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WRONGFUL DISMISSAL - Constructive dismissal - Change to job content or status

Thursday, July 05, 2018 @ 8:44 AM  


Lexis Advance® Quicklaw®
Appeal by the employer, Ocean Nutrition, from a wrongful dismissal judgment and award in favour of the employee, Matthews. Ocean Nutrition manufactured fish oil for commercial sale. Matthews, age 50, was a chemist with decades of experience in the omega-3 fish oil industry. He worked for Ocean Nutrition and its predecessors between 1997 and 2011, holding positions ranging from operations manager to vice president of new and emerging technologies. Matthews reported to Ocean Nutrition's chief operating officer, Emond, from 2007 onward. The relationship between the two men deteriorated to the point that Matthews resigned in 2011 and sued, alleging wrongful dismissal. Matthews alleged that Emond engaged in a campaign to push him out of operations and minimize his influence within the company. The trial judge found that Emond was a self-serving and deceitful witness. The trial judge concluded that Matthews was constructively dismissed and that the appropriate notice period was 15 months. Matthews was also awarded damages of $1.1 million, most of which related to a Long Term Incentive Plan provided to reward and retain executives. The trial judge found that Matthews would have received payments under the Plan had he remained employed throughout the notice period. Ocean Nutrition appealed.

HELD: Appeal allowed in part. Ocean Nutrition's appeal of the trial judge's constructive dismissal finding was largely an attempt to reargue a position rejected at trial. No misapprehension or ignoring of relevant evidence tainted the finding that Ocean Nutrition made a unilateral change amounting to a breach in the employment contract, and that a reasonable person would have felt the essential terms of their contract had been substantially changed. The finding of a constructive dismissal was supported by voluminous affidavit and viva voce evidence, and clear findings on credibility that rejected the evidence of all of Ocean Nutrition's witnesses. The trial judge did not err in finding that the reasonable notice period was 15 months, having regard to Matthews' age, specialized experience, and the notice period negotiated with his subsequent employer. However, the trial judge erred in finding that Matthews was entitled to damages pursuant to the Long Term Incentive Plan. The ability to recover such damages was governed by the terms of the Plan's agreement rather than common law principles related to reasonable notice. The Plan expressly stated that it was of no force and effect if an employee ceased to be an employee, regardless of whether that employee resigned or was terminated with or without cause. The trial judge's use of the notice period to vest rights under the Plan ignored the Plan's plain and unambiguous terms. The damages award was reduced accordingly.

Ocean Nutrition Canada Ltd. v. Matthews, [2018] N.S.J. No. 200, Nova Scotia Court of Appeal, D.P.S. Farrar, P. Bryson and J.E. Scanlan JJ.A., May 24, 2018. Digest No. TLD-July22018008