Lippa v. Can-Cell Industries Inc., (2009) 483 A.R. 262 (QB)

• Judge: Verville, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: November 23, 2009
• Citations: (2009), 483 A.R. 262 (QB);2009 ABQB 684

Lippa v. Can-Cell Ind. Inc. (2009), 483 A.R. 262 (QB)

MLB headnote and full text

Temp. Cite: [2009] A.R. TBEd. NO.127

Sandra Lippa (plaintiff) v. Can-Cell Industries Inc. (defendant)

(0103-15670; 2009 ABQB 684)

Indexed As: Lippa v. Can-Cell Industries Inc.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Verville, J.

November 23, 2009.

Summary:

The plaintiff was purportedly terminated for cause five months after she left work ill and never received medical clearance to return (company policy). She sued for damages for wrongful dismissal, including a bonus she claimed entitlement to. The employer submitted that the plaintiff abandoned her employment (never able to return) and that her employment contract had been frustrated. Alternatively, the employer claimed that if the plaintiff had been wrongfully dismissed, settlement monies received from the disability insurer (disability benefits initially denied) had to be deducted from any damages awarded.

The Alberta Court of Queen's Bench held that the plaintiff was wrongfully dismissed. She had not abandoned her employment. The employment contract was not frustrated. The court awarded the plaintiff nine months' pay in lieu of notice and an additional $5,000, which was 50% of the bonus she received the previous year. The $65,000 in disability benefits received from the disability insurer in the settlement of her rejected disability claim were not to be deducted from the damage award.

Damages - Topic 1746

Deductions for payments or assistance by third parties - Contractually - Insurance - Accident and sickness benefits (incl. drugs, disability, etc.) - The plaintiff was dismissed without cause five months after she left her employment with a tentative diagnosis of multiple sclerosis - At the time she was terminated, there was no evidence that she would be unable to return to work - Group benefits were paid 50% by the plaintiff and 50% by the employer, but the plaintiff paid 100% of the disability coverage premium (tax reasons) - Although the plaintiff was initially denied short-term disability benefits, the disability insurer later settled the plaintiff's claim for $65,000 - The employer argued that damages awarded in lieu of reasonable notice should be reduced by $65,000 to avoid double compensation - The Alberta Court of Queen's Bench stated that "the recovery from [the insurer] in this case exceeds the amount I have awarded in damages for wrongful dismissal. The plaintiff paid for either all of or at least half of the short and long term disability premiums. She did not receive benefits during the notice period. While it is clear that the claim against [the insurer] was for disability benefits the plaintiff could potentially have recovered same under the Group Benefit Plan to age 65. She was 54 years of age at the time of the settlement. The Release and Settlement Agreement executed by the plaintiff ... was all encompassing. ... there is no clear evidence of what this sum represents. Deductibility would result in a windfall to the defendant employer in this case. It is not clear that finding the [disability] payment is not deductible would result in a commensurate windfall to the plaintiff." - The $65,000 was not deductible from the damage award - See paragraphs 101 to 111.

Damages - Topic 6750

Contracts - Employment relationship or contract - Breach by employer - Loss of bonus or profit sharing - The plaintiff was terminated without cause on April 20, 2000, after nine years' employment - She had received exemplary employee evaluations and a discretionary bonus every year since 1995, including a $10,000 bonus in 1998 - All employees except the plaintiff received bonuses for 1999, even those with evaluations less favourable than the plaintiff - The employer offered two explanations for not giving the plaintiff a bonus: (1) that although she was evaluated as "above average", she did not get the highest evaluation of "exceptional" and (2) that settlement monies received from the disability insurer (plaintiff out sick for five months when terminated) compensated her for the lack of a bonus - The Alberta Court of Queen's Bench awarded the plaintiff $5,000, being 50% of the bonus received the previous year - Although bonuses were discretionary, that discretion had to be exercised reasonably and in good faith - In exercising that discretion, the reasons stated by the employer for denying a bonus demonstrated unreasonableness and bad faith - See paragraphs 60 to 100.

Master and Servant - Topic 7560

Dismissal or discipline of employees - Grounds - Absenteeism or tardiness - [See Master and Servant - Topic 7612 ].

Master and Servant - Topic 7612

Dismissal or discipline of employees - Defences - Frustration - The plaintiff fell ill on November 12, 1999, and left work with the intention of returning November 18 - Company policy would not allow her to return without a doctor's approval - The plaintiff never returned - There was a tentative diagnosis of multiple sclerosis - The plaintiff was denied disability benefits (later received $65,000 from the disability insurer in settlement of her disability claim) - On April 20, 2000, the employer unilaterally mailed the plaintiff a record of employment indicating that the plaintiff's date of recall was unknown - In response to a May 16, 2000, letter by the plaintiff protesting the employer's treatment of her, the employer responded on May 31, 2000, requesting medical information - The plaintiff did not provide the information - On July 13, 2000, the employer advised that she had been terminated for cause six weeks earlier (April 20) - The plaintiff sued for damages for wrongful dismissal - The employer claimed that the plaintiff abandoned her employment and that her employment contract had been frustrated by her inability to return to work - The Alberta Court of Queen's Bench held that the plaintiff had been wrongfully dismissed - The employer, although satisfied with the plaintiff's work, felt that she was overpaid and took advantage of her illness to replace her with someone at a lower salary - The employer purportedly terminated her for cause without any inquiry into her medical condition or when she might be able to return to work - The plaintiff did not abandon her employment - A five month absence from work was not sufficient to frustrate the employment contract - The employer simply seized the opportunity to avoid paying severance - The plaintiff, a nine year employee, was awarded nine months' pay in lieu of reasonable notice, plus $5,000, which was 50% of the bonus she received the previous year - The disability settlement benefits received by the plaintiff were not deductible from the damage award - See paragraphs 60 to 112.

Master and Servant - Topic 7613

Dismissal or discipline of employees - Defences - Illness of employee - [See Master and Servant - Topic 7612 ].

Master and Servant - Topic 8000

Dismissal without cause - Notice of dismissal - What constitutes reasonable notice - [See Master and Servant - Topic 7612 ].

Cases Noticed:

Davis Contractors Ltd. v. Fareham Urban District Council, [1956] 2 All E.R. 145 (H.L.), refd to. [para. 60].

National Carriers Ltd. v. Panalpina (Northern) Ltd., [1981] 1 All E.R. 161 (H.L.), refd to. [para. 60].

Naylor Group Inc. v. Ellis-Don Construction Ltd., [2001] 2 S.C.R. 943; 277 N.R. 1; 153 O.A.C. 341, refd to. [para. 61].

Simpson v. The Co-operators (1994), 158 A.R. 321 (Q.B.), affd. (1998), 212 A.R. 378; 168 W.A.C. 378; 1998 ABCA 86, refd to. [para. 60].

Wightman Estate v. 2774046 Canada Inc. et al. (2006), 231 B.C.A.C. 75; 381 W.A.C. 75; 2006 BCCA 424, refd to. [para. 60].

Egan v. Alcatel Canada Inc. (2006), 206 O.A.C. 44 (C.A.), refd to. [para. 60].

Yeager v. Hastings (R.J.) Agencies Ltd. (1984), 5 C.C.E.L. 266 (B.C.S.C.), refd to. [para. 61].

Antonacci v. Great Atlantic & Pacific Co. of Canada Ltd. (1998), 53 O.T.C. 291 (Gen. Div.), affd. in part (2000), 128 O.A.C. 236 (C.A.), refd to. [paras. 61, 82].

White v. Woolworth (F.W.) Co. (1996), 139 Nfld. & P.E.I.R. 324; 433 A.P.R. 324; 22 C.C.E.L.(2d) 110 (Nfld. C.A.), refd to. [para. 61].

Robinson v. Team Cooperheat-MQS Canada Inc., [2008] A.R. Uned. 477; 95 Alta. L.R.(4th) 249; 2008 ABQB 4, refd to. [para. 61].

Martin v. Children's House Child Care Society (2006), 410 A.R. 322; 2006 ABQB 937, refd to. [para. 61].

Meyer v. Pattison (Jim) Industries Ltd. (1991), 38 C.C.E.L. 101 (B.C.S.C.), refd to. [para. 61].

Fitzgibbons v. Westpres Publications Ltd. (1983), 50 B.C.L.R. 219 (S.C.), refd to. [para. 61].

Rumney and Snider (Ken) Cartage Ltd., Re, [1998] C.L.A.D. No. 353, refd to. [para. 61].

Sylvester v. British Columbia, [1997] 2 S.C.R. 315; 212 N.R. 51; 91 B.C.A.C. 124; 148 W.A.C. 124, refd to. [para. 62].

Marshall v. Harland & Wolff Ltd., [1972] 2 All E.R. 715 (N.I.R.C.), refd to. [para. 76].

MacLellan v. H.B. Contracting Ltd. et al. (1990), 32 C.C.E.L. 103 (B.C.S.C.), refd to. [para. 78].

Wilmot v. Ulnooweg Development Group Inc. (2007), 253 N.S.R.(2d) 376; 807 A.P.R. 376; 57 C.C.E.L.(3d) 170; 2007 NSCA 49, refd to. [para. 81].

Dragone v. Riva Plumbing Ltd., [2007] O.T.C. Uned. K33; 61 C.C.E.L.(3d) 261 (Sup. Ct.), refd to. [para. 82].

Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R.(2d) 140 (Ont. H.C.), refd to. [para. 90].

Leduc v. Canadian Erectors Ltd. (1996), 18 C.C.E.L.(2d) 216 (Ont. Gen. Div.), refd to. [para. 96].

Burns v. Oxford Development Group Inc. (1992), 128 A.R. 345 (Q.B.), refd to. [para. 97].

Skopitz v. Intercorp Excelle Foods Inc. (1999), 96 O.T.C. 15; 43 C.C.E.L.(2d) 253 (Gen. Div.), refd to. [para. 102].

Pereira v. Business Depot Ltd., [2009] B.C.T.C. Uned. 1178; 2009 BCSC 1178, refd to. [para. 102].

McNamara v. Alexander Centre Industries Ltd. (2001), 144 O.A.C. 376; 8 C.C.E.L.(3d) 204 (C.A.), leave to appeal refused (2001), 284 N.R. 199; 158 O.A.C. 195 (S.C.C.), refd to. [para. 109].

Authors and Works Noticed:

England, Geoffrey, Wood, Roderick, and Christie, Innis, Employment Law in Canada (4th Ed. 2005) (Looseleaf), para. 18.22 [para. 82].

Mole, Ellen E. and Stendon, Marion J., Wrongful Dismissal Handbook (3rd Ed. 2004), c. B-4 [para. 82].

Counsel:

Barry J. Massing (MacPherson Leslie & Tyerman LLP, formerly known as Henderickson Gower Massing Olivieri LLP), for the plaintiff;

Frank P.K. Friesacher (McCuaig Desrochers LLP), for the defendant.

This action was heard on October 13-16 and 22, 2009, before Verville, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following judgment on November 23, 2009.