Potter v. New Brunswick Legal Aid Services Commission

Potter v. New Brunswick Legal Aid Services Commission
Collection
Supreme Court Judgments
Date
2015-03-06
Neutral citation
2015 SCC 10
Report
[2015] 1 SCR 500
Case number
35422
Judges
McLachlin, Beverley; Abella, Rosalie Silberman; Rothstein, Marshall; Cromwell, Thomas Albert; Moldaver, Michael J.; Karakatsanis, Andromache; Wagner, Richard
On appeal from
New Brunswick
Subjects
Labour law
Notes
SCC Case Information: 35422
Decision Content
SUPREME COURT OF CANADA
Citation: Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10, [2015] 1 S.C.R. 500
Date: 20150306
Docket: 35422
Between:
David M. Potter
Appellant
and
New Brunswick Legal Aid Services Commission,
a statutory body corporate pursuant to a special act
of the Province of New Brunswick
Respondent
Coram: McLachlin C.J. and Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner JJ.
Reasons for Judgment:
(paras. 1 to 130)
Concurring Reasons:
(paras. 131 to 183)
Wagner J. (Abella, Rothstein, Moldaver and Karakatsanis JJ. concurring)
Cromwell J. (McLachlin C.J. concurring)
potter v. new brunswick legal aid services commission, 2015 SCC 10, [2015] 1 S.C.R. 500
David M. Potter Appellant
v.
New Brunswick Legal Aid Services Commission,
a statutory body corporate pursuant to a special act of the
Province of New Brunswick Respondent
Indexed as: Potter v. New Brunswick Legal Aid Services Commission
2015 SCC 10
File No.: 35422.
2014: May 12; 2015: March 6.
Present: McLachlin C.J. and Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner JJ.
on appeal from the court of appeal for new brunswick
Employment law — Constructive dismissal — Administrative suspension — Commission suspending Executive Director indefinitely with pay — Commission alleging that suspension was authorized by express or implied term of contract — Whether administrative suspension constitutes unilateral act that amounts to breach of employment contract — If so, whether decision to suspend could reasonably be perceived as having substantially changed essential terms of contract.
Employment law — Wrongful dismissal — Damages — Employee drawing pension benefits upon dismissal — Whether pension benefits should be deducted from damages for wrongful dismissal — If not, whether s. 16 of Public Service Superannuation Act displaces private insurance exception and precludes employee from collecting both pension benefits and equivalent of salary — Public Service Superannuation Act, R.S.N.B. 1973, c. P-26 [rep. 2013, c. 44, s. 2], s. 16.
P was appointed as the Executive Director of the New Brunswick Legal Aid Services Commission (“Commission”) for a seven-year term. In the first half of that term, the relationship between the parties deteriorated and they began negotiating a buyout of P’s employment contract. P took sick leave before the matter was resolved. Just prior to his return, and unbeknownst to P, the Commission wrote a letter to the Minister of Justice recommending that P’s employment be terminated for cause. The Commission’s legal counsel wrote to P’s lawyer on the same date, advising that P was not to return to work until further direction from the Commission. Before the conclusion of his sick leave, the Commission suspended P indefinitely with pay and delegated his powers and duties to another person. P claimed that he was constructively dismissed and commenced litigation. The Commission took the view that in doing this, P had voluntarily resigned. The trial judge found in favour of the Commission, as did the Court of Appeal.
Held: The appeal should be allowed.
Per Abella, Rothstein, Moldaver, Karakatsanis and Wagner JJ.: P was constructively dismissed. In light of the indefinite duration of his suspension, of the fact that the Commission failed to act in good faith insofar as it withheld reasons from him, and of the Commission’s concealed intention to have him terminated, the suspension was not authorized by his employment contract. Nor did the Commission have the authority, whether express or implied, to suspend P indefinitely with pay and that suspension was a substantial change to the contract, which amounted to constructive dismissal.
The test for constructive dismissal has two branches. The court must first identify an express or implied contract term that has been breached and then determine whether that breach was sufficiently serious to constitute constructive dismissal. However, an employer’s conduct will also constitute constructive dismissal if it more generally shows that the employer intended not to be bound by the contract. This approach is necessarily retrospective, as it requires consideration of the cumulative effect of past acts by the employer and the determination of whether those acts evinced an intention no longer to be bound by the contract. Given that employment contracts are dynamic in comparison with commercial contracts, courts have properly taken a flexible approach in determining whether the employer’s conduct evinced an intention no longer to be bound by the contract.
The first branch of the test for constructive dismissal, the one that requires a review of specific terms of the contract, has two steps: first, the employer’s unilateral change must be found to constitute a breach of the employment contract and, second, if it does constitute such a breach, it must be found to substantially alter an essential term of the contract. For that second step of the analysis, the court must ask whether, at the time that the breach occurred, a reasonable person in the same situation as the employee would have felt that the essential terms of the employment contract were being substantially changed. In determining this, a court must not consider evidence consisting of information that was neither known to the employee nor reasonably foreseeable.
Constructive dismissal can take two forms: that of a single unilateral act that breaches an essential term of the contract, or that of a series of acts that, taken together, show that the employer intended to no longer be bound by the contract. In all cases, the primary burden will be on the employee to establish constructive dismissal, but where an administrative suspension is at issue, the burden will necessarily shift to the employer, which must then show that the suspension is reasonable or justified. If the employer cannot do so, a breach will have been established, and the burden will shift back to the employee at the second step of the analysis.
A finding of constructive dismissal does not require a formal termination, but a unilateral act by the employer to substantially change the contract of employment. In this case, the Commission was P’s employer for most purposes, although the Crown was his employer for the purposes of appointment, reappointment and termination. In other words, the Commission had the power to substantially change P’s contract, and thus to constructively dismiss him.
The express terms of P’s employment contract are found in the Legal Aid Act, R.S.N.B. 1973, c. L-2, and in the terms and conditions of employment established by the Commission pursuant to s. 39(2) of that Act. However, none of those terms nor conditions, or even the Act itself, refer to suspension for administrative reasons. There is simply no express grant of power to suspend.
There is also no implied grant of power to suspend. Given the nature of the Executive Director’s position and the detail in which his statutory obligations were defined in the contract, the Commission had an obligation to provide P with work. Even if the Commission had an implied authority to relieve P of some or all of his statutory duties, such an authority is not unfettered, but is subject to a basic requirement of business justification. Because the Commission has failed to establish that the suspension was reasonable or justified, it cannot argue that it was acting pursuant to an implied term of the contract, which means that the suspension constituted a unilateral act. To begin with, P was given no reasons for the suspension. In most circumstances, an administrative suspension cannot be found to be justified in the absence of a basic level of communication with the employee. At a minimum, acting in good faith in relation to contractual dealings means being honest, reasonable, candid and forthright. Failing to give an employee any reason whatsoever for his suspension is not being forthright. Moreover, the limited evidence presented in support of the Commission’s ostensible purpose of facilitating a buyout is undercut by the actions that the Commission took to have P terminated. The Commission’s letter to the Minister in which it recommended that P be terminated ought to be admitted at this stage of the analysis. Add to this the facts that P was replaced during the suspension period and that the period was indefinite, and there remains no doubt that the suspension was unauthorized.
Furthermore, on the evidence, it cannot be said that P acquiesced in the change. Even if P was interested in a buyout, that interest can in no way be taken as consent to his suspension, nor can it be prejudicial to his position in his action. P simply did what most employees would do if their employer raises the possibility of a buyout: listen to the offer and, depending on its terms, consider accepting it.
With respect to the second step of the first branch of the test for constructive dismissal, it was reasonable for P to perceive the unauthorized unilateral suspension as a substantial change to the contract. As far as he knew, he was being indefinitely suspended and had been given no reason for the suspension. The letter to P stated that the suspension was to continue until further direction from the Commission. When P had his lawyer write to request clarification of the Commission’s instructions, the Commission persisted in its silence regarding the reason. That is sufficient to discharge P’s burden here. Knowledge of the reasons given by the Commission at trial should not be imputed to P as of the time of the suspension.
In short, P has proven that the Commission’s unilateral act breached his employment contract and that the breach substantially changed the essential terms of the contract. P was constructively dismissed and therefore entitled to damages for wrongful dismissal. The trial judge’s provisional assessment of those damages should be adopted, with the exception that on the basis of the private insurance exception from IBM Canada Limited v. Waterman, 2013 SCC 70, [2013] 3 S.C.R. 985, P’s pension benefits should not be deducted from the damages awarded to him. Those benefits were not intended to compensate P in the event of his being wrongfully dismissed. Section 16 of the Public Service Superannuation Act, R.S.N.B. 1973, c. P-26, does not displace the private insurance exception. Neither the ordinary meaning of the words of s. 16 nor its context support the position that the provincial legislature intended to preclude the common law rule in Waterman. Rather, they support the position that s. 16 is intended for situations in which a former employee who is receiving pension benefits returns to employment in the public service. It therefore neither applies to wrongful dismissal cases nor precludes P from collecting both the full damages amount and his pension benefits.
Per McLachlin C.J. and Cromwell J.: The trial judge made two related errors of law in his analysis of whether the Commission had repudiated P’s employment contract and thereby constructively dismissed him. First, the trial judge failed to recognize that constructive dismissal may be established not only on the basis of a sufficiently serious breach, but also by conduct which, in light of all of the surrounding circumstances and viewed objectively by a reasonable person in the position of the employee, shows that the employer does not intend to be bound in the future by important terms of the contract of employment.
In this case, the surrounding circumstances reveal the following: (i) the Commission wanted to bring P’s employment to an end before the expiry of the term of his contract; (ii) the Commission wanted him to stay out of the workplace indefinitely; and (iii) the Commission provided no assurances that it would continue to honour the remuneration terms of his contract in the future. Had the trial judge taken these surrounding circumstances into account, as the relevant legal principles require, rather than focusing simply on how serious a breach of contract the suspension was, he would inevitably have concluded that the Commission had evinced a clear intention not to be bound in the future by important provisions of P’s employment contract.
The trial judge’s second error was to exclude from consideration the fact that on the same day the Commission’s counsel instructed P to stay out of the workplace indefinitely, the Commission sent a letter to the Minister of Justice seeking to have P’s appointment revoked for cause. The trial judge decided that he could only consider what P knew at the time he claimed to have been constructively dismissed.
While the law on this point is not as clear or as settled as one would wish, a non-breaching party claiming repudiation is entitled to rely on grounds actually in existence at the time of the alleged repudiation but which were unknown to him at the time. In other words, P is entitled to rely on the Commission’s conduct up to the time he accepted the repudiation and sued for constructive dismissal, even if he was unaware of it at that time. This is important for the purposes of this case: the trial judge excluded from consideration the fact, unknown to P at the time, that the Commission on the very day that it suspended him, sent a letter seeking to have his appointment revoked for cause. The trial judge therefore erred in failing to take this into consideration in deciding whether P had been constructively dismissed. Contrary to the opinion of the Court of Appeal, the judge’s error was not harmless. The letter, understood in the context in which it was written, made it clear that the Commission did not intend to be bound in the future by important provisions of his contract of employment. This was one of the surrounding circumstances that the judge was obliged to consider in deciding whether the suspension, viewed in light of all of the circumstances, evinced the Commission’s intention not to be bound by the contract.
According to this Court’s decision in IBM Canada Limited v. Waterman, 2013 SCC 70, [2013] 3 S.C.R. 985, the pension benefits that P received should not be deducted from his damage award for wrongful dismissal.
Cases Cited
By Wagner J.
Applied: Farber v. Royal Trust Co., [1997] 1 S.C.R. 846; IBM Canada Limited v. Waterman, 2013 SCC 70, [2013] 3 S.C.R. 985; adopted: Cabiakman v. Industrial Alliance Life Insurance Co., 2004 SCC 55, [2004] 3 S.C.R. 195; Devlin v. NEMI Northern Energy & Mining Inc., 2010 BCSC 1822, 86 C.C.E.L. (3d) 268; Reininger v. Unique Personnel Canada Inc. (2002), 21 C.C.E.L. (3d) 278; discussed: Park v. Parsons Brown & Co. (1989), 39 B.C.L.R. (2d) 107; referred to: Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701; In re Rubel Bronze and Metal Co. and Vos, [1918] 1 K.B. 315; Shah v. Xerox Canada Ltd. (2000), 131 O.A.C. 44; Whiting v. Winnipeg River Brokenhead Community Futures Development Corp. (1998), 159 D.L.R. (4th) 18; Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69; General Billposting Co. v. Atkinson, [1909] A.C. 118; Freeth v. Burr (1874), L.R. 9 C.P. 208; Western Excavating (ECC) Ltd. v. Sharp, [1978] 1 All E.R. 713; Downtown Eatery (1993) Ltd. v. Ontario (2001), 54 O.R. (3d) 161; Universal Cargo Carriers Corp. v. Citati, [1957] 2 All E.R. 70; Carscallen v. FRI Corp. (2005), 42 C.C.E.L. (3d) 196, aff’d (2006), 52 C.C.E.L. (3d) 161; Labarre v. Spiro Méga inc., 2001 CarswellQue 1753; Belton v. Liberty Insurance Co. of Canada (2004), 72 O.R. (3d) 81; McKinley v. BC Tel, 2001 SCC 38, [2001] 2 S.C.R. 161; Haldane v. Shelbar Enterprises Ltd. (1999), 46 O.R. (3d) 206; Turner v. Sawdon & Co., [1901] 2 K.B. 653; Suleman v. B.C. Research Council (1990), 52 B.C.L.R. (2d) 138; Reference re Public Service Employee Relations Act (Alta.), [1987] 1 S.C.R. 313; Sûreté du Québec et Association des policiers provinciaux du Québec, [1991] T.A. 666; Fraternité des policiers de la Communauté urbaine de Montréal et Communauté urbaine de Montréal, [1984] T.A. 668; Re Ontario Jockey Club and Mutuel Employees’ Association, Service Employees’ International Union, Local 528 (1977), 17 L.A.C. (2d) 176; Pierce v. Canada Trust Realtor (1986), 11 C.C.E.L. 64; MacKay v. Avco Financial Services Canada Ltd. (1996), 146 Nfld. & P.E.I.R. 353; Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494; Evans v. Teamsters Local Union No. 31, 2008 SCC 20, [2008] 1 S.C.R. 661; Parry Sound (District) Social Services Administration Board v. O.P.S.E.U., Local 324, 2003 SCC 42, [2003] 2 S.C.R. 157.
By Cromwell J.
Applied : In re Rubel Bronze and Metal Co. and Vos, [1918] 1 K.B. 315; Farber v. Royal Trust Co., [1997] 1 S.C.R. 846; IBM Canada Limited v. Waterman, 2013 SCC 70, [2013] 3 S.C.R. 985; approved: Stolze v. Addario (1997), 36 O.R. (3d) 323; Shah v. Xerox Canada Ltd. (2000), 131 O.A.C. 44; referred to: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69; General Billposting Co. v. Atkinson, [1909] A.C. 118; Freeth v. Burr (1874), L.R. 9 C.P. 208; Western Excavating (ECC) Ltd. v. Sharp, [1978] 1 All E.R. 713; Woodar Investment Development Ltd. v. Wimpey Construction UK Ltd., [1980] 1 All E.R. 571; Federal Commerce & Navigation Co. v. Molena Alpha Inc., [1979] A.C. 757; Eminence Property Developments Ltd. v. Heaney, [2010] EWCA Civ 1168, [2011] 2 All E.R. (Comm.) 223; Universal Cargo Carriers Corp. v. Citati, [1957] 2 All E.R. 70; British and Beningtons, Ltd. v. North Western Cachar Tea Co., [1923] A.C. 48; Glencore Grain Rotterdam BV v. Lebanese Organisation for International Commerce, [1997] 4 All E.R. 514; Taylor v. Oakes, Roncoroni, and Co. (1922), 127 L.T. 267; Scandinavian Trading Co. A/B v. Zodiac Petroleum S.A., [1981] 1 Lloyd’s Rep. 81; Lake Ontario Portland Cement Co. v. Groner, [1961] S.C.R. 553.
Statutes and Regulations Cited
Act Respecting Pensions under the Public Service Superannuation Act, S.N.B. 2013, c. 44, s. 2.
Civil Code of Québec.
Interpretation Act, R.S.N.B. 1973, c. I-13, ss. 1(1)(a), 21(1).
Legal Aid Act, R.S.N.B. 1973, c. L-2 [am. 2005, c. 8 ], ss. 2 , 39 , 40(1) , 41(1) , 42 , 50(2) , 51(1) , 52(8) , 53(2) , (3) .
Public Service Superannuation Act, R.S.N.B. 1973, c. P-26 [rep. 2013, c. 44, s. 2], s. 16.
Public Service Superannuation Act (1966), S.N.B. 1966, c. 23, s. 16.
Authors Cited
Barnacle, Peter. Employment Law in Canada, 4th ed. Markham, Ont.: LexisNexis, 2005 (loose-leaf updated June 2014, release 51).
Barron’s Canadian Law Dictionary, 6th ed. by John A. Yogis and Catherine Cotter. Hauppauge, N.Y.: Barron’s Educational Series, 2009, “constructive”.
Black’s Law Dictionary, 10th ed. by Bryan A. Garner, ed. St. Paul, Minn.: Thomson Reuters, 2014, “constructive”.
Brown, Donald J. M., and David M. Beatty. Canadian Labour Arbitration, 2nd ed. Aurora, Ont.: Canada Law Book, 1984.
Concise Oxford English Dictionary, 12th ed. by Angus Stevenson and Maurice Waite, eds. Oxford: Oxford University Press, 2011, “appoint”, “appointment”.
Doorey, David J. “Employer ‘Bullying’: Implied Duties of Fair Dealing in Canadian Employment Contracts” (2005), 30 Queen’s L.J. 500.
Echlin, Randall Scott, and Jennifer M. Fantini. Quitting for Good Reason: The Law of Constructive Dismissal in Canada. Aurora, Ont.: Canada Law Book, 2001.
England, Geoffrey. Individual Employment Law, 2nd ed. Toronto: Irwin Law, 2008.
McCamus, John D. The Law of Contracts, 2nd ed. Toronto: Irwin Law, 2012.
New Brunswick. Legislative Assembly. Synoptic Report: Legislative Assembly of the Province of New Brunswick, June 16, 1966, pp. 1235-54.
Petit Robert: dictionnaire alphabétique et analogique de la langue française, nouvelle éd. Paris: Le Robert, 2012, “nomination”.
Sproat, John R. Wrongful Dismissal Handbook, 6th ed. Toronto: Carswell, 2012.
Sullivan, Ruth. Sullivan on the Construction of Statutes, 5th ed. Markham, Ont.: LexisNexis, 2008.
Swan, Angela, with the assistance of Jakub Adamski. Canadian Contract Law, 2nd ed. Markham, Ont.: LexisNexis, 2009.
Waddams, S. M. The Law of Contracts, 6th ed. Aurora, Ont.: Canada Law Book, 2010.
APPEAL from a judgment of the New Brunswick Court of Appeal (Drapeau C.J.N.B. and Richard and Bell JJ.A.), 2013 NBCA 27, 402 N.B.R. (2d) 41, 1044 A.P.R. 41, 6 C.C.E.L. (4th) 1, 2013 CLLC ¶201-032, [2013] N.B.J. No. 122 (QL), 2013 CarswellNB 196 (WL Can.), affirming a decision of Grant J., 2011 NBQB 296, 384 N.B.R. (2d) 14, 995 A.P.R. 14, 94 C.C.E.L. (3d) 302, [2011] N.B.J. No. 361 (QL), 2011 CarswellNB 579 (WL Can.). Appeal allowed.
Eugene J. Mockler and Perri Ravon, for the appellant.
Clarence L. Bennett and Josie H. Marks, for the respondent.
The judgment of Abella, Rothstein, Moldaver, Karakatsanis and Wagner JJ. was delivered by
Wagner J. —
I. Introduction
[1] The issue in this appeal is whether and in what circumstances a non-unionized employee who is suspended with pay may claim to have been constructively dismissed. The case involves the indefinite suspension of an employee with pay in the context of negotiations for a buyout of his contract of employment. The courts below found that the suspension did not amount to constructive dismissal and that the employee, Mr. Potter, had therefore repudiated the contract when he brought an action for constructive dismissal. For the reasons that follow, I respectfully disagree. Mr. Potter’s employer, the New Brunswick Legal Aid Services Commission (“Commission”), lacked the authority, whether express or implied, to suspend him indefinitely with pay for the reasons it gave. I find that Mr. Potter was constructively dismissed and that he is accordingly entitled to damages for wrongful dismissal. I would adopt the trial judge’s provisional assessment of those damages, with the exception that the pension benefits Mr. Potter received should not be deducted from them.
II. Background and Judicial History
A. Background
[2] Mr. Potter is a lawyer who was admitted to the Law Society of New Brunswick in 1977. After serving in various positions primarily with the Province of New Brunswick, Mr. Potter became the Province’s interim Director of Legal Aid in 1993. He remained in that position until 2005, when the Legal Aid Act, R.S.N.B. 1973, c. L-2, was amended to create a new scheme under which staff lawyers would represent litigants (S.N.B. 2005, c. 8). Under the former system, lawyers in private practice had been paid for performing legal aid work. The amendments also created the position of Executive Director of Legal Aid (“Executive Director”).
[3] On December 12, 2005, the day the amendments were proclaimed, the Board of Directors (“Board”) of the newly created Commission nominated Mr. Potter for appointment as the Executive Director. The Lieutenant-Governor in Council formally appointed him to that office on March 16, 2006, by means of Order-in-Council 2006-85. The appointment was for a seven-year term that was to expire on December 12, 2012.
[4] Mr. Potter’s appointment as the Executive Director was governed by s. 39 of the Legal Aid Act, which reads as follows:
Executive Director
39(1) The Lieutenant-Governor in Council shall appoint as the Executive Director of Legal Aid the person nominated by the Board.
39(2) The Board shall establish the terms and conditions of the Executive Director’s appointment.
39(3) An Executive Director shall hold office for a term of 7 years from the date of his or her appointment.
39(4) The appointment of an Executive Director may be revoked for cause by the Lieutenant-Governor in Council.
39(5) An Executive Director is eligible for reappointment and subsections (1) to (4) apply with the necessary modifications in respect of a reappointment.
39(6) The Executive Director shall perform the duties and may exercise the powers imposed on the Executive Director by this Part, the regulations or the Board.
[5] The Board had also established the terms and conditions of Mr. Potter’s appointment, as required by s. 39(2), in a resolution dated December 12, 2005 that included provisions on remuneration, insurance benefits, pension benefits, vacation and sick leave, and a vehicle allowance. Section 39(6) provides that certain powers and duties are attributed to the Executive Director by the Legal Aid Act itself, by the regulations or by the Board. The powers and duties attributed by the Act include the following (Court of Appeal reasons, at para. 15):
• “the hiring of employees (s. 40(1))”;
• “contracting with lawyers not employed by the Commission (s. 41(1))”;
• “directing employees and contractors (s. 42(1), (2))”;
• “assisting the Legal Aid Committee with investigations (s. 50(2))”;
• “appointing area legal aid committees (s. 51(1))”;
• “acting as one of the signing officers of the Legal Aid Fund (s. 52(8))”;
• “administering Legal Aid New Brunswick (‘the plan’) in accordance with Part III, the regulations and any policies established under Part III and the regulations (s. 53(2))”; and
• “subject to Board approval, establishing policies to govern the administration of the plan (s. 53(3))”.
[6] In October 2009, after Mr. Potter had completed nearly four years of his seven-year contract, his physician advised him to take time off for medical reasons. Although initially one month, the period of his medical leave was subsequently extended, first to January 4, 2010, and then to January 18, 2010. The second extension was accompanied by a note in which Mr. Potter’s physician observed that he “needs to be reassessed before [going] back” (Court of Appeal reasons, at para. 31). In his absence, Mr. Potter delegated his powers and duties to Peter Corey, the Commission’s Director of Criminal Operations.
[7] Before then, in the spring of 2009, Mr. Potter and the Board had begun to negotiate a buyout of his contract. If successful, that process would have culminated in Mr. Potter’s resignation in exchange for an agreed-upon compensation package.
[8] On January 5, 2010, the Board decided — without alerting Mr. Potter — that if the buyout negotiations were not resolved before January 11, it would request that the Lieutenant-Governor in Council revoke Mr. Potter’s appointment for cause pursuant to s. 39(4) of the Legal Aid Act. Its decision was reflected in the following resolution:
The Chair shall send correspondence to the Minister of Justice (with a cc to the Deputy Minister) requesting that David Potter’s appointment as Executive Director of the Legal Aid Services Commission be revoked for cause, such letter to be sent only if Gordon Petrie, Q.C. is unable to negotiate a resolution with Mr. Potter before Monday, January 11, 2010 (on the basis that Mr. Potter receive no more than 18 months’ salary including his retirement allowance). [Emphasis deleted.]
(Court of Appeal reasons, at para. 32)
[9] On January 11, unbeknownst to Mr. Potter, the Chairperson of the Board sent a letter to the Minister of Justice recommending that Mr. Potter be dismissed for cause and outlining in general terms the grounds for dismissal.
[10] Also on January 11, counsel for the Commission sent a letter to counsel for Mr. Potter advising him that Mr. Potter was not to return to work “until further direction”:
Our client, the Legal Aid Services Commission, has instructed us to advise you that David Potter ought not to return to the work place until further direction from the Commission. He will continue to be paid until instructed otherwise.
[11] On January 12, counsel for Mr. Potter replied, acknowledging receipt of that letter and requesting clarification of the Commission’s instructions:
I have received your letter dated January 11, 2010. I note the use of the phrase that “Mr. Potter ought not to return to the work place. . .”. The phrasing could be interpreted as advisory as opposed to directive.
Given that Mr. Potter occupies a position which sets out a statutory obligation to perform the duties of his position, can you confirm whether the Board has suspended Mr. Potter[?] [Emphasis in original.]
[12] On January 13, counsel for the Commission confirmed that the statement was directive: “I am surprised that you and your client are confused. He is not to return to work until further notice.”
[13] Mr. Potter was not aware of the Board’s letter recommending that he be dismissed for cause, and there is no evidence that the Lieutenant-Governor in Council took any steps towards acting on the recommendation. Mr. Potter’s sick leave was due to expire on January 18, 2010, but having received the instruction of January 11, as clarified in the letter of January 13, he did not return to work. The Board delegated the powers and duties of the Executive Director to Mr. Corey, to whom Mr. Potter had previously delegated them.
[14] On March 9, 2010 — eight weeks after the Board’s instruction to stay away from the workplace, and seven weeks after Mr. Potter had been scheduled to return from sick leave — Mr. Potter commenced an action for constructive dismissal. He claimed the following relief: damages with respect to salary and benefits through December 12, 2012 (the end of his term), general damages, damages arising from the manner of dismissal like those defined in Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701, a declaration that the Board had no authority to suspend Mr. Potter, a declaration that the Board had unlawfully obstructed Mr. Potter from exercising his statutory powers, declarations that the Board had unlawfully usurped the functions of both the Executive Director and the Lieutenant-Governor in Council by delegating those statutory powers to someone who had not been duly appointed, and post-judgment interest.
[15] In response, the Board stopped Mr. Potter’s salary and benefits. Counsel for the Commission advised his counsel of this in a letter of March 15, 2010:
Based upon your clients’ legal action claiming constructive dismissal, our client takes the position that he has effectively resigned his position.
Therefore, salary and benefits were stopped on March 9, 2010.
Furthermore, he is directed to return to the Commission the following items:
a) Blackberry;
b) Cell phone;
c) Home computer; and
d) On Star.
We thank you for your anticipated cooperation.
[16] Counsel for Mr. Potter replied that same day, indicating that Mr. Potter had not resigned: “To be clear, Mr. Potter has not resigned from any position or office and your Client is incorrect in that regard.” The letter went on to say that Mr. Potter might be “forced” to draw on his pension, retirement/severance and other benefits, but that his doing so would not constitute acquiescence in the Commission’s view that he had resigned. A similar letter of clarification was sent to the Deputy Minister of Justice, also on March 15. On March 23, 2010, counsel for Mr. Potter notified the Deputy Minister, in a letter that was copied to counsel for the Commission, that Mr. Potter was taking steps to draw on his pension and other benefits “[f]or financial reason[s]”. This letter went on as follows:
However, we ask that your Office take immediate steps to direct reinstatement of his salary and benefits until the matter is finally determined. As you are aware, Mr. Potter’s appointment to his Office by Order in Council remains in effect. The Commission has deprived him of his duties and now his pay. That action is reserved exclusively to the Crown upon showing just cause.
We ask for your intervention as noted. Again, as set out in previous correspondence, Mr. Potter has not resigned his Office or refused to carry out the duties of his Office. The fact that Mr. Potter now feels he must access his pension plan or other benefits ought not to be considered in anyway [sic] as a resignation of his Office or duties, but only as a matter of financial necessity forced upon him by the actions of the Commission.
B. New Brunswick Court of Queen’s Bench, 2011 NBQB 296, 384 N.B.R. (2d) 14 (Grant J.)
[17] Grant J. found that the Board had the statutory authority, under the Legal Aid Act, to place Mr. Potter on an administrative suspension with pay. Although that Act clearly grants the Lieutenant-Governor in Council the authority to retain and dismiss the Executive Director (s. 39(1) and (4)), Grant J. found that s. 39(6) of the Act gives the Board a broad discretion to supervise the Executive Director in the performance of his or her duties and that this discretion includes the power of suspension.
[18] On the central question of constructive dismissal, Grant J. held that Mr. Potter’s administrative suspension with pay did not in the circumstances of the case, despite its indefinite term, constitute constructive dismissal.
[19] The question was whether, by taking Mr. Potter’s duties and powers away from him for an indefinite period of time, the Board had repudiated his contract of employment. Grant J. held that this question should be examined in light of what Mr. Potter knew at the time of what he alleged to be a constructive dismissal, “because he could hardly allege that he was constructively dismissed based on something the employer did unbeknownst to him” (para. 36). Since there was no evidence that the Board had advised Mr. Potter that it intended to arrange for his termination, he could not rely on the Board’s letter to the Minister of Justice recommending termination for cause. If the situation is viewed only in light of what Mr. Potter knew at the time he commenced his action, although he was clearly suspended from work and unable to perform his duties, “the Commission [had] not do[ne] or sa[id] anything that would lead an objective observer to conclude that they had removed those duties from him permanently” (para. 38).
[20] On the contrary, Grant J. found that Mr. Potter and the Board had been engaged in ongoing discussions about a buyout of his contract, and that an administrative suspension pending resolution of these discussions was consistent with the relationship between the parties (paras. 40 and 43). In suspending Mr. Potter, the Board was “buying time” for further negotiations, “and while the duration of the suspension was becoming lengthy, there is nothing on the record before me [Grant J.] to indicate that a reasonable person looking at the matter objectively would have concluded that the employer had repudiated the contract” (para. 42). Grant J. noted that if Mr. Potter was concerned about the indefinite nature of the suspension, he could have corresponded with the Board or given them notice that after a certain date he would consider himself to have been constructively dismissed, rather than taking the “precipitous course” or making the “dramatic move” of starting legal proceedings (paras. 39 and 44). Grant J. distinguished this situation of a suspension pending negotiations from the one in Park v. Parsons Brown & Co. (1989), 39 B.C.L.R. (2d) 107 (C.A.), in which a decision to strip an employee of all his powers and duties had been found to amount to constructive dismissal (paras. 41-42).
[21] Grant J. went on to find that by commencing an action for constructive dismissal, Mr. Potter had effectively destroyed any chance of a productive working relationship between the parties and had therefore repudiated the employment contract by what amounted to a resignation (paras. 50-51).
[22] In case his decision on the constructive dismissal issue should be reversed on appeal, Grant J. also made a provisional assessment of damages. He found that any damages would be measured by calculating the balance of salary and benefits to which Mr. Potter would be entitled from the date the Board stopped paying him (March 9, 2010) until the date his term was to expire (December 12, 2012) (paras. 61-62). He held that by virtue of s. 16 of the Public Service Superannuation Act, R.S.N.B. 1973, c. P-26 (repealed by An Act Respecting Pensions under the Public Service Superannuation Act, S.N.B. 2013, c. 44, s. 2), Mr. Potter would not be entitled to collect both his salary and pension benefits, and that any amounts received or to be received under his pension would be deducted from the award of damages (paras. 63-64). Grant J. added that Mr. Potter had had no duty to mitigate his damages by seeking other employment, given his age (66 in March 2010) and “the small likelihood he would find any employment let alone a job analogous to the [Executive Director] position” (para. 71). Finally, he refused to award Wallace­-type damages or general damages, which were being claimed for the manner of the alleged dismissal, as he found no evidence that Mr. Potter had been mistreated or that the Board had acted in bad faith (paras. 72-76).
C. New Brunswick Court of Appeal, 2013 NBCA 27, 402 N.B.R. (2d) 41 (Drapeau C.J.N.B. and Richard and Bell JJ.A.)
[23] Drapeau C.J.N.B., writing for a unanimous panel of the New Brunswick Court of Appeal, dismissed the appeal. He began by addressing the question whether the Commission was truly Mr. Potter’s employer or whether the employer was instead the Crown, which was the only entity empowered to appoint, reappoint or dismiss the Executive Director. In his view, the action for constructive dismissal could not succeed if the Crown was the true employer. After giving reasons in support of this position, Drapeau C.J.N.B. declined to dispose of the appeal on this ground, as it had not been pursued by the parties (paras. 58-69). Instead, he confirmed Grant J.’s interpretation to the effect that the Legal Aid Act confers on the Board power over all aspects of the Executive Director’s employment other than his or her appointment, reappointment and removal. The Board’s discretion to supervise the Executive Director includes the power of administrative suspension (paras. 70-79).
[24] Drapeau C.J.N.B. held that the trial judge had committed no reversible error in concluding that Mr. Potter had not been constructively dismissed. He noted that the question whether an indefinite suspension with pay constitutes constructive dismissal depends on the circumstances of the case, quoting Cabiakman v. Industrial Alliance Life Insurance Co., 2004 SCC 55, [2004] 3 S.C.R. 195, at para. 71, in this regard (para. 82). The test, as this Court had stated in Farber v. Royal Trust Co., [1997] 1 S.C.R. 846, at para. 33, is whether the suspension constitutes “a fundamental or substantial change to an employee’s contract of employment”. To this end, Drapeau C.J.N.B. applied the following “useful list” of factors that had been formulated in Devlin v. NEMI Northern Energy & Mining Inc., 2010 BCSC 1822, 86 C.C.E.L. (3d) 268, at para. 50:
1. the duration of the suspension;
2. whether someone was appointed to replace the suspended employee;
3. whether the employee was asked for his or her keys;
4. whether the employee continued to be paid and receive benefits;
5. whether there is evidence that the employer intended to terminate the employee at that time; and
6. whether the employer suspended the employee in good faith, for example, for bona fide business reasons.
[25] For Drapeau C.J.N.B., although the indefinite duration of the suspension weighed in favour of a finding that the suspension constituted constructive dismissal, it did not trump the other factors, all of which supported Grant J.’s “amply justified” conclusion that Mr. Potter had not been constructively dismissed (para. 81). Thus, no one was formally appointed to replace Mr. Potter during his suspension, and the person tasked with assuming his responsibilities had been designated by Mr.