Contracts suspended, not frustrated, by fire: Court

A New Brunswick company must pay wrongful dismissal damages to three employees it did not rehire after a workplace fire forced it to lay off its employees, the New Brunswick Court of Queens’ Bench has ruled.

Craig Manufacturing, a manufacturer of attachments for heavy construction equipment such as excavators and backhoes, had a factory in Hartland, N.B. On May 7, 2005, the factory was destroyed by fire. Craig told the 85 employees at the factory it intended to rebuild and get them back to work “as soon as we can.” The company paid vacation pay and any “banked time” and issued Records of Employment so the workers could collect unemployment insurance.

A new larger and more advanced factory was built and opened on Feb. 6, 2006. Most of the employees were recalled to work in the new factory, with the exception of three: Peter Davidson, an engineering draftsperson; Laureen Markey, an engineering assistant; and Russell Delong, an oxyfuel operator.

During the construction of the new factory in 2005, Craig sent dismissal letters to the three employees, stating it would not be able to offer them continued employment. Craig said the fire had reduced its business to “nothing but rubble” and its employment contracts with Davidson, Markey and Delong were frustrated because there were no longer any duties for them to perform.

The court found the employment contracts of the three employees were not frustrated, since Craig was still a “viable business” after the fire. The company still existed after the fire, the court said, and it proceeded with rebuilding its factory. It still had a workforce with employment contracts that were “temporarily and partially suspended,” not frustrated. The company told employees it would get them back to work as soon as possible, and Davidson, Markey and Delong could have reasonably expected they would be recalled along with the other workers until they received their dismissal letters months later.

The court ruled the three employees were entitled to reasonable notice, minus the time between their dismissals and the factory’s re-opening on Feb. 5, 2006, during which time they didn’t have a “realistic expectation of being paid” while Craig was rebuilding. Davidson and Markey, who both had 17 years’ service with Craig, were entitled to 17 months’ notice. The court subtracted six and one-half months from Davidson’s award for the time between his dismissal on July 18, 2005, and the re-opening. Markey, who was dismissed on Sept. 25, 2005, had four and one-half months subtracted.

Delong, who was dismissed with Markey on Sept. 25 after 21 years with Craig, was awarded 21 months’ notice minus four and one-half months of unpaid time off before the re-opening. See Davidson v. Craig Manufacturing Ltd., 2008 CarswellNB 429 (N.B. Q.B.).