationship: The Proper Forum for Reform, in Reiter, B.J., and Swan, J., Studies in Contract Law (1980), 357, p. 363 [para. 23].

Counsel:

Thomas J. Gorsky, for the appellants;

D. Barry Prentice, for the respondent.

This appeal and cross-appeal were heard on April 29, 2004, by Goudge, Simmons and Juriansz, JJ.A., of the Ontario Court of Appeal. Juriansz, J.A., delivered the following decision for the court which was filed on August 17, 2004.