McKee v. Reid's Heritage Homes,

• Jurisdiction: Ontario
• Judge: MacPherson, Simmons and LaForme, JJ.A.
• Neutral Citation: 2009 ONCA 916
• Citation: (2009), 256 O.A.C. 376 (CA),2009 ONCA 916,315 DLR (4th) 129,[2009] OJ No 5489 (QL),184 ACWS (3d) 1013,256 OAC 376,315 D.L.R. (4th) 129,[2009] O.J. No 5489 (QL),(2009), 256 OAC 376 (CA),256 O.A.C. 376
• Date: 23 December 2009
• Court: Court of Appeal (Ontario)

McKee v. Reid's Heritage Homes (2009), 256 O.A.C. 376 (CA)

MLB headnote and full text

Temp. Cite: [2009] O.A.C. TBEd. DE.124

Elizabeth McKee and Bribet Holdings Inc. (plaintiffs/respondents) v. Reid's Heritage Homes Ltd. (defendant/appellant)

(C49783; 2009 ONCA 916)

Indexed As: McKee et al. v. Reid's Heritage Homes Ltd.

Ontario Court of Appeal

MacPherson, Simmons and LaForme, JJ.A.

December 23, 2009.

Summary:

The plaintiff, through her company, signed an agreement in 1987 with the defendant home builder to advertise and sell a fixed number of its homes for a $2,500 per home commission. The homes sold quickly. Over the next 18 years, the plaintiff continued to work exclusively to sell homes for the defendant for a commission, eventually using the assistance of sub-agents hired by her. In 2005, the plaintiff was told that she and her sub-agents would now be "direct employees". The plaintiff resisted, but agreed after being promised a guarantee of a fixed number of sales over two years. That guarantee never materialized and the plaintiff rejected a six month engagement. The plaintiff sued for damages for wrongful dismissal, claiming an employment relationship. The defendant argued that the plaintiff was a "dependent contractor", not an "employee", and was entitled to only limited reasonable notice. The trial judge held that the plaintiff was an "employee", not a "dependent contractor" and was entitled to 18 months' pay in lieu of reasonable notice. The plaintiff's failure to continue to work for the defendant for the offered six month period did not constitute a failure to mitigate given their "irreparably damaged" relationship. The defendant appealed.

The Ontario Court of Appeal dismissed the appeal. The trial judge did not err in finding the plaintiff to be an "employee" or in finding no failure to mitigate. Given that finding, the defendant did not challenge 18 months' notice as unreasonable.

Master and Servant - Topic 303

Nature of relationship - What constitutes an employer-employee relationship - The plaintiff, through her company, signed an agreement in 1987 with the defendant home builder to advertise and sell a fixed number of its homes for a $2,500 per home commission - The homes sold quickly - Over the next 18 years, the plaintiff continued to work exclusively to sell homes for the defendant for a commission, eventually using the assistance of sub-agents hired by her - In 2005, the plaintiff was told that she and her sub-agents would now be "direct employees" - The plaintiff resisted, but agreed after being promised a guaranteed number of sales over two years - That negotiated guarantee never materialized and the plaintiff rejected a six month engagement - The plaintiff sued for damages for wrongful dismissal - The defendant argued that the plaintiff was a "dependent contractor", not an "employee", and was entitled to only limited reasonable notice - The Ontario Court of Appeal affirmed a trial decision that the plaintiff was an "employee" entitled to 18 months' pay in lieu of reasonable notice and that she did not fail to mitigate her loss by refusing to continue to work for six months because of the "irreparably damaged" relationship between her and the defendant - Applying the Belton/Sagaz factors, (1) the plaintiff worked exclusively selling the defendant's homes under an implied agreement, (2) she was subject to the defendant's control as to what was sold, when it was sold, where it was sold and how it was sold, (3) the principal tool of her trade (the defendant's model homes) were provided by the defendant, (4) she had no capital at risk, was financially dependent on the defendant and had no expectation of profit distinct from her commissions, and (5) the plaintiff's sole activity was part of the defendant's business (i.e., it was in the defendant's business in which the plaintiff was engaged) - See paragraphs 4 to 64.

Master and Servant - Topic 305

Nature of relationship - "Independent" and "dependent" contractor distinguished - The Ontario Court of Appeal held that there was an intermediate category between an "independent contractor" and an "employee", which was based on exclusivity and economic dependence in non-employment cases - The court stated that "an intermediate category exists, which consists, at least, of those non-employment work relationships that exhibit a certain minimum economic dependency, which may be demonstrated by complete or near-complete exclusivity. Workers in this category are known as 'dependent contractors' and they are owed reasonable notice upon termination." - A court still had to first determine, using the traditional tests, whether a person was an "employee" or a "contractor" - If the person was a contractor, it had to then be determined whether he or she was a "dependent contractor", a category carved out of the non-employment category which did not affect the range of the employment category - See paragraphs 24 to 30.

Master and Servant - Topic 8000

Dismissal without cause - Notice of dismissal - What constitutes reasonable notice - [See Master and Servant - Topic 303 ].

Master and Servant - Topic 8064

Dismissal without cause - Damages - Mitigation - [See Master and Servant - Topic 303 ].

Cases Noticed:

Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R.(2d) 140 (Ont. H.C.), refd to. [para. 19].

Keays v. Honda Canada Inc., [2008] 2 S.C.R. 362; 376 N.R. 196; 239 O.A.C. 299, refd to. [para. 19].

Carter v. Bell & Sons (Canada) Ltd., [1936] O.R. 290 (C.A.), refd to. [para. 24].

Marbry et al. v. Avrecan International Inc. (1999), 119 B.C.A.C. 266; 194 W.A.C. 266; 171 D.L.R.(4th) 436 (C.A.), refd to. [para. 25].

JKC Enterprises Ltd. et al. v. Woolworth Canada Inc. et al. (2001), 300 A.R. 1 (Q.B.), refd to. [para. 25].

Erb and Farris v. Expert Delivery Ltd. (1995), 167 N.B.R.(2d) 113; 427 A.P.R. 113 (T.D.), refd to. [para. 25].

Paper Sales Corp. v. Miller Brothers Co. (1962) Ltd. (1975), 7 O.R.(2d) 460 (C.A.), refd to. [para. 26].

Mancino v. Nelson Aggregate Co., [1994] O.J. No. 1559 (Gen. Div.), refd to. [para. 27].

Braiden et al. v. La-Z-Boy Canada Ltd. (2008), 238 O.A.C. 71; 294 D.L.R.(4th) 172 (C.A.), refd to. [para. 28].

Belton et al. v. Liberty Insurance Co. of Canada (2004), 189 O.A.C. 173; 72 O.R.(3d) 81 (C.A.), refd to. [para. 33].

671122 Ontario Ltd. v. Sagaz Industries Canada Inc. et al., [2001] 2 S.C.R. 983; 274 N.R. 366; 150 O.A.C. 12, refd to. [para. 37].

Wiebe Door Services Ltd. v. Minister of National Revenue, [1986] 3 F.C. 553; 70 N.R. 214 (F.C.A.), refd to. [para. 37].

Kordish et al. v. Innotech Multimedia Corp. (1998), 46 C.C.E.L.(2d) 318 (Ont. Gen. Div.), affd. [2000] O.A.C. Uned. 131 (C.A.), refd to. [para. 54].

Evans v. Teamsters Union Local No. 31, [2008] 1 S.C.R. 661; 374 N.R. 1; 253 B.C.A.C. 1; 425 W.A.C. 1, refd to. [para. 61].

Authors and Works Noticed:

England, Geoffrey, Wood, Roderick, and Christie, Innis, Employment Law in Canada (4th Ed. 2005) (Looseleaf), vol. 1, § 2.33 [para. 35].

Counsel:

R. Ross Wells, for the appellant;

Kirk F. Stevens, for the respondents.

This appeal was heard on November 25, 2009, before MacPherson, Simmons and LaForme, JJ.A., of the Ontario Court of Appeal.

The judgment of the Court of Appeal was delivered by MacPherson, J.A., and released on December 23, 2009.