bellini v ausenco engineering alberta inc., 2016 nssc … · supreme court of nova scotia citation:...

SUPREME COURT OF NOVA SCOTIA

Citation: Bellini v. Ausenco Engineering Alberta Inc., 2016 NSSC 237

Date: 2016-09-10

Docket: Halifax, No. 443113

Registry: Halifax

Between:

Robert Bellini

Applicant

v.

Ausenco Engineering Alberta Incorporated

Respondent

Judge: The Honourable Justice Arthur J. LeBlanc

Heard: May 24, 2016, in Halifax, Nova Scotia

Counsel: James B. Green, and Kelsey Black, Law Student, for the

Applicant

Mark Tector and Michelle Black, for the Respondent

By the Court:

Introduction

[1] The applicant, Mr. Bellini, claims that he was wrongfully dismissed from his

position as a Senior Mechanical Engineer with the respondent. In addition to a

declaration that he was wrongfully dismissed, he seeks damages for breach of his

employment contract, pre-judgment interest, and costs.

[2] Mr. Bellini was hired as a Senior Mechanical Engineer by PROJEX

Technologies on March 30, 2012. He began work on April 12, 2012. In July 2013,

Ausenco bought the company. Mr. Bellini was provided with a new contract by

Ausenco, and an opportunity to obtain independent legal advice. The Ausenco

contract included a provision governing termination without just cause. It states:

15.1 Conditions

Although the Company anticipates a long term employment relationship, our

business is subject to economic factors which sometimes necessitates a reduction

in workforce. We have therefore adopted a policy of specifying termination

conditions in our employment letters. If it becomes necessary for us to terminate

your employment for any reason other than cause, your entitlement to advance

working notice or pay in lieu of such notice, will be in accordance with the

provincial employment standards legislation. [Emphasis added.]

[3] Mr. Bellini signed the Ausenco contract on July 10, 2013. It recognized his

seniority date from his former contract. He began work with Ausenco on July 22,

2013, and remained there until June 17, 2015, when his employment was

terminated. Ausenco attributed the termination to a lack of work. Mr. Bellini was

paid all outstanding wages and benefits, as well as an additional two weeks’ salary

and extended health and dental coverage to the end of the month in lieu of notice.

[4] While Ausenco is an international company, there is no dispute that the

relevant legislation is the Nova Scotia Labour Standards Code, R.S.N.S. 1989, c.

246. Section 6 of the Code provides:

Effect of Act

6 This Act applies notwithstanding any other law or any custom, contract or

arrangement, whether made before, on or after the first day of February, 1973, but

nothing in this Act affects the rights or benefits of an employee under any law,

custom, contract or arrangement that are more favourable to him than his rights or

benefits under this Act.

[5] Section 72 of the Code provides for minimum notice periods for employees

terminated without cause. It states, in part:

Termination of employment by employer

72(1) Subject to subsection (3) and Section 71, an employer shall not discharge,

suspend or lay off an employee, unless the employee has been guilty of wilful

misconduct or disobedience or neglect of duty that has not been condoned by the

employer, without having given at least

…

(b) two weeks’ notice in writing to the person if his period of

employment is two years or more but less than five years;

…

(4) Notwithstanding subsections (1), (2) and (3), but subject to Section 71, the

employment of a person may be terminated forthwith where the employer gives to

the person notice in writing to that effect and pays him an amount equal to all pay

to which he would have been entitled for work that would have been performed

by him at the regular rate in a normal, non-overtime work week for the period of

notice prescribed under subsection (1) or (2), as the case may be.

[6] This case is concerned with the interaction between the contractual

termination provision and the Labour Standards Code.

Termination at common law and by contract

[7] Mr. Bellini does not challenge the enforceability of the contractual

termination provision. The issue is its interpretation. Mr. Bellini maintains that the

language of the employment contract does not oust his common law notice rights,

and therefore does not limit his reasonable notice period to the statutory minimum.

[8] It is well-established that “employment contracts for an indefinite period

require the employer, absent express contractual language to the contrary, to give

reasonable notice of an intention to terminate the contract if the dismissal is

without cause”: Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986, [1992]

S.C.J. No. 41, at para. 19. The intention to contract out of the obligation to give

reasonable notice requires “clear, express language”: Howard A. Levitt, The Law

of Dismissal in Canada, 3d edn. (Toronto: Thomson Reuters, looseleaf) at

§11:40:30. As the court said in Cybulski v. Adecco Employment Services Ltd., 2011

NBQB 181, 2011 CarswellNB 401:

12 In order to displace the presumption of reasonable notice, the language of a

limiting clause must be clear and unequivocal. There must be a high level of

clarity... It should be noted in this case that the Contract was prepared by [the

employer]. There is a presumption that unless there is an agreement with express

language to the contrary, an employee is entitled to reasonable notice of

termination.

[9] The Ontario Court of Appeal commented on the practice of limiting notice

by agreement in Bowes v Goss Power Products Ltd, 2012 ONCA 425, [2012] OJ

No 2811:

23 It is well-settled law that employment agreements are subject to the ordinary

principles of contract law. Peculiar to employment law, however, is the principle

that, unless otherwise stated, every employment agreement contains an implied

term that an employer must provide reasonable notice to an employee prior to the

termination of employment. If the employer fails to provide reasonable notice of

termination, the employee is entitled to damages that flow from this breach.

…

25 However, the parties to employment agreements can, and often do,

substitute a fixed period of notice in the agreement, thereby displacing the

common law period of "reasonable notice". Parties are entitled to do so provided

that they do not violate the minimum statutory requirement relating to notice: see

Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986, at pp. 998-1002.

26 Establishing a pre-determined period of notice in the contract of

employment has certain distinct advantages. Most notably, it provides certainty.

From the employer's perspective, it has the advantage of "capping" the period of

reasonable notice that a court might otherwise award in a suit for wrongful

dismissal. Likewise, from the employee's perspective, it ensures a guaranteed

entitlement that may be greater than that which a court would award under

common law. For both parties, pre-determining the period of notice avoids the

need for litigation to assess notice upon termination.

[10] A termination provision that can support more than one meaning should be

read contra proferentum. For instance, in Kaiser v. Dural, 2001 NSSC 131, [2001]

N.S.J. No. 352, Coughlan J. said that an ambiguously worded contract drafted by

the employer’s lawyer “must be read contra proferentem” (para. 28). The Court of

Appeal held that “the judge did not err in finding that the provision of the letter

was ambiguous and interpreting it contra proferentem”: 2002 NSCA 69, [2002]

N.S.J. No. 249, at para. 8.

[11] Accordingly, clear and express language is required to deprive Mr. Bellini of

the right to reasonable notice at common law. He says the employment contract

does not accomplish this. Ausenco, by contrast, says the termination provision

reveals an agreement to oust the common law and to limit the notice period to the

minimum under the Labour Standards Code.

[12] The scope of the Labour Standards Code is a matter of statutory

interpretation. The basic method was described by Iacobucci J, for the court, in Re Rizzo & Rizzo Shoes Ltd., [1998] 1 S.C.R. 27, [1998] S.C.J. No. 2:

21 Although much has been written about the interpretation of legislation …,

Elmer Driedger in Construction of Statutes (2nd ed. 1983) best encapsulates the

approach upon which I prefer to rely. He recognizes that statutory interpretation

cannot be founded on the wording of the legislation alone. At p. 87 he states:

Today there is only one principle or approach, namely, the words of an

Act are to be read in their entire context and in their grammatical and

ordinary sense harmoniously with the scheme of the Act, the object of the

Act, and the intention of Parliament.

[13] It has been said that “the general tenor of the statute” is that the Labour

Standards Code is “intended to be remedial. It is intended that it should add to the

rights of employees and not diminish those rights”: Deagle v. Shean Co-operative

Ltd. (1995), 143 N.S.R. (2d) 261, [1995] N.S.J. No. 332 (S.C.) at para. 14,

affirmed at 156 N.S.R. (2d) 219 (C.A.). Cromwell J.A. (as he then was) described

the interpretive approach for the Code in Morine v. L & J Parker Equipment Inc., 2001 NSCA 53, [2001] N.S.J. No. 114:

11 … we must review the words of the Code "in their entire context in their

grammatical and ordinary sense harmoniously with the scheme of the Act, the

objective of the Act and the intention of [the Legislature]: see Elmer A. Driedger,

The Construction of Statutes, 3rd edition (Toronto: Butterworths, 1994) at p. 67.

Having done so, if there remains doubt concerning the true meaning of the Code,

it should, as stated by the Supreme Court of Canada in Machtinger and Rizzo

Shoes, be interpreted so that its protections extend to as many employees as

possible and so as to resolve difficulties of language in favour of the claimant.

[Emphasis added.]

[14] Mr. Bellini argues that the effect of the Code is to supplement common law

reasonable notice with a statutory “floor” beneath which the employer cannot go,

namely the minimum notice periods under s. 72(1).

[15] Ausenco says s. 6 of the Labour Standards Code – which provides, in part,

that “nothing in this Act affects the rights or benefits of an employee under any

law, custom, contract or arrangement that are more favourable to him than his

rights or benefits under this Act” – means only that the existence of the minimum

notice provisions in the Code does not preclude the parties from agreeing to greater

notice entitlements. However, Ausenco says, no such terms were negotiated in Mr.

Bellini’s case. In the absence of such agreement, in Ausenco’s view, there is no

entitlement to common law notice that is greater than the statutory notice

entitlement. The question in Deagle, Ausenco says, was whether the employee

could recover both by statute and at common law. There was no evidence of an

existing contract.

[16] The applicant says this is a mischaracterization of s 6; the employee is not

required to negotiate for common law reasonable notice, which is implied into the

contract. Rather, it is the employer’s task to show a clear intention to depart from

this presumption.

[17] In Kaiser v Dural the employer argued that the termination provision of the

contract – which contemplated the “minimum notice required by law” – limited

the notice required. The court found the provision was ambiguous and read it

against the employer on the contra proferentum principle. Ausenco says this

language left it unclear whether the notice provision referred to “common law,

statute or otherwise”, and therefore “it is not difficult to understand why the Court

found the clause to be ambiguous.” I note that in affirming the decision of

Coughlan J., however, the Court of Appeal said:

8 The appellant says that Mr. Kaiser is restricted to the "... minimum notice

required by law" under the terms of his hiring letter and that this means a period

of one (1) week as provided for under section 72 of the Labour Standards Code...

Having regard to section 6 of the Code, we doubt that this argument is sound even

if the hiring letter were to be interpreted as incorporating the Code by reference.

In any case, the judge did not err in finding that the provision of the letter was

ambiguous and interpreting it contra proferentem. [Emphasis added.]

[18] Ausenco says the absence of specific reference to the Code “clearly

distinguishes” Kaiser from this case. The respondent says the comment about

section 6 is obiter, that section 6 was apparently not fully argued at either level of

court, and that there is no full analysis of section 6 provided.

[19] For its own part, Ausenco relies on the Small Claims Court decision in

Hoadley v. Manpower Services Ltd., 2005 NSSM 17, [2005] N.S.J. No. 605, where

the contract provided for notice “as is required by applicable Statute or pay in lieu

thereof, and without further liability to me for notice at common law for wages,

salary or benefits except such as may have been actually earned by me for work

performed as at the date of such termination” (para. 20). The adjudicator concluded

that, on the facts, the contract did not govern the relationship between the claimant

and defendant. Additionally, the language of the contract in Hoadley is quite

different from the language in the Ausenco agreement. I do not find this decision to

be particularly persuasive here.

[20] In Goebel v. Jardine Rolfe Ltd. (1992), 42 C.C.E.L. 290, 1992 CarswellBC

864 (S.C.), the employment contract provided that a terminated employee was

“entitled to receive the compensation provided for in the 'Termination of

Employment' provisions of the Employment Standards Act of British Columbia, in

its then operative form…” (para. 11). The court held that, read in the context of the

rest of the contract, this was not sufficiently clear and unambiguous to deprive the

plaintiff of common law notice.

[21] Goebel was distinguished in Strench v Canem Systems Ltd, 2005 BCSC

1736, [2005] B.C.J. No. 2698, on the basis that “[i]n Goebel … there were clear

ambiguities found by the trial judge. There are no such ambiguities in the case at

bar” (para. 39). The contract in Strench set out specific notice periods. In the event

of employment for more than three months but less than one year, notice was to be

“in accordance with the Employment Standards…” (para. 9). For clarity, the

ambiguity found in Goebel was described as follows:

26 In my view the termination clause in the employment agreement in this case

is not clear and unambiguous. Clause 6(f) provides in part that:

... the Employee shall be entitled to receive the compensation provided for

in the 'Termination of Employment' provisions of the Employment

Standards Act of British Columbia ...

It does not say the employee is "limited" in the compensation he is entitled to

receive by the provisions of the Employment Standards Act, 1980. It does not say

the contract "may be terminated at any time". Clause 6 further provides that:

... provided such compensation is paid in such circumstances, the

Employee ... shall not claim ... any further compensation of any kind or

nature whatsoever arising in any manner from the termination ...

I am left with the question, if the plaintiff is indeed limited to two weeks' notice or

two weeks' pay in lieu thereof, even if wrongfully dismissed, why would the last

paragraph be included in cl. 6, which paragraph appears to be an attempt to limit

damages for wrongful dismissal? As well, on the reading of that part of cl. 6,

payment pursuant to the applicable provisions of the Employment Standards Act,

1980 operates as a condition precedent to the employee, releasing the employer

from any claims arising from termination…

[22] Mr. Bellini cites McLennan v. Apollo Forest Products Ltd. (1993), 49

C.C.E.L. 172, [1993] B.C.J. No. 2078 (B.C.S.C.), where the termination provision

stated that the terms and conditions of employment were “in accordance with the

Employment Standards Act and other legislation of the Province of British

Columbia governing the Employer/Employee relationship in the workplace” (para.

10). The court held that this language did not oust the common law notice

entitlement, and that it incorporated the statutory requirement of “at least” two

weeks’ notice that would apply to the plaintiff under the Act. Meiklem J said:

11 Notwithstanding my determination in the preceding paragraph the express

terms of the employment agreement do not restrict the notice to the minimum set

out in the Act, since the Act uses the terminology of "at least". Thus a

determination of reasonable notice in the circumstances remains to be made in

construing the term of reasonableness implied by common law as a matter of

public policy.

[23] The Alberta Employment Standards Code expressly preserves common law

rights, and qualifies statutory notice requirements by the phrase “at least.” In

Kosowan v. Concept Electric Ltd., 2007 ABCA 85, [2007] A.J. No. 266, the

termination provision provided for notice “in accordance with the Employment

Standards Act…” (para. 1). Berger J.A. said, for the court:

4 The question to be decided is whether the termination clause in the letter

agreement renders inapplicable s. 3(1) of the Code. As we read it, the term of the

agreement provides only that in the event of termination without cause, the

Appellant is entitled to severance pay "in accordance with the Employment

Standards Act of Alberta." (It is conceded here that the reference is to the Code.)

The clause does not, on its face, confine the Appellant to compensation pursuant

to ss. 56 and 57(1) of the Code. On the contrary, the choice of language leaves

open to the employee the ability to pursue an action. To do so, in our opinion,

would be "in accordance with the Employment Standards Code." The provision is

clear and unambiguous.

[24] Mr. Bellini also cites Joseph v. June Warren Publishing Ltd., 2007 ABPC

309, [2007] A.J. No. 1224, where the termination provision required the employer

to comply with “its minimal obligations, if any, under the Alberta Employment

Standards Code.” In holding that this language was not sufficiently clear to oust

common law notice, the court said, “any agreement that derogates from the

common law rights of employees is to be read strictly and will not be extended

beyond a strict literal interpretation of the words used, notwithstanding that there is

a strong inference that the probable intent would go further” (para. 16). To a

similar effect, in Gillespie v. 1200333 Alberta Ltd., 2012 ABQB 105, [2012] A.J.

No. 171, where the employer argued that a reference to the legislation in a policy

and procedure manual was sufficient to oust the common law, the court said:

40 I reject the Respondent's argument that the minimum notice provisions of

the Employment Standards Code … are determinative in this case. A contractual

provision that termination notice will accord with legislated provincial standards

should be interpreted as an agreement regarding minimal notice, not an agreement

to exclude the implied contractual term that dismissal without cause requires

reasonable notice. Although employers are free to make contracts that limit an

employee's notice entitlement to the statutory minimums (see Machtinger … at

paras. 33-35), any such agreement to exclude the employee's common law

protection must be clear and unambiguous. Requiring such clarity where an

employer intends to rely on its strict rights under the Employment Standards Code

accords with the objectives of the Code as summarized by the Alberta Court of

Appeal in Vrana v. Procor Ltd., 2004 ABCA 126 at para. 10:

The Code contains a detailed preamble setting forth its legislative

objectives. In particular, those objectives stress the importance of

employment legislation encouraging the "fair and equitable resolution of

matters arising over terms and conditions of employment". Further and

most important for purposes of this appeal, the preamble expressly

recognizes the salutary effect of open communication between employer

and employee and the vital need for each to understand their respective

rights and obligations.

41 In Vrana, the Court of Appeal considered the temporary layoff provisions of

the Code. It held that where an employer intends to rely on its strict rights under

the Code, it needs to ensure the employee is properly advised of this intention. As

such, it must inform the employee of this and point to the relevant sections of the

Code on which it intends to rely in its notice to the employee (Vrana at para 13).

[25] After referencing Kosowan and several trial court cases, the court concluded

that “a clause that references the division or sections of the Code dealing with

termination notice, combined with the wording ‘will be limited to’, is sufficiently

clear and unambiguous to confine the employee to the statutory minimums and

oust his or her ability to claim for higher damages for wrongful dismissal at

common law. Of course, the parties are never at liberty to contract below the

statutory minimums…” (para. 44).

[26] In Cybulski, a New Brunswick decision, the termination provision stated that

the contract was “subject to provincial legislation regarding termination of

employment” (para. 3). The New Brunswick Employment Standards Act, like Nova

Scotia’s, required “at least” the statutory minimum of notice (para. 18). Glennie J.

rejected the argument that notice was limited to the statutory minimum:

19 Thus the wording contained in the New Brunswick legislation is similar to

the British Columbia legislation in that both contain the words "at least". In my

opinion Mr. Cybulski's employment Contract could not fix the notice period on

termination to be the period set out in the Employment Standards Act because the

statute itself, by providing that notice was required of "at least" the minimum

statutory period, does not fix the notice period. The Contract only converts the

provisions of the Employment Standards Act to a floor for benefits rather than a

ceiling. Accordingly, since the Contract failed to fix the notice period with

sufficient clarity, the common law presumption of reasonable notice continues to

operate. The common law presumption in favour of reasonable notice has not

been rebutted with express contractual language to the contrary.

[27] As such, Mr. Bellini argues that the interpretation of employment standards

legislation with similar language to the Nova Scotia legislation, as applied to

employment contracts with similar provisions to the termination section here,

support the conclusion that he retains a full common law notice entitlement.

[28] Ausenco says the termination provision ousts the common law in favour of

the minimum notice periods under the Labour Standards Code. It relies on

University of British Columbia v. Wong, 2006 BCCA 491, [2006] B.C.J. No. 2846,

where the court held that the statutory provisions “providing for notice or pay in

lieu of notice are incorporated into the contract in issue. The effect is that the

language of the ESA concerning notice or pay in lieu of notice is part of the

contract. It is as if the draftsman included the words either in the text of or as a

schedule to the contract” (para. 34). The chambers judge had noted the arbitrator’s

conclusion that “even if the ESA governed, then it prescribed a minimum notice

period only” (para. 22). According to the chambers judge, “Mr. Wong's counsel

has conceded that the arbitrator was incorrect on this point and I will make no

further comment about it” (para. 22). The Court of Appeal added that “the

incorporation by reference in this case does not involve an acceptance of any part

of the substantive content of the ESA” (para. 35). The Court of Appeal did not

undertake any specific consideration of the language.

[29] Wong was followed in Van't Slot v. OncoGenex Technologies Inc., 2010

BCPC 249, [2010] B.C.J. No. 1942, where the court said:

24 … I cannot see any substantive difference between "An employee ... shall

receive notice or pay in lieu of notice in accordance with the provisions of the

Employment Standards Act" (Wong) and "... the Employee shall be entitled to ...

notice or severance payments to the Employee as required pursuant to the

provisions of the Employment Standards Act ... as amended from time to time"

(this case).

[30] Given the lack of analysis of the language in question, I do not believe that

Wong clearly supports the respondent’s interpretation of the phrase “in accordance

with…” It merely supports the conclusion that the Act was incorporated by

reference into the employment contract, which is not in dispute. As the applicant

argues, Wong was not concerned with the interpretive issue we are dealing with

here.

[31] Ausenco further argues that the absence of the word “minimum”, or of any

reference to a “ceiling” to entitlements upon termination, does not mean that Mr.

Bellini is entitled to common law notice. The respondent cites McKay v.

LightRoom F/X Inc., 2009 BCPC 321, [2009] B.C.J. No. 2059, where the relevant

termination provision stated that “termination will be in accordance with the

Employment Standards Act…” (para. 11). Noting that Wong was binding, the court

held that this language “sets out the applicable notice period with sufficient clarity

and particularity to rebut the presumption of reasonable notice” (para. 45).

[32] The applicant says Ausenco overstates the value of the British Columbia

cases, particularly those that post-date the 1996 legislative amendment replacing

the “at least” phrasing with “equal to.” After that amendment, the British Columbia

courts stopped applying McLennan, but they did not overrule it. Thus, it is

submitted, cases such as Van't Slot, McKay, and Strench do not displace the

McLennan reasoning when applied to the language of the Nova Scotia Code. As

the applicant submits, a British Columbia termination provision that contemplates

notice “in accordance with” the Employment Standards Act would clearly oust the

common law, since the legislation, as amended, sets out the requisite notice

periods, rather than only setting a minimum.

[33] In Stevens v. Sifton Properties Ltd., 2012 ONSC 5508, [2012] O.J. No. 6244,

the employment contract contemplated “notice or payment in lieu of notice, and/or

severance pay, in accordance with the Employment Standards Act of Ontario”

(para. 4). On the defendant’s summary judgment motion, the plaintiff argued that,

pursuant to Machtinger, a contract’s “mere indication of minimum notice to be

provided, (either expressly or by reference to legislation that speaks only to

minimum required notice), is not necessarily inconsistent with an intention to

provide more generous notice in accordance with the common law, and therefore

should not be regarded as sufficient to rebut the presumption” (para. 32). Leach J.

acknowledged that McLennan and Cybulski supported this interpretation:

36 The McLellan [sic] and Cybulski decisions therefore do suggest that, where

an employment contract incorporates provisions of employment standards

legislation by reference, that will not suffice to provide the clarity of intention

required to displace the presumption that reasonable notice in accordance with

common law is required, if the legislation in question merely establishes

minimum notice requirements without going further to specify precisely what

notice is required; e.g., by indicating that the legislative requirements are not only

a floor but a ceiling.

[34] However, Leach J went on, this was not the end of the matter. In Wood v.

Industrial Accident Prevention Association, [2000] O.T.C. 605, [2000] O.J. No.

2711 (Sup. Ct. J.), Leitch J. had held “a provision requiring termination ‘in

accordance with the Employment Standards Act of Ontario’ sufficient to displace

the presumption of notice in accordance with common law requirements” (Stevens,

para. 39). Wood had been given under an earlier version of the Ontario legislation

which did not include the words “at least” in the notice provision; it had since been

amended to do so, bringing it into line with the British Columbia and New

Brunswick legislation considered in McLennan and Cybulski (paras. 40-42).

[35] The Ontario caselaw, however – particularly the Court of Appeal decision in

MacDonald v. ADGA Systems International Ltd., [1999] O.J. No. 146 (C.A.) – led

Leach J. to a different conclusion. In MacDonald, the termination provision

required “not less than one (1) month's prior written notice…” (para. 18). The court

distinguished this language from Machtinger’s, which stated, “[e]mployer may

terminate employment on giving Employee 2 weeks' notice or salary ... in lieu of

notice” (MacDonald, para. 19). Abella J.A. (as she then was) said, for the court:

20 In my view, the clause in Machtinger is easily distinguishable from the

termination provision in MacDonald's contract. The Machtinger clause sets out a

specific notice period which, on its face, violates the four week notice provisions

required for these employees under the Employment Standards Act.

21 The MacDonald clause, on the other hand, does not, on a plain reading,

conflict with any legislative entitlement. ADGA is required to give MacDonald

not less than 1 month's notice. This does not contravene the duty to comply with

the Employment Standards Act's minimal requirement of one week's notice per

year of service, up to a maximum of eight weeks.

…

23 It would no doubt have been linguistically preferable had the termination

provision in MacDonald's contract contained words after the term of notice such

as "in accordance with the relevant provisions of the Employment Standards Act."

But while this layer of specificity might have enhanced the clarity of the parties'

intentions, its absence does not detract from the provision's legality.

24 In this case, the common law presumption in favour of reasonable notice has

been rebutted. There is a clear - and clearly expressed - term providing for not less

than one month's notice. Neither on its face, nor inferentially, does this term

provide for a notice period less than that required by the Employment Standards

Act, nor reflect an attempt to contract out of that requirement. Accordingly, the

contractual term prevails over the common law presumption.

[36] Leach J. said, in Stevens:

43 The problem with the plaintiff's argument is that Justice Leitch did not base

her decision in Wood (and her rejection of [McLennan]) solely on the difference

then existing between the British Columbia and Ontario legislation. At paragraphs

15-17, she also relied expressly on the Court of Appeal's decision in MacDonald

[…], in which the common law presumption was displaced not by legislation

incorporated by reference, but by the contract's express reference only to a

minimum notice requirement:

[…] In MacDonald the court interpreted a provision in an employment

contract which provided that either party could terminate the agreement at

any time by giving not less than month's prior written notice. The Court of

Appeal held that this clause did not, on its plain reading, conflict with any

legislative entitlement and there was no attempt to contract out of the

minimum requirements of the Act with the result that the term of the

contract prevailed over the common law presumption. ...

I am satisfied that the contractual term in question is clear and sets out the

applicable notice period with sufficient particularity to rebut the

presumption of reasonable notice. I further find that the clause in question

meets the policy considerations set out in Machtinger and I find that the

reasoning of the Ontario Court of Appeal in MacDonald is applicable.

The contract in question clearly provides an entitlement to a period of

notice which is not less than that required by the Employment Standards

Act. It is not an attempt to contract out of the provisions of that Act and, as

found in MacDonald, these contractual provisions prevail over the

common law presumption. [Emphasis added in Stevens.]

44 In the result, Justice Leitch found in Wood, as do I, that our Court of Appeal

has held that language in an employment contract merely specifying a minimum

notice period will suffice to displace the common law presumption, provided the

specified minimum does not conflict with the legislative requirements.

…

46 In that regard, I see no logical or meaningful distinction between the

MacDonald case and the case before me. Here as there, the termination provision

in question admittedly specifies only minimum notice requirements by

incorporating, via reference, the "at least" provisions of the "new" Ontario

employment standards legislation. However, incorporation of the legislative

notice requirements also means the specified minimum notice requirements of the

contract self-evidently will not conflict with those of the legislation. Pursuant to

MacDonald, that is sufficient to displace the common law presumption.

[37] Leach J. repeated that the termination provision in MacDonald “did not

purport to incorporate the applicable employment standards legislation by

reference. It merely specified a minimum notice period… For the Court of Appeal,

that was sufficient to displace the common law presumption” (para. 45). As a

result, there was “no logical or meaningful distinction” between MacDonald and

the Stevens case: “incorporation of the legislative notice requirements also means

the specified minimum notice requirements of the contract self-evidently will not

conflict with those of the legislation. Pursuant to MacDonald, that is sufficient to

displace the common law presumption” (para. 46).

[38] Leach J. also held that the post-MacDonald Ontario Court of Appeal

decision in Ceccol v. Ontario Gymnastic Federation (2001), 204 D.L.R. (4th) 688,

[2001] O.J. No. 3488 – which indicated that a “high level of clarity” is required to

rebut the presumption of common law reasonable notice – did not change the result

(Stevens at paras. 31 and 47). The more recent decision in Clarke v. Insight

Components (Canada) Inc., 2008 ONCA 837, [2008] O.J. No. 5025, decided under

the new “at least” language of the Employment Standards Act, had “found the

contract provisions to be clear and unambiguous, not contrary to the employment

standards legislation, and therefore sufficient to displace the presumption of

reasonable notice required at common law” (Stevens, para. 48). The contract in

Clarke provided:

… Your employment may be terminated without cause for any reason upon the

provision of reasonable notice equal to the requirements of the applicable

employment or labour standards legislation. By signing below, you agree that

upon the receipt of your entitlements in accordance with this legislation, no

further amounts will be due and payable to you whether under statute or common

law. [Clarke, para. 1]

[39] The Court of Appeal held:

4 … In our view the effect of this clause is clear. The words "reasonable

notice" cannot be read in isolation. They must be read in the context of the clause

as a whole. When read in their proper context, the words "reasonable notice"

cannot be taken to import the general common law standard. Rather, the clause

clearly provides that the reasonable notice period to which the employee is

entitled is "equal to the requirements of the applicable employment or labour

standards legislation." To resolve any possible doubt, the concluding words of the

clause exclude any further amounts "whether under statute or common law."

[40] The applicant maintains that Leach J. made errors in analysis due to over-

reliance on MacDonald and in rejecting McLennan and Cybulski without adequate

explanation. For instance, Leach J. found that MacDonald indicated that a

termination provision need not include a floor and a ceiling to oust the common

law. However, the applicant says this is not the case. The issue in MacDonald, he

submits, was the enforceability of the termination clause, not its interpretation.

There was no general pronouncement about the interpretation of termination

provisions. Further, the contract in MacDonald did not incorporate statutory

provisions. Moreover, to be clear, the governing statutory provision in MacDonald

did not include the “at least” phrasing found in the Nova Scotia legislation, but

imposed specified definite notice entitlements.

[41] The applicant also says there were significant differences between the

provisions in MacDonald and those in Stevens that Leach J. did not consider. He

says it was implicit in the wording of the termination provision in MacDonald that

the parties had agreed on one month’s notice. No such agreement existed in

Stevens, nor did the applicant in this case agree to the minimum notice under the

statute. He agreed to notice in accordance with the Labour Standards Code –

which includes common law notice. The MacDonald analysis, he argues, will only

govern where the employee has agreed to the statutory minimum.

[42] The applicant emphasises that, unlike in Machtinger – where the lack of

notice in the contract violated the fixed-notice provisions of the legislation – the

issue here is not the enforceability of the contract, but whether it ousts common

law notice by “clearly” providing an alternative.

[43] On a consideration of all the relevant law, I conclude that I should follow the

authorities requiring a higher level of clarity in termination provisions that are said

to oust common law notice. The Court of Appeal decision in Kaiser alludes to this

reasoning, although admittedly the point was not directly dealt with. I find the

reasoning in cases such as McLennan, Cybulski and Kosowan persuasive. I take

note of Clarke, but the provision in that case specifically referred to “reasonable

notice” and stated clearly that “no further amounts will be due and payable …

whether under statute or common law.” I believe that is significantly clearer and

more specific than the language I am dealing with here. The provision in this case

is at best ambiguous as to whether the parties intended the statutory minimum to

apply, or simply whether the applicable notice would be consistent with the

legislation. It would not be difficult for an employer to draft a termination clause

that leaves no doubt as to the parties’ intention to oust common law notice. This

language does not do that. I am not convinced that the court should apply a

strained interpretation to attribute such meaning to contract language that does not

specifically say so. As such, I am not convinced that the termination provision

ousted Mr. Bellini’s right to common law notice.

The reasonable notice period

[44] The factors in Bardal v Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont.

S.C. (H.C.J.) govern the quantification of reasonable notice. These factors are (1)

the character of the employment; (2) the length of service of the employee; (3) the

employee’s age; and (4) the availability of similar employment, having regard to

the experience, training, and qualifications of the employee. This analysis has been

endorsed by the Nova Scotia Court of Appeal: Silvester v. Lloyd's Register of

North America Inc., 2004 NSCA 17, [2004] N.S.J. No. 37, at para. 20.

[45] Mr. Bellini says a nine-month reasonable notice period is appropriate. In

particular, he submits that the availability of similar employment is a major factor

in the present calculation. In his view, the state of the Canadian oil and gas

industry weighs heavily under the fourth Bardal factor.

[46] Ausenco says the reasonable notice period should be between three and five

months. The respondent says Mr. Bellini’s skill set is highly transferable, as

demonstrated by his employment history: he has held different positions with

relatively short periods of retention, including with Ausenco. Further, he was hired

in his late-fifties, suggesting that his current age of sixty-one years should not

automatically be considered an obstacle in his search for further employment.

Finally, Ausenco says reasonableness applies to the employer as well as the

employee: see Bent v. Atlantic Shopping Centres Ltd., 2007 NSSC 231, [2007]

N.S.J. No. 420, at para. 94. In this case, the impugned termination was not a

surprise and was tied to factors beyond the employer’s control.

[47] There are several approaches in the caselaw to the assessment of the Bardal

factors. One line of cases in Ontario, such as Ryshpan v. Burns Fry Ltd. (1995), 10

C.C.E.L. (2d) 235, [1995] O.J. No. 1132 (Ont. Ct. J. (Gen. Div.), adopted a “rule of

thumb” using the formula of one month of notice per year of service as a starting

point. This approach was rejected by the Ontario Court of Appeal in Minott v.

O'Shanter Development Co. (1999), 168 D.L.R. (4th) 270, [1999] O.J. No. 5,

where Laskin J.A. said, for the court:

71 Those who support the rule of thumb approach to calculating the period of

reasonable notice argue that it accords with popular perception, that it is reflected

in corporate severance policies, and, most important, that it provides "some

predictability and certainty to the calculation ... while at the same time allowing

for flexibility by adjusting for various factors."

72 Predictability, consistency and reasonable certainty are obviously desirable

goals in employment law - both for employers and for those advising employees

who have been or are about to be dismissed - a point emphasized by Lacourciere

J.A. in his majority reasons in Cronk. These goals, however, are best achieved by

a careful weighing and blending of the Bardal and other factors relevant to the

calculation of reasonable notice, by establishing reasonable ranges for similar

cases, recognizing that no two cases are the same, and even by establishing upper

limits for particular classes of cases where appropriate.

73 The rule of thumb approach suffers from two deficiencies: it risks

overemphasizing one of the Bardal factors, "length of service", at the expense of

the others; and it risks undermining the flexibility that is the virtue of the Bardal

test. The rule of thumb approach seeks to achieve this flexibility by using the

other factors to increase or decrease the period of reasonable notice from the

starting point measured by length of service. But to be meaningful at all, this

approach must still give unnecessary prominence to length of service. Thus, in my

opinion, the rule of thumb approach is not warranted in principle, nor is it

supported by authority.

[48] Similarly, in Capital Pontiac Buick Cadillac GMC Ltd. v. Coppola, 2013

SKCA 80, [2013] S.J. No. 454, the Saskatchewan Court of Appeal held that a “rule

of thumb” approach “is not supported by the jurisprudence and is inconsistent with

Bardal” (para. 22). The Nova Scotia courts have not addressed this point in detail.

In MacKinnon v. Acadia University, 2009 NSSC 269, [2009] N.S.J. No. 411,

Warner J. stated that the “rule of thumb” had no place in the assessment, being

inconsistent with Bardal (para. 113). I am satisfied that the weight of the caselaw

militates against employing the “rule of thumb.” As MacKinnon suggests, what is

required is an individualized approach to assessing the Bardal factors.

[49] The character of the employment. Mr. Bellini was a senior mechanical

engineer who offered guidance to junior engineers, but did not actually hold

traditional executive or managerial responsibilities, such as hiring and firing

personnel.

[50] Length of service. Mr. Bellini began his employment with a different

company on March 30, 2012, and signed a new contract with Ausenco on July 22,

2013. The Ausenco contract recognized the former seniority date. The fact that the

new contract incorporated the former contract’s seniority date, with no express

provision rebutting the presumption of continuance, suggests that the length of

service should be calculated from March 30, 2012: see Peter Barnacle and Michael

Lynk, Employment Law in Canada (Toronto: LexisNexis, looseleaf), vol. I, at

§3.13. As such, notice should be calculated from the earlier date.

[51] Age of the employee. Geoffrey England writes in Individual Employment

Law (Toronto: Irwin Law, 2008) that courts “treat age as an important factor in

increasing the notice period” (p. 317). Mr. Bellini contends that, at sixty-one years

old at the time of termination, he is approaching retirement, thereby limiting the

reasonable radius of his job search. Ausenco says Mr. Bellini’s history of relatively

short-term work – and the fact that he was hired for the job in question at fifty-

seven years of age – suggests that his age should not automatically be considered a

hindrance to finding new employment. I am inclined to agree that in view of his

age at the time of his last hire, and his relatively brief period in that position, his

age should not be considered the major factor, though it will be a significant

consideration.

[52] Availability of similar employment. This is a primary factor for

determining the period of reasonable notice. England notes that “courts have

always placed paramount weight on whether or not the employee can reasonably

be expected to find replacement work, recognizing that employees need a financial

cushion to support them while they conduct a job search” (Individual Employment

Law, p. 311). As the New Brunswick Court of Appeal put it in Bramble v. Medis

Health and Pharmaceutical Services Inc. (1999), 175 D.L.R. (4th) 385, [1999]

N.B.J. No. 307, “[t]he primary objective of notice is to provide the terminated

employee with a reasonable opportunity to seek alternate suitable employment”

(para. 57).

[53] The parties disagree as to whether the general decline of the oil and gas

industry is relevant to the availability of similar employment. Ausenco says Mr.

Bellini has a highly transferable skillset. He argues, however, that the same

economic factors that impelled his layoff (such as the decrease in the price of oil)

also make it more difficult for him to find similar employment.

[54] In Stuart v. Navigata Communications Ltd., 2007 BCSC 463, 2007

CarswellBC 670, the court commented that “[w]here the industry at issue … is

undergoing a restructuring which will lead to minimal availability of similar

employment, the notice period may be increased. This is so because a poor general

work environment extends or increases the loss actually suffered by an employee

from the breach of his employment contract” (para. 13). In Kelly v. Monenco

Consultants Ltd., [1987] O.J. No. 563, 1987 CarswellOnt 1770 (Ont. S.C.

(H.C.J.)), for instance, the plaintiff was a 44-year-old mechanical engineer who

was dismissed after four years’ employment. The court acknowledged the impact

of an oil industry slowdown on the plaintiff’s ability to find new employment

(para. 23). Reasonable notice was assessed at ten months.

[55] In Bohemier v Storwal International Inc. (1983), 4 D.L.R. (4th) 383, [1983]

O.J. No. 3312, the Court of Appeal affirmed the reasoning of the Trial Judge,

suggesting that the usual “cushion” policy would unfairly jeopardize a company’s

ability to dismiss employees in difficult economic times. A potential flaw in this

position is described in Employment Law in Canada: “It rests on the flawed

assumption that adverse economic conditions have an equivalent impact on

employers and employees. This is palpably not so” (§14:114).

[56] A further difficulty is Mr. Bellini’s assertion that, given his the location of

his home and his wife’s job in Halifax, he should not be expected to relocate at his

age. In effect, this asserts that similar employment must be both in kind and in

geographical proximity.

[57] Discussion. Both parties advance several cases in support of their respective

positions. Mr. Bellini relies on Chen v. Toronto Hydro Electric Commission, 2000

CarswellOnt 1108 (Ont. Sup. Ct. J.), where a 52-year-old junior electrical engineer

with about six years’ employment was assessed a reasonable notice period of

fifteen months. (However, the plaintiff held a PhD in his field and entered the

workforce with relatively few years for remunerative work.) In Ghate v. Acres

Consulting Services Ltd. (1986), 15 C.C.E.L. 20, 1986 CarswellOnt 855 (Ont. S.C.

(H.C.J.)), the plaintiff was a 50-year-old hydraulic engineer with four years’

employment. The court found an appropriate notice period of ten months. In Butler

v. Potash Corp. of Saskatchewan Mining Ltd. (1986), 47 Sask. R. 187, 1986

CarswellSask 543 (Sask. Q.B.), a 62-year-old senior mechanical engineer with

under three years’ employment received notice of nine months. In Dailey v.

Falconbridge Ltd., [1986] O.J. No. 2038 (Ont. Dist. Ct.), a 55-year-old engineer

working as a geomechanics supervisor with four years’ employment was assessed

a reasonable notice period of twelve months. In Lederhouse v. Vermilion Energy

Inc., 2015 ABQB 387, the plaintiff was a 56-year-old geologist with 3.5 years’

employment, who was assessed a reasonable notice period of nine months. The

court accepted that the plaintiff’s proximity to retirement put her at a disadvantage

in obtaining new employment (para. 30).

[58] The respondent references a line of cases supporting a three-to-five month

notice period, but only Slater v. Sandwell Inc. (1994), 5 C.C.E.L. (2d) 308, [1994]

O.J. No. 1317, involves employment reasonably similar to Mr. Bellini’s. In that

case a professional mechanical engineer had been terminated at the age of 59, after

being employed for two months and two years. The court considered, inter alia,

the “the cyclical nature of the engineering consulting industry” (para. 54), and

found the reasonable notice period to be four months.

[59] Ultimately, the cases relied on by the parties provide a general sense of the

range of notice in cases similar to this one, but the ultimate determination is an

individual one. In this case, upon weighing the factors discussed above against the

authorities, I am satisfied that the reasonable notice period is six months.

Canada Pension Plan

[60] Mr. Bellini seeks recovery for lost Canada Pension Plan contributions, citing

Bell v. Izaak Walton Killam Hospital for Children (1986), 74 N.S.R.(2d) 309

(S.C.T.D.), where Nunn J. included in the award “the amount of the employer's

premium towards Canada Pension Plan during the period of the notice” (para. 81).

Ausenco says Bell should be ignored, because it is thirty years old and provides no

analysis on the point. This is not a basis to ignore the case, however. More

relevantly, Ausenco points to caselaw to the effect that such an amount should not

be awarded absent evidence of loss. For instance, in Monk v. Coca-Cola Bottling Ltd. (1996), 150 N.S.R. (2d) 192, Saunders J. (as he then was) said:

[67] The plaintiff has failed to prove a loss with respect to the defendant's

contributions to the Canada Pension Plan. The Canada Pension Plan makes

allowance for the contingency that a contributor may be out of work for some

time during his working career. Therefore it is quite possible that the plaintiff lost

nothing by the failure of the defendant to make contributions to CPP during the

notice period. If there has been a loss, it is incalculable. No evidence was

presented at trial as to what that loss, if any, might be.

[61] See also Horechuk v. I.M.P. Group International Inc., 2012 NSSC 96,

[2012] N.S.J. No. 174, at para. 33, where Bourgeois J. (as she then was) followed

Monk.

[62] Mr. Bellini accepts the Monk reasoning, but argues that the loss is obvious

from the earnings calculations that are used to determine CPP entitlement. He cites

Shinn v. TBC Teletheatre B.C., 2001 BCCA 83, [2001] B.C.J. No. 223, where

McEachern C.J.B.C., speaking for the court on this point (see para. 26) said:

20 In my judgment, it should not be necessary in a wrongful dismissal action

like this one to require a plaintiff to bear the cost of such a study. The legislation

demonstrates that pension entitlement depends upon the amount of contributions,

and such amounts should be recovered unless the defendant establishes that the

loss is something less than the actual premium dollar shortfall during the period of

reasonable notice.

[63] As the applicant argues, the loss of CPP contributions during the notice

period makes it more likely that more of Mr. Bellini’s lower-earning years will be

counted among his pensionable earnings. The Monk reasoning does not directly

address the form such proof would take.

Mitigation

[64] An employee cannot recover damages for reasonable notice if they could

have been avoided with reasonable effort. The burden to establish a lack of

mitigation is on the employer: Red Deer College v. Michaels, [1976] 2 SCR 324, at

331. A failure to mitigate will support a reduced notice period: see Chambers v.

Axia Netmedia Corp., 2004 NSSC 24, [2004] N.S.J. No. 26, at paras. 99-101.

[65] Ausenco says there are gaps in Mr. Bellini’s job search log, and contends

that, in many cases, his efforts comprised only of registering with various job

posting entities (such as Career Beacon). Essentially, Ausenco says the applicant’s

job search should have been more vigorous; for instance, the respondent points out

that he took two vacations (and postponed an interview due to vacation) since his

dismissal.

[66] Mr. Bellini says his efforts were reasonable, and included diligently

monitoring available job postings and applying for several similar positions. He

owns a house in Dartmouth and his wife works in Halifax. As they approach

retirement age, he argues that it is reasonable not to relocate in search of work.

Moreover, submits that a “cooling off” period, and occasional vacations while

searching for employment, are not unreasonable: see, for instance, Zimmer v.

Cascade Construction Ltd. (1985), 39 Alta. L.R. (2d) 66, [1985] A.J. No. 689

(Alta. Q.B.), at para. 10.

[67] In all the circumstances, I am not convinced that Ausenco has established a

lack of reasonable efforts by Mr. Bellini. Mitigation is not a matter of picking apart

every detail of the applicant’s job search; on the evidence, I cannot conclude that

there was a lack of reasonable mitigation efforts by Mr. Bellini.

Conclusion

[68] Accordingly, I find that the termination provision did not oust the right to

common law notice; the applicant was entitled to reasonable notice of six months;

the applicant is entitled to recover the CPP contributions; and the respondent has

not established a failure to mitigate.

[69] If the parties are unable to agree on costs, they may provide costs

submissions within thirty days of the release of this decision.

LeBlanc, J.

bellini v ausenco engineering alberta inc., 2016 nssc … · supreme court of nova scotia citation:...

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