Written by Michael J Weiler

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‍In my December 2015 blog post I reported on the increasing number of cases outside BC where damage awards were exceeding the normal “rough upper limit” of 24 months. I opined that likely the 24-month limit would continue to apply in British Columbia.  The trend of breaking the 24-month ceiling continues in Ontario but with a new twist—namely contractors who are considered to be “dependent contractors” have now received damages based on notice periods exceeding 24 months. In Keenan v Canac Kitchens 2015 ONSC 1055 (appeal dismissed 2016 ONCA 79) the plaintiffs were a husband and wife team who worked for Canac for many years installing and supervising the installation of kitchen cabinets.  After working as employees for a number of years the couple was required to enter into a new arrangement where they were to provide their own trucks and equipment, hire installers (fully paid for by Canac through the couple’s business) and they were paid piece work.  They worked almost exclusively for Canac.  They did not receive EI or WCB coverage and paid their own taxes.  They were called into a meeting in 2009 and told that Canac was going to close its operations and their services would no longer be required.  No notice or pay in lieu was given to either the husband or wife. The court made two very important findings.

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DEPENDENT CONTRACTORS

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First they held that the evidence overwhelmingly supported the conclusion that the couple were “dependent contractors” and as such were “entitled to reasonable notice of termination” [31].  This, in my view, was not a surprising conclusion as the court applied the usual 4 fold test plus the business organization and control tests developed in the case law.  The leading decision in B.C. on dependent contractors who are entitled to notice is Marbry Distributors Ltd. V Avrecan Int. Inc. 1999 BCCA 0172  where the Court of Appeal held that a distributor of  Reebok  products was entitled to notice of termination:For all of the reasons expressed above I would classify the relationship between Marbry and Avrecan as more akin to employee/employer than that of an independent contractor or strict agency.  As such, this relationship falls in that intermediate category as identified in Carter v. Bell, supra, where the agreement may only be terminated with reasonable notice.

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26 MONTHS NOTICE

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What is unusual about the Canac case in my view is the fact the court awarded damages to each of the husband and wife based on 26 months’ notice.  The Court of Appeal in upholding the trial judge’s decision stated:

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‍I agree that the trial judge failed to expressly make a finding of exceptional circumstances.  I note that as part of the agreed statement of facts, the parties presented an agreed damages calculation that included figures for up to 26 months of notice.  This may explain why there is no explicit finding of exceptional circumstances as it clearly indicates that an award beyond 24 months was in the contemplation of all parties.  In any event, however, given the Keenans’ ages and lengths of service, and the character of the positions that they held, I would not interfere with the award.

[32]      Lawrence Keenan and Marilyn Keenan worked for Canac for approximately 32 and 25 years respectively.  Together, their average length of service was 28.5 years.  They were 63 and 61 years of age at the time of termination.  They held supervisory, responsible positions in which they oversaw the installation of Canac’s products and met with Canac’s customers as its representatives.  For over a generation, they were Canac’s public face to the outside world.  Over a period of approximately thirty years – the entirety of their working lives – the Keenans’ income had come from Canac and they relied on that income to support themselves and their family.  Even during the approximately two years that they provided some services to Cartier, a “substantial majority” of the Keenans’ work continued to be done for Canac.  These circumstances justify an award in excess of 24 months and I see nothing wrong in the trial judge’s finding that 26 months’ notice was reasonable.

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‍It is unlikely in my view that a BC Court would come to this same conclusion on the notice period. First as noted in my previous blog the likelihood of a damage award in a wrongful dismissal exceeding 24 months is remote. Secondly the B.C. courts have generally awarded less notice to dependent contractors than employees.  The factors taken into account are quite different.  So for example in Marbry Distributors Ltd. V Avrecan Int. Inc the Court of Appeal reduced the trial judge’s finding of 15 months’ notice and substituted a 9 month notice period. It remains to be seen if these types of cases especially those out of the Ontario Court of Appeal will eventually have an influence on British Columbia courts.  

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Regardless the advice I have given employers for decades remains valid in light of these potentially significant and increasing notice awards — have a binding, enforceable written agreement in place that reduces the amount of notice and the company’s exposure to a large damage award not to mention considerable legal fees.