DATE: 20000320 DOCKET: C30872 COURT OF APPEAL FOR ONTARIO RE: VIREN SHAH (Plaintiff/Respondent) v. XEROX CANADA LTD. (Defendant/Appellant) BEFORE: OSBORNE A.C.J.O., LASKIN and BORINS JJ.A. COUNSEL: Darryl A. Cruz For the appellant Anna Perschy For the respondent HEARD: February 2, 2000 On appeal from the judgment of Cullity J. dated October 22, 1998 E N D O R S E M E N T [1] The plaintiff, Viren Shah, worked for Xerox for twelve and one-half years. On May 21, 1996 he resigned. He then sued for wrongful dismissal. The trial judge, Cullity J., concluded that before his resignation Shah had been constructively dismissed by Xerox. Cullity J. held that Xeroxs treatment of Shah made his continued employment intolerable and, therefore, amounted to an unjustified repudiation of the employment relationship. He awarded Shah damages equivalent to twelve months notice. [2] Xerox appeals only against liability. It makes one submission: the trial judge applied the wrong legal test for constructive dismissal, and had he applied the correct test he would have had to conclude that Shah had not been constructively dismissed. Xerox argues that the trial judge should have ascertained the terms of Shahs employment contract and found that he was constructively dismissed only if Xerox had unilaterally changed a fundamental term of that contract. In other words, to establish that he had been constructively dismissed, Shah had to show that Xerox had breached a specific fundamental term of his employment contract. [3] In making this submission Xerox relies on the judgment of the Supreme Court of Canada in Farber v. Royal Trust Co., [1997] 1 S.C.R. 846 at 864, and on the reasons of this court in Re Stolze and Addario (1997), 36 O.R. (3d) 323. [4] In Farber, Gonthier J. wrote at p. 864: Thus, it has been established in a number of Canadian common law decisions that where an employer unilaterally makes a fundamental or substantial change to an employees contract of employment a change that violates the contracts terms the employer is committing a fundamental breach of the contract that results in its termination and entitles the employee to consider himself or herself constructively dismissed. [5] In Re Stolze this court similarly stated at p. 326: The law is clear that in assessing whether there has been a constructive dismissal of an employee the terms of the employment contract between the parties must be ascertained. The court must then consider whether the act or acts of the employer have been such as to constitute a repudiation of the fundamental terms of the contract. If so, the employee was constructively dismissed when the facts constituting the repudiation were completed. [6] Cullity J., however, concluded that the court may find an employee has been constructively dismissed, without identifying a specific fundamental term that has been breached, where the employers treatment of the employee makes continued employment intolerable. We agree with Cullity J. The passages from Farber and Re Stolze relied on by Xerox reflect a more general principle of contract law. Gonthier J. referred to this general principle in Farber at 195: In cases of constructive dismissal, the courts in the common law provinces have applied the general principle that where one party to a contract demonstrates an intention no longer to be bound by it, that party is committing a fundamental breach of the contract that results in its termination. The application of this principle will vary depending on the conduct of the employer in question. [7] In cases where an employer requires an employee to relocate or take on a different position as part of a restructuring, the court, obviously, must decide whether in doing so the employer has changed a fundamental term of the employment contract. [8] In some cases, however, the employers conduct amounts not just to a change in a specific term of the employment contract but to repudiation of the entire employment relationship. For example, in Whiting v. Winnipeg River Brokenhead Community Futures Development Corp. (1998) 159 D.L.R. (4th) 18 (Man. C.A.), the trial judge concluded that an employee had been constructively dismissed because of a series of incidents culminating in the imposition of probation. The employer had unjustifiably criticized the employee, levelled vague and unfounded accusations against her, and created a hostile and embarrassing work environment. The trial judge concluded that, viewed objectively, the plaintiffs continued employment in such environment was no longer possible. This conclusion was upheld by the Manitoba Court of Appeal. Thus, the decision in Whiting v. Winnipeg reflects the general principle referred to by Gonthier J. in Farber. The employer in the Whiting case had by its conduct demonstrated an intention no longer to be bound by the contract. [9] The case before us is similar. Xeroxs treatment of Shah between November, 1995, and May, 1996, demonstrated that it no longer intended to be bound by the employment contract, and that it had, therefore, constructively dismissed Shah. The following evidence reasonably supports Cullity J.s finding of constructive dismissal. (a) until taking on the new position of technical support analyst in May, 1995, Shah had had a successful career at Xerox, regularly receiving good performance reviews, bonuses and pay raises; (b) the performance concerns raised by Shahs new manager in November, 1995, were largely unsubstantiated and resulted from a misunderstanding about Shahs duties; (c) the subsequent critical performance review on March 18, 1996 provided few details and relied on reports that were not verified; (d) the warning letter received by Shah the following day, March 19, 1996, was not only unexpected, but was unjustified; (e) the warning letter of May 14, 1996, was again short on specifics and again without justification; (f) the letter of May 17, 1996, putting Shah on probation was also unwarranted. The trial judge found that, instead of telling Shah what was expected of him and giving him a reasonable opportunity to respond to the criticisms against him, the responsible Xerox manager became "more authoritarian, impatient and intolerant and subsequently acted impulsively and without justification. [10] On this evidence Cullity J. could reasonably find that Xerox had made Shahs position intolerable and had constructively dismissed him. That finding is entitled to deference in this court. We have not been persuaded that we should interfere with it. [11] The appeal is therefore dismissed with costs. C.A. Osborne ACJO J.I. Laskin J.A. S. Borins J.A. |