Family squabble turns ugly

A perfect case for Wallace damages

An Alberta oil patch worker was awarded 26 months’ notice — including four months’ additional notice for the way the termination was handled — after a court ruled he had been constructively dismissed.

Justice M.A. Binder of the Alberta Court of Queen’s Bench said the way Norman Miller was treated was “exactly the kind of situation” the Supreme Court of Canada had in mind when it made its landmark 1997 ruling in Wallace v. United Grain Growers.

In Wallace the court said that during dismissal employers must be candid, reasonable, honest and forthright with their employees and refrain from engaging in conduct that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive. Injuries resulting from such conduct such as humiliation, embarrassment and damage to one’s sense of self-esteem are worthy of compensation depending on the circumstances.

All in the family

Norman Miller, 51, started working full-time for Milcorp Industries Ltd. in 1971, a family-owned company that was started by his father. In 1999 the family decided to sell the business to ICO Canada Inc.

At the time of the sale, the common shares were held 30/30/40 per cent respectively by Norman and his brothers Wayne and Dennis.

Milcorp was in the business of transportation of pipes, pipe inventory storage and related services for major oil companies. Norman rose over the course of his employment from a truck driver to the position of special project supervisor, the position he held when the company was sold in 1999.

At the time, in keeping with his position of authority, he had a private office, a desk, a phone, a vehicle, access to other company vehicles, security clearance outside of regular business hours, signing authority and access to files and manpower.

At the time of the sale, Dennis drafted an agreement on Milcorp letterhead. It said Norman’s position would continue to be that of special projects supervisor after the sale. Norman and Dennis signed this agreement. The agreement also stated that Norman’s base salary was in excess of the salary that would normally be paid to someone in his position and therefore future increases might not occur until other base salaries had reached his level.

After the sale, things started to change. The first instance occurred when he was told by the manager of the maintenance shop that he no longer had permission or authorization to be in the shop. This was apparently on the direction of Dennis, who was the chief executive officer of ICO Canada.

When the company bought equipment in 1999 and 2000, Norman was not involved in the purchase, specifications or design. Another manager told Norman he brought the lack of consultation with Norman to Dennis’ attention and Dennis said not to worry about it, he would look after letting Norman know. But that never happened.

By February 2001, Norman’s duties had changed so much that he had no workers available to him, no projects he was responsible for and no involvement in the management of the company. He was doing general “one-man labour jobs” in order to stay active, the court said.

Wage rollback proposed

In addition to the change in employment duties, a number of other incidents occurred which affected the work environment for Norman. In the summer of 1999, the idea of Norman taking a pay cut was floated. It came up again in the fall. Norman asked Dennis to put the proposal in writing and he would give it to his lawyer — the matter was not raised again. Dennis didn’t ask any other worker to take a pay cut during this time.

In 1999 Norman received business cards that described his position as “foreman.” No one had discussed the title change with him — the cards were just left on his desk.

In August 2000 Kelly Miller, Dennis’ ex-wife, got in touch with Norman about some information about the sale of the company.

In October Dennis accused Norman of having provided confidential information to Kelly regarding the sale of Milcorp, resulting in a heated argument. After this meeting, things deteriorated drastically.

The disappearing desk

On Nov. 8, 2000, a couple of co-workers told Norman to enjoy eating his lunch in his office “while it still lasts.” He didn’t understand what they were talking about.

Two days later, it became much clearer. That’s when workers showed up at his office, with no prior notice while Norman was eating his lunch, and took his desk. Norman continued to work, using his briefcase on his lap as a work surface. His files were in a box.

Dennis testified that new employees were coming into the office and available resources were reallocated to accommodate the situation. He said it was his decision to remove the desk from Norman’s office, and that he did not discuss it with him until after the desk had been removed.

On Nov. 13 Norman showed up at work and found that his security pass did not work. Dennis testified that he ordered that Norman’s security code be deleted from the system, but did not discuss it with him prior to deleting it.

The Christmas holidays over 2000 were not enjoyable for Norman. He was nervous and upset about what was going on at work. When he returned on Jan. 15, 2001, he found a part-time employee in a new desk in his old office. Norman’s files and belongings were along the wall, and there was no indication as to where he should work.

On Jan. 23, 2001, he sent Dennis a letter outlining his concerns about his employment. He referred to the agreement the two signed prior to the sale and noted that his office, desk and other resources required to carry out his duties and responsibilities had been taken away from him. He referred to the cancellation of his security access and stated that he had been assigned work that was not consistent with his duties and responsibilities.

He asked to be told when he could expect to receive his office and desk back, and said he would appreciate being assigned duties and responsibilities consistent with his position.

Dennis responded with a letter dated Jan. 31, 2001. It said Norman’s duties and responsibilities had not changed and were consistent with those outlined in the agreement. It said a private office was never a requirement of the position and that relocating him to the foreman’s office was consistent with the requirements of his position and there were no plans to reassign a private office to him. It also said Norman did not require after hours security access and that, effectively immediately, Norman would be reporting to the operations manager.

Nervous breakdown

On Feb. 24, 2001, Norman had a nervous breakdown. After returning from hospital he sent an e-mail to Dennis stating he would not be returning to work because of how he had been treated. He said he had been dismissed in everything but name.

Dennis responded by e-mail. He took the position that no material change in duties or conditions had occurred that could be construed as constructive dismissal and, accordingly, his notification was considered a voluntary resignation.

The court said Norman had been constructively dismissed.

“Although some of the changes in his employment might be attributable to changes in the organizational structure of the company after the sale in 1999, the end result was that Norman occupied a position far inferior to that which he agreed to in the 1999 agreement,” said Justice Binder. “Not only was he relieved of a number of his former duties and responsibilities, he was also deprived of the trappings of his position to the point that he had no office or desk for a significant period of time.”

The court said it was clear such treatment could and would result in psychological harm. It rejected a claim by the company that if there was a substantive change in employment, it happened in 1999 and that’s when Norman should have raised it as an issue. In Islip v. Northmount Food Services Ltd. the court said, essentially, that in the face of a breach of a fundamental term, the employee’s decision whether to treat the employment relationship as being at an end must be made within a reasonable time, “but he is entitled to a few days, or even a couple of weeks to think it over.”

But Justice Bender rejected that argument in this case. He said Norman was never presented with a clear substantial change.

“What occurred … were a series of changes, none of which on its own might have been enough for Norman to reasonably perceive a fundamental breach,” said Justice Bender. “When viewed cumulatively, these changes constituted a substantial change to his employment status, culminating concurrently in his dismissal and nervous breakdown.”

He said Dennis should have recognized the humiliation, embarrassment, loss of respect, dignity and self-esteem Norman would suffer because of what happened at work.

“(Dennis) would have recognized this but for his blindness created by his animosity towards Norman resulting from (his) view that Norman had sided with Dennis’s wife during a very acrimonious divorce between them,” the court said. It awarded 22 months notice, plus an additional four months of Wallace damages for the way the termination was handled, for a total award of 26 months.

For more information see:

Miller v. ICO Canada Inc., 2005 CarswellAlta 397, 2005 ABQB 226 (Alta. Q.B.)

Islip v. Northmount Food Services Ltd., 1988 CarswellBC 722, [1988] B.C.J. No. 1161, 20 C.C.E.L. 250 (B.C. C.A.)

Why Wallace damages were awarded

Citing the Supreme Court of Canada’s decision in Wallace, Justice Bender underlined the fact that the time at which the employment relationship ruptures is the time when the employee is most vulnerable and in need of protection.

The employer said Norman did not complain about the changes to his employment. Norman countered with a charge that his complaints fell on deaf ears. He was suffering from increasing stress and depression. Further, in a number of conversations with Dennis over the years prior to his departure, Dennis would raise is voice, sometimes yelling and “pushing his weight around,” he said.

Norman’s Jan. 23, 2001, letter was an “SOS,” the court said — he had been pushed to the breaking point. The reply from Dennis was essentially “read your contract.” Given Norman’s experience to that time, he was justified in perceiving any offers to discuss the situation as being insincere, the court said.

“The law not only expects but requires an employer to treat its employees with respect and dignity rather than to subject them to humiliation, embarrassment and damage to their sense of self-worth and self-esteem,” said Justice Bender. “Although the (employer) may not have been untruthful or misleading, it cannot reasonably be argued that the (employer) was not unduly insensitive in the circumstances.”

More about Wallace

For more information about the Wallace decision, click the link below.

The Wallace factor

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