New owner, same responsibility

Danaher v. Moon Palace (2000) Ltd., 112 A.C.W.S. (3d) 504 (N.B.Q.B.)

Danaher, 59, was employed as a waitress by the defendant, Colonial Inns Limited, for more than 13 years. She was dismissed from her job as supervisor on Nov. 30, 1999, shortly after the restaurant premises were sold to Moon Palace. Danaher received no severance pay from Colonial Inns upon the sale. A condition of the sale to Moon Palace was that it retain Colonial Inns’ employees. Danaher’s employment was terminated by Moon Palace six months after the sale. She was given $920 in termination pay based solely on her service with Moon Palace.

The court held Danaher was entitled to wrongful dismissal damages from Colonial Inns because she did not consent to the discharge of its obligation to give her reasonable notice nor to a transfer of such obligations to Moon Palace. The new employment contract with Moon Palace did not extinguish the old contract with Colonial Inns — there was simply a new contract with Moon Palace. The court rejected the defendant’s argument that Danaher failed to mitigate her damages by turning down an offer to give her a modified version of her old job back. It was reasonable for her to reject this offer because the job was only for 18 hours per week (as opposed to the 40 hours she had been working previously) and the offer was conditional on her stopping the wrongful dismissal action.

The court awarded 12 months’ reasonable notice plus an additional four months for bad-faith conduct in the manner of dismissal, less the six months of earnings Danaher had earned at Moon Palace. Bad faith conduct was found to exist due to Colonial Inns’ failure to be candid, honest and forthright.

Colonial Inns did not tell Danaher about the sale of the restaurant or its consequences. Colonial Inns verbally told her it would ensure the employees would not be adversely affected by the sale and then failed to live up to that assurance.

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