The Court of Appeal heard the matter, and released its decision on Friday, allowing Cunningham's appeal and restoring the trial judge's decision.
The Court of Appeal's decision essentially hinged on deference. A trial judge is entitled to deference, particularly as regards factual findings, and concluded that the Divisional Court mistakenly substituted its view of the facts for the trial judge's findings.
First of all, it should be noted that most of the material facts were agreed upon - the letter which was at the core of the 'just cause' analysis was simply a matter of record. As for whether or not the majority of the concerns Bennett raised were justified, the Divisional Court did not attack the trial judge's findings that they were not.
The core aspects in which the Divisional Court disagreed with the trial judge were the following:
(1) The trial judge concluded that the letter was "critical", "disrespectful", "accusatory", and suggested that Cunningham was "disorganized, incompetent, dishonest and negligent". This was insolent. The Divisional Court found that the only part of the letter which could be considered 'insolent' was the sole allegation that the docketing errors (affecting Bennett's commissions) were 'dishonest and negligent'.
(2) The Divisional Court disagreed with the trial judge's failure to give weight to the closing of the letter, which was an invitation to discuss and resolve the issues, and also the failure to consider the overall context and purpose of the letter, as private correspondence between employer and employee, not disclosed to third parties.
(3) The Divisional Court viewed the trial judge as having failed to consider the full context in light of the high threshold for an employer to meet in establishing just cause: "As in other employment relationships, there remains a power imbalance and there is a strong policy interest in encouraging open and frank discussion between employer and employee of workplace issues."
My personal view is that this quotation of the Divisional Court is a highly important aspect of this case. As an employment lawyer, I'm fairly confident that I can draft a letter in most contexts to address an employee's concerns and strengthen their position in possible subsequent wrongful dismissal litigation without crossing the line into 'insolence'...however, it's often a fine line, and many (I'd dare say most) employees are not entirely capable of toeing that line. Therefore, a certain latitude needs to be afforded.
The Court of Appeal found that the trial judge had applied the necessary contextual analysis, and that the Divisional Court simply came to its own different conclusions.
This decision could be significant, for a couple of reasons. Despite the title of this entry, the Court of Appeal didn't really address the merits of the case directly. The Court didn't say "Employees should be more cowed". But by restoring the trial judge's decision, that's the precedent being set.
I'm concerned, moreover, about the characterization of the finding of just cause as being "essentially factual in nature". There are well-established and not-so-straightforward legal tests for proving just cause. To call it a question of fact...well, it's highly inconsistent with the existing case law, including case law which the Divisional Court accurately summarized by noting that a trial court is required "to consider not just whether an employee may be found guilty of misconduct giving rise to just cause dismissal, but also whether the nature and the degree of the misconduct warranted the employee’s summary dismissal."
I can't really fault the Court of Appeal for its findings regarding difference #1 above. Strictly speaking, a finding that the language and tone of a letter is altogether insolent is probably squarely within the realm of factual findings. The Divisional Court may have stepped over the line of deference slightly when it zeroed in on the language of the letter and determined that only one narrow part was really insolent. But when you start getting into the question of "Is it bad enough to justify summary dismissal?", that's more than just a simple question of fact.
The Divisional Court looked to the letter directly to come to its own assessment of the severity of the misconduct. As I said, this may have been slightly over the line, but not unforgivably so, because the letter was simply a matter of record. Perhaps more importantly, there was a reason they looked at the letter directly: The analysis of severity in the trial judge's reasons were relatively scarce.
The trial judge's reasons, regarding just cause, boil down as follows:
Paragraphs 30-34: The concerns raised in the letter were largely unjustified.
Paragraphs 35-37: Bennett wrote the letter out of frustration, but her action was unreasonable. She had an opportunity to apologize and failed to do so.
Paragraphs 38-40: The overall tone of the letter was not courteous, and he doubted Bennett's sincerity in inviting a constructive discussion, because she hand-delivered it and also sent it by registered mail.
Paragraph 41: Cunningham decided that she could no longer maintain the employment relationship.
Paragraph 42: Cunningham's conclusion was justified. "The comments and accusations in the letter undermined the confidence she had in Bennett and destroyed the employment relationship."
Paragraph 43: The letter constituted just cause.
When the Divisional Court said that there was an absence of contextual analysis, this is what they were talking about. There were no detailed reasons about how Cunningham's confidence was undermined. She was shocked and angry, certainly. But no examination of the severity of the insolence in light of the context of the employment relationship. Just a blanket statement that Cunningham's conclusion was justified and that her confidence was undermined. The problem is exacerbated by the subjective language the trial judge continued to use - the Divisional Court rightly called him on that, noting that the question isn't whether or not Cunningham was able to continue the relationship, but whether or not - in light of all the circumstances - the misconduct was objectively serious enough to regard the employment relationship as being at an end.
In other words, what we're looking at is a 'sufficiency of reasons' problem. When it comes to simple factual findings, such as "John said x", then there's a low threshold for the judge to meet. If there's contradictory evidence on the point, the judge probably needs to nod to the opposed evidence and explain why he disregarded it, but not in too much detail. "I preferred John's evidence" is usually enough. From there, it's simply a question of whether or not there's evidence on the record capable of supporting that conclusion, and that the trial judge didn't simply misapprehend what John was saying.
However, for questions of law, or of mixed fact and law, there are greater obligations. It is not enough for a trial judge to show that he is aware of the issues; he must explain how he came to his decision, in such a way that his reasons can be subjected to appellate review. Whether or not an act of misconduct rises to the level of just cause is certainly in that area. The Court of Appeal's treatment of the issue of just cause as being simply factual...is worrying.
If the Court of Appeal really wanted to hold the Divisional Court's feet to the fire in terms of inappropriate appellate intervention, it should have sent the matter back down to the trial level for a new trial of the issue. Respectfully, I think even that might have been overkill, given that there were really no contested facts at issue on the appeal.
At the end of the day, the Divisional Court's decision was based on a look at the record and a look at the trial judge's reasons, and a conclusion that 'It wasn't really all that bad'. However, all of the underlying findings of pure fact were left completely intact. Bennett sent the letter. The language of the letter was harsh. The allegations in the letter were wrong. There was misconduct. It was inappropriate to call Cunningham 'dishonest and negligent'.
But, said the Divisional Court, this didn't rise to the level of just cause.
Beyond the issues strictly on appeal, the trial judge's decision contains an asymmetry which should be troubling in light of the power imbalance of an employment relationship. The expectation seems to be that, to the extent that there are difficulties in the relationship between Bennett and Cunningham, it falls to Bennett to be proactive and resolve them.
Consider, on the one hand, the trial judge's treatment of the "docketing system" issue. Bennett submitted her docketed hours to Cunningham's assistant, who entered them into a system for billing. She was entitled to a percentage of her collected billings. However, she discovered that some of her hours were being entered as Cunningham's hours, presumably as an error by the assistant. Cunningham's response was to tell Bennett that the errors would be corrected if Bennett provided the accounts in which the errors had occurred. The trial judge felt that this was enough.
In other words, this was a system established by Cunningham, administered by an employee of Cunningham, which resulted in errors which favoured Cunningham, and Cunningham's answer was to put Bennett to the strict proof of each error. Assuming Bennett still had copies of her handwritten dockets and access to all the accounts in question, it would still be a time-consuming and menial process to perform a line-by-line comparison of all of her time entries with the accounts on each file.
On the other hand, consider the trial judge's discussion of the possibility of an apology for the letter. Bennett delivered the letter on December 21, immediately before Cunningham left for a two week vacation, and failed to apologize in the two week window before she was summarily fired. "Although that would have been difficult, if not impossible, to do in person, Ms. Bennett could have prepared and placed a written apology on Ms. Cunningham’s desk for her attention when she returned from vacation." This implies that an apology would have been sufficiently mitigating that it might have changed the trial judge's analysis of just cause (and perhaps even suggests that the 'failure to apologize' was aggravating), and yet recognizes that there was no meaningful interaction between the parties between the delivery of the letter and the termination. It also suggests that Bennett should have anticipated that a personal apology after Cunningham's return would be impossible, and that the absence of a proactive apology cemented cause for dismissal.
The relevance of this asymmetry is simply this: The trial judge was always looking to Bennett's acts or omissions - what could Bennett have done differently to save the employment relationship? At no point does the trial judge ask whether or not Cunningham could or should have done something differently which might have salvaged the employment relationship, and there is usually such an obligation upon the employer: That's what progressive discipline is all about.
This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.