Is calling your boss negligent and dishonest just cause for dismissal? It depends on who you ask it would appear.
In a decision released August 17th, 2012, Bennett v. Cunningham, 2012 ONCA 540, the Court of Appeal for Ontario reversed the decision of the Ontario Divisional Court, which had itself reversed the decision of an Ontario Superior Court judge.
In the result, the Court of Appeal overturned the Divisional Court’s decision and restored the trial judgment in all respects.
The parties were both Ontario lawyers. The employer, Ms. Cunningham, operated a one-woman law firm in Mississauga. In the summer of 2002 she was looking for a junior associate lawyer to assist her with litigation files. She interviewed Ms. Bennett, who had been called to the bar in 2001, for the position on July 4, 2002, and on July 8, 2002 Ms. Bennett accepted Ms. Cunningham’s offer of employment.
The trial judge determined that Ms. Bennett was an employee and not an independent contractor; a decision that was not challenged.
Most of the salient facts were repeated, at length, from the original trial decision by both the Divisional Court and the Court of Appeal. Why reinvent the wheel now?
 Ms. Bennett began work on July 15, 2002. During her first morning of work, Ms. Cunningham presented her with a written agreement specifying the terms of the position. The written agreement contained a number of provisions that had not been discussed during either the interview or the subsequent telephone conversation when Ms. Bennett accepted the position. Ms. Bennett signed the agreement. [See my post about whether this agreement was necessarily binding, here http://seanbawden.blogspot.ca/2012/06/no-changes-without-consideration.html]
 Ms. Bennett immediately assumed responsibility for a number of files, the majority of which were family law cases, an area in which she had little experience. The office was busy. Ms. Bennett worked long hours from Monday to Friday, and often on weekends. She became concerned that Ms. Cunningham was not providing her with the tools she required to do her work. Her concerns focused on the paucity of office resources available to her and the inadequacy of the technology in place.
 Ms. Bennett prepared a proposed business plan to address those concerns. She met with Ms. Cunningham in mid-August 2002 to discuss them. In addition to office resource and technology issues, Ms. Bennett expressed concern that she had been asked to sign a written agreement relating to her position on such short notice, particularly when there had been no mention of a written agreement during the interview or at the time of the job offer.
 In response [to] Ms. Bennett’s concerns, Ms. Cunningham had the staff attend at the office on a Saturday after her meeting with Ms. Bennett. They identified and listed the files assigned to Ms. Bennett. Ms. Cunningham invested in voice mail and software known as Amicus Attorney. She also adopted Ms. Bennett’s suggestion that each file contain a sub-folder for lawyer’s notes.
 Prior to the introduction of the Amicus Attorney software, Ms. Bennett had submitted handwritten dockets for the time spent on all files she worked on. The receptionist was responsible for entering the dockets into the office computer for file and billing purposes. The receptionist retired suddenly about August 22, 2002, and was not replaced until September 1, 2002.
 Ms. Cunningham met with Ms. Bennett on the evening of November 5, 2002. Ms. Bennett expressed concern that, while her share of fees billed was about $26,500, only $2,650 had been collected. She was also concerned about whether all her time dockets had been entered. A subsequent comparison of the handwritten documents with the computer records for her files confirmed that 42.8 hours of her docketed time had not been entered in the computer.
 The two lawyers met again on December 16, 2002. Ms. Bennett remained concerned. The gap between fees billed and collected had increased; after five months, the advances paid to Ms. Bennett exceeded her share of fees collected by about $10,000. She asked Ms. Cunningham for a legal assistant. Ms. Cunningham told her that if she wanted one, she would have to bear the cost from her commission income.
 Prior to this meeting, Ms. Bennett had pulled some accounts rendered and discovered a number of instances where time she had docketed had been credited to Ms. Cunningham. When she learned of this, Ms. Cunningham told Ms. Bennett that these errors would be corrected upon receipt of copies of the accounts where such errors had occurred.
 Ms. Bennett met with Ms. Cunningham on Saturday morning, December 21, 2002, just prior to Ms. Cunningham leaving on a Christmas vacation. She handed Ms. Cunningham a four-page letter dated December 21, 2002, which documented nine areas of concern. She also sent her a copy by registered mail. In the letter, Ms. Bennett made a number of statements that Ms. Cunningham claimed were untrue. Under the heading “Docketing System”, Ms. Bennett accused Ms. Cunningham of being dishonest and negligent. The letter contained other comments suggesting that Ms. Cunningham was disorganized and incompetent.
 Ms. Cunningham left on vacation and returned to the office on January 6, 2003. On that date, she invited Ms. Bennett to her office and informed her that she was terminated. On January 8, 2003, Ms. Cunningham handed a termination letter dated January 7, 2003 to Ms. Bennett, advising that her last day of work was to be January 10, 2003.
The trial judge, whose identity I do not know, found that Ms. Bennett had made several unsubstantiated allegations about Ms. Cunningham’s practice.
As the Court of Appeal explained, the trial judge further analyzed the language and tone of the letter. He assessed whether it provided a sufficient basis upon which to conclude that Ms. Bennett had been insolent to the extent that the employment relationship could no longer be maintained, thereby justifying summary dismissal.
In the result, the trial judge held that:
The relationship between lawyers practicing in the same law office is fundamentally based on confidence, respect and trust. After she had an opportunity to read the letter in its entirety and to consider its implications, Ms. Cunningham concluded that she could no longer have a working relationship with Ms. Bennett.
Her conclusion in that regard was justified. The letter was highly critical of the operations in the law office and of Ms. Cunningham's integrity. The comments and accusations in the letter undermined the confidence she had in Ms. Bennett and destroyed the employment relationship.
I find that the contents and tone of the letter constituted serious misconduct on the part of Ms. Bennett. The insolence was not reconcilable with maintaining the employment relationship. In the circumstances, Ms. Cunningham had just cause for terminating the services of Ms. Bennett without notice. [Paras. 41-43; emphasis added.]
Divisional Court (2011 ONSC 28)
As observed by the Court of Appeal:
The Divisional Court, in its decision to reverse the trial judgment, focused on the failure of the trial judge to apply a contextual approach to the assessment of whether there was just cause for dismissal, as mandated by the decisions in McKinley v. BC Tel, 2001 SCC 38 (CanLII), 2001 SCC 38,  2 S.C.R. 161, and Dowling v. Ontario (Workplace Safety and Insurance Board) 2004 CanLII 43692 (ON CA), (2004), 246 D.L.R. (4th) 65 (Ont. C.A.). [2012 ONCA 540 at para. 13]
Decision of Court of Appeal
In holding that the Divisional Court had erred, Justice MacFarland wrote that:
The Supreme Court of Canada instructs us in McKinley, at para. 34, that the contextual approach involves examining “both the circumstances surrounding the conduct as well as its nature or degree”. In my view, a fair reading of paragraphs 32 through 43 of the trial judge’s reasons for judgment clearly demonstrates that he did precisely that, even if he did not use the words “contextual approach”.
The case was neither complicated nor complex. The trial judge considered the circumstances leading up to the writing of the letter, the facts surrounding the actual delivery of the letter to Ms. Cunningham, and the nature of the allegations and accusations contained in the letter. He also considered the nine areas of concern Ms. Bennett outlined in her letter and found many of her complaints to be unsubstantiated. He was entitled to make these factual findings on the record before him. Only after having done so, did the trial judge conclude that Ms. Cunningham had just cause for terminating the services of Ms. Bennett.
The trial judge’s decision was also premised on his factual findings, included at the beginning of the judgment that set out the nature of the parties’ relationship. The trial judge need not repeat his factual conclusions when he considers the question of whether there was just cause for termination. He zeroed in on the central question in this case: whether Ms. Bennett’s four page letter dated December 21, 2002 provided just cause for her immediate termination. He concluded it did and I agree with his disposition. [Paras. 15-17. Emphasis added.]
I am not sure what to make of this decision. It would appear to turn on its facts, and no new law is being advanced.
The decision highlights however, as others have observed, the challenge with advising dismissed employees about “just cause.” Thus far the case has been before no fewer than seven different judges, with the decision alternating each time. No word yet on whether the Supreme Court of Canada will weigh in (I doubt it, given their mandate), but the addition of another nine voices can only serve to assist I am sure.
Did Ms. Cunningham have just cause to terminate Ms. Bennett without the provision of notice? In my opinion she did not. It seems to me that it would have been far easier and less expensive for Ms. Cunningham to have just provided Ms. Bennett with a reasonable severance package, but with full disclosure, I do tend to act mostly for employees.
The concern I have is the expense to which both parties have been put; not only in dollars but in time. This case has now been before three different courts, not including the leave applications to get in front of them, all so that the employer could avoid paying the employee reasonable notice.
While I appreciate an employer’s right to stick to principles, given the amount in issue, and given the change in positions back and forth, I find the whole situation suspect.
Furthermore, I am inclined to agree with the analysis taken by the Divisional Court. In my humble opinion, the Divisional Court directed more attention to the context of the situation leading to the impugned letter, which I would submit was highly relevant to the entire situation.
It is difficult to provide sober analysis on this point. Had I blogged about this case following the Divisional Court’s decision I would have said that employers have to take into account the context of the situation and perhaps one lapse in judgment is not sufficient to warrant termination. (In fact, I often do say similar things, see e.g. this post.)
Now, with the limited analysis from the Court of Appeal with respect to taking in the context of the situation I do not know what to say. Perhaps I will say what others do, when it comes to advising on just cause, it’s complicated.
As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation and it is always prudent to seek professional legal advice before taking any decisions on one’s own case.
Sean Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer. He tweets from @SeanBawden.