Canada: Case Law Update: Evans v Avalon Ford Sales (1996) Limited

Last Updated: June 22 2017
Article by Ashley Savinov

Earlier this year, the Newfoundland and Labrador Court of Appeal unanimously upheld the decision of the Trial Division in Evans v Avalon Ford Sales (1996) Limited. The trial decision was discussed in an earlier publication.

The case involved a wrongful dismissal claim by Mr. Evans ("Evans") who was Fleet Manager at the Avalon Ford auto dealership (the "Dealership") for more than 12 years. Based on the facts, as summarized in our previous publication, the trial judge found that while Evans' resigned from the Dealership, the resignation was neither voluntary nor unequivocal.  Accordingly he was entitled to damages based on 12 months' pay in lieu of notice. The trial judge determined that Evans' damages must be assessed based on the earnings that were reasonably expected on alternative employment with the Dealership during the notice period, since Evans did not want to continue with the additional duties of his Fleet Manager position. Evans was also entitled to special damages. The trial judge declined to award moral or punitive damages, despite finding that the Dealership deliberately took steps to deprive Evans from obtaining his short term disability benefits and that following his resignation, the Dealership's conduct was characterized as a form of "careless disregard".

The Appeal

Avalon Ford appealed the decision on the basis that the trial judge misapplied the law respecting voluntary resignation, drew conclusions unsupported by the evidence, and erred in the calculation of damages.

Evans cross-appealed on the basis that the trial judge erred in calculating his pay in lieu of notice, basing it not upon his position and income at the time of termination but on what he would have earned based on modified duties. Evans also cross-appealed the trial judge's decision not to award moral and punitive damages in light of the findings of fact made at trial.

Justice Harrington, writing for a unanimous Court of Appeal, dismissed both the appeal and cross-appeal. Although he held that some aspects of the rulings of the trial judge were flawed, he agreed that Evans did not resign and therefore there was no reason to set aside the conclusion of wrongful dismissal. Justice Harrington held that he would not go as far as the trial judge did and imply a free-standing term of good faith into the parties' contract of employment.

Resignation / Wrongful Dismissal

Justice Harrington held that the test for determining whether an employee resigned is an objective one: the resignation must be clear and unequivocal.  However, to be clear and unequivocal, the resignation must objectively reflect an intention to resign or conduct evidencing such an intention. An employee's state of mind is a relevant consideration in determining whether or not the objective circumstances reflect a genuine intention to resign. Therefore, the Court of Appeal disagreed with the Dealership's argument that the trial judge misapplied the law of voluntary resignation.

Justice Harrington affirmed the trial judge's decision that it was not reasonable for the Dealership to conclude Evans had resigned in light of the circumstances surrounding his resignation, adding that it is well established that resignations in the heat of the moment, particularly where there has been a lengthy employment relationship, are precisely the type of situation where the overarching duty of good faith takes effect. 

Damages

Instead of assessing damages based on Evans' position and income at the time of his wrongful dismissal, the Court of Appeal upheld the trial judge's assessment of damages based on Evans' earnings that were reasonably expected on alternative employment with the Dealership. Interestingly, no jurisprudence was provided in support of this position. The trial judge found that had Evans returned to work, his duties would have been modified and he would have earned less income, which was consistent with Evans' own evidence that he did not want to continue to perform additional duties of Fleet Manager due to stress. As a result, Evans' damages for pay in lieu of notice was based on an annual salary that was approximately $100,000.00 less than his average salary prior to his involuntary resignation.

Justice Harrington refused to disrupt the trial judge's decision to compensate Evans for the loss of his short term disability benefits. He also found that it was reasonable for the trial judge to conclude, by relying on past conduct of the parties, that Evans was entitled to funds from the Ford incentive ("May Mania") program.

Moral and Punitive Damages

Although the employer took steps to deprive Evans of short-term disability, the trial judge made the ultimate finding that Evans had been adequately compensated for all his damages and by the recovery of the short term disability he had lost.  Justice Harrington held that the trial judge did not err in declining to award moral damages, and that Evans was adequately compensated for all damages when the trial judge ordered that he be entitled to the short-term disability benefits he had lost. Furthermore, Justice Harrington held that nothing in the evidence suggested the trial judge erred in determining Evans had not established grounds for entitlement to punitive damages. Ultimately, the Court of Appeal found that the trial judge did not err in determining that that conduct of the employer did not rise to the level of actions required to award punitive damages.

Takeaways for Employers

The outcome in this case serves as a reminder that employers must remember that when the circumstances surrounding an employee's "resignation" are emotionally charged, the resignation should not be taken at face value; time must be given for both parties to cool off, gather their thoughts and reconsider their actions, or risk costly litigation. Although moral and punitive damages were not awarded in this case, they very easily could have been. The employer's conduct in this case serves as an example of what not to do when an employee tries to access short-term disability benefits.

Please click below for the full decision:
Avalon Ford Sales (1996) Limited v Evans, 2017 NLCA 9 (CanLII)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Ashley Savinov
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.