IN THE SMALL CLAIMS COURT OF NOVA SCOTIA
Citation: Moarbes v. Heka Electronics Inc., 2015 NSSM 2
Date: 20150202
Claim: 429221
Registry: Bridgewater
Between:
Antoine John Moarbes
Claimant
v.
Heka Electronics Incorporated
Defendant
Adjudicator: J. Scott Barnett
Heard: October 10 and 20, 2014
Written Decision: February 2, 2015
Counsel: Claimant, Self-represented
Derek R. Schnare for the Defendant
By the Court:
INTRODUCTION
[1] The Claimant, Antoine Moarbes, claims that he was wrongfully dismissed from his employment with the Defendant, Heka Electronics Incorporated, and he therefore seeks damages as a result. Among other things, he maintains that the written contract of employment in this case is void because it does not comply with the minimum advance notice of termination provisions set out in the Nova Scotia Labour Standards Code, R.S.N.S. 1989, c. 246.
[2] In response, the Defendant does not assert that it had just cause for termination. Instead, it argues that the employment contract is valid in this case and that it has appropriately paid all sums to which Mr. Moarbes is entitled in accordance with the written termination provisions.
[3] These basic arguments, in addition to a number of others raised by Mr. Moarbes, will be addressed in the reasons for judgment that follow.
FACTUAL BACKGROUND
[4] Mr. Moarbes is a thirty-five year old professional engineer. He graduated from Dalhousie University – Sexton Campus (formerly TUNS - the Technical University of Nova Scotia) in August 2002 with a Bachelor Degree in Electrical Engineering.
[5] During the course of his university studies, he participated in a number of co-op work terms and, after graduation, he worked as an electronics engineer at Magneto Inductive Systems in Jeddore, Nova Scotia for around three years. He subsequently worked as a consulting engineer with Cimarron Engineering in Calgary, Alberta for around one year and later as a hardware and firmware engineer at MacKay Meters in Halifax, Nova Scotia in an approximately year and a half long period of consecutive term positions.
[6] In the summer of 2010, the Defendant (with an office then located in Mahone Bay, Nova Scotia) advertised an open job listing for an electronics hardware design engineer on the Dalhousie University Career Services Centre website. The listing describes the position as follows:
“HEKA Electronics is a small advanced technology company requiring a Professional Engineer to work as a member of a team in the design and testing of new products. The person they seek will be working in a unique end-user environment and must have strong communication and writing skills in English and be interested in working in a new technology. They will be required to work comfortably with marketing and manufacturing staff and to handle concurrent projects with minimal direction. Some travel is involved and ability in languages other than English will be an asset. In short, a well rounded engineering background combined with the flexibility to fit into the small business environment will mark the attributes of the successful candidate.”
[7] On August 12, 2010, Mr. Moarbes submitted a cover letter and resume for Heka Electronics’ consideration, the latter of which notes that he then had “5+ years experience in high-tech at hardware/firmware level, coupled with 1 year in industrial automation.” He also states in terms of “non-technical skills” that, among other things, he has “above average business acumen,”
[8] Mr. Moarbes’ application for the job was successful. On September 21, 2010, Hugh Macpherson, then a retired professional engineer working as an independent contractor for Heka Electronics (but previously having worked as its managing director in Nova Scotia), sent an email to Mr. Moarbes with an attached “Offer of Employment.” The email requests that Mr. Moarbes report to the Mahone Bay office at 10:30 a.m. on September 27, 2010 at which time Mr. Moarbes and Dr. Peter Schulze (then and still the President of Heka Electronics) could sign the document.
[9] The following day, Mr. Moarbes replied by email indicating that he would “review and respond” and he sent a further email a couple of hours later in order to raise a variety of points and to suggest a number of changes to the proposed employment contract contained in the Offer of Employment.
[10] Specifically, Mr. Moarbes noted the following:
a. The Offer of Employment indicated a start date of September 27, 2010 but Mr. Moarbes indicated that his understanding was that Heka Electronics had been looking at an October 2010 start date; Mr. Moarbes stated that he was not available until October 5, 2010;
b. The Offer of Employment described the position as an “Electronic Design Engineer” but since Mr. Moarbes was going to be the only employed professional engineer in the office, he requested that the title be changed to Electronic Design “Lead Engineer”;
c. The Offer of Employment set out hours of work as forty hours a week, usually from 8 a.m. to 4:30 p.m., Monday to Friday, with one half hour for lunch – Mr. Moarbes asked for flexibility in the start time for “work-life balance purposes,” he indicated that he needed to be back in the city of Halifax at 4 p.m. on Thursdays, he suggested that professionals in Canada are accustomed to one hour lunches and he asked if there was any “telecommuting” policy or storm day policy;
d. The Offer of Employment states that Mr. Moarbes would be required, in the course of his duties, to travel frequently, at Heka Electronics’ expense, in Europe and North America and, on occasion, he might be required to travel to other destinations – Mr. Moarbes asked about the estimated frequency of travel.
[11] Mr. Moarbes also wrote in the email that “the work sounds great and the travel is ok.”
[12] Mr. Macpherson and Mr. Moarbes subsequently spoke by telephone and, on September 24, 2010, Mr. Moarbes wrote an email to Mr. Macpherson and Dr. Schulze in order to provide a summary of his discussion with Mr. Macpherson and raising other options for consideration.
[13] Specifically, Mr. Moarbes indicated that his discussion with Mr. Macpherson included the following points:
a. The earliest that Mr. Moarbes would be able to travel to the Heka Electronics office would be October 4, 2010 in the afternoon;
b. Mr. Moarbes understood that Dr. Schulze was content with changing the job title to “Lead Engineer”;
c. Mr. Moarbes understood that a performance bonus was typically issued based on the performance of the company and he requested that detail be put in the Offer of Employment with respect to the bonus;
d. Mr. Moarbes requested an additional week of vacation time on top of the offered two weeks available annually during the first five years of employment;
e. Mr. Moarbes understood that the estimated frequency of travel was only “a couple of times per year”; and
f. Mr. Moarbes would need to leave the office on Thursdays at 3 p.m. for health reasons.
[14] Mr. Moarbes also raised other “options for [Heka Electronics’] consideration” including:
a. One day per week of telecommuting;
b. A shortened work week;
c. A starting bi-weekly salary of the annual equivalent of $75,000 and increasing the same to the annual equivalent of $80,000 after six months – contrasting with the Offer of Employment where the figures were $73,260 and $76,910.71 respectively; and
d. One month of severance for each year worked.
[15] On Monday, September 27, 2010, Mr. Macpherson forwarded, by email, a revised Offer of Employment in which the change to the title of the position was made (even though the listed job duties did not change whatsoever), the salary for the period after the first six initial months of employment was increased to the annual equivalent of $78,996 and the vacation time was changed to three weeks annually during the first five years of employment. Generally speaking, Mr. Macpherson rebuffed Mr. Moarbes’ other proposed changes and suggestions, including any increase in the amount of severance to which Mr. Moarbes would be entitled on termination by Heka Electronics without cause. In addition, Mr. Macpherson wrote the following:
“I would suggest that you ponder carefully the implications of para B in the Salary section of the offer.
We would like an answer by 1700, ADT, Wednesday, 29 September.” [emphasis in original]
[16] Paragraph B in the “Salary & Duration” section of the revised Offer of Employment merely states that the agreement would be reviewed after six months of employment and that any such review “carries no stated or implied intent by either party to either preserve the agreement unchanged or to seek alteration.”
[17] By reply email sent approximately twelve hours later, Mr. Moarbes wrote:
“Gentlemen, thank-you for the changes. It sounds good. I will see you in Mahone Bay October 4, late morning / early afternoon.”
At no time before writing this email did Mr. Moarbes consult with a lawyer. He testified that he was concerned that Heka Electronics would take its offer “off of the table” if he did not accept, he detected an air of aggression in the deadline set by Mr. Macpherson in his September 27, 2010 email and he felt vulnerable given that, at the time, he had been out of work for around four months.
[18] When Mr. Moarbes arrived on October 4, 2010, both he and Dr. Schulze signed what I am calling the revised Offer of Employment, a four page document, the most relevant sections of which will later be referenced in this decision.
[19] One of Mr. Moarbes’ contentions is that the job duties listed in the revised Offer of Employment did not match what he was asked to, and what he actually did, do. It would therefore be helpful to set out what that document says, in full, about Mr. Moarbes’ job duties:
“Moarbes is employed as a professional electronic engineering designer to design, develop, trouble shoot and improve the hardware platforms and assemblies consistent with Heka’s products and market requirements. His area of expertise will be primarily directed towards, but not limited to, those products related to electrophysiology; electroneurology and electrochemistry.
“Moarbes will report to the President of Heka for direction relating to development tasks and goals. He is expected to work without the need of detailed direction. He is advised that his work will be of a collaborative nature and he is expected to maintain professional relationships with other hardware and software developers in Heka and in Heka’s operations in Germany, the United States of America and Switzerland. At some point in time he may be required to supervise less experienced electronic engineers, technicians and technologists.
“He will carry out his duties on the Heka premises in Mahone Bay until Heka relocates to Chester, Nova Scotia.
“Moarbes will be required, in the course of his duties, to travel frequently, at Heka’s expense, in Europe and North America. On occasion he may be required to travel to other destinations. He may also be required to attend trade shows and related events to explain Heka products to current and potential customers.
“Moarbes shall report to Dr. Stephen Jones for administrative matters.”
[20] A common element in the testimony of all of the witnesses that I heard, including Mr. Moarbes, is that Heka Electronics was and is a small company with very few employees in Canada (i.e. less than ten people). I also accept Mr. Macpherson’s and Dr. Schulze’s testimony that the corporate reporting structure was “fairly flat” – as Mr. Macpherson put it, Heka is “a small company so we don’t stand on ceremony too much” while Dr. Schulze suggested that those working in the company might wear “different hats” at different times (i.e. play different roles), depending on the then existing needs of the company – everyone was expected to help everyone else as needed.
[21] I find as a fact that there was really no official and true office manager in the Nova Scotia office while Mr. Moarbes was employed there. Dr. Schulze was absent in Germany for health and other reasons during much of the time that Heka Electronics employed Mr. Moarbes. Dr. Jones, referred to in the revised Offer of Employment, left Heka Electronics in April 2012 and even before that he only ever really played an unofficial role as an office manager. Mr. Macpherson was generally not in the office.
[22] Mr. Moarbes suggested that he took on a larger role in the company than contemplated by almost acting as an unofficial go-between for local staff and Dr. Schulze / Mr. Macpherson on, among other things, human resource issues. However, I find as a fact that this simply reflects the flat reporting structure to which I have previously referred, the small size of the employee group and Mr. Moarbes’ own decision to periodically take on the role of a go-between in what he perceived as a leadership vacuum. At no time during his employment did Mr. Moarbes ever actually manage other employees as their supervisor.
[23] During the course of his almost exactly three years of continuous employment with Heka Electronics, Mr. Moarbes was authorized to go on two trips outside of Canada – once to Germany and once to the United States. He requested other travel opportunities as a means of maintaining professional relationships with other key people involved in the research and development of products for Heka Electronics but he was told that such travel was not necessary and that electronic communication would suffice.
[24] On this last point, Mr. Moarbes was clearly the only certified and licensed engineer in the Nova Scotia office. When necessary, Mr. Moarbes generally had to consult with Heka Electronics colleagues working in other geographical locations (employed not by Heka Electronics but by Heka-related companies) by email.
[25] Mr. Moarbes also complains that, unlike in his previous employment before Heka Electronics, he was required to take on more than he had contemplated. He described, as follows, the research and development process as a series of sequential steps:
User requirements
↓
System requirements
↓
Architectural design
↓
Component development
↓
Integration and verification
↓
Installation and validation
[26] From his perspective, Mr. Moarbes says that the development of user requirements (which necessarily involves interaction with prospective end-users, i.e. customers) and the translation of those technical requirements into “system requirements,” were outside the scope of his job duties as set out in the revised Offer of Employment.
[27] As Mr. Moarbes described it, in a typical engineering office, project management engineers work closely with customers and those engineers feed system specifications to design engineers such as himself who then create design documents and subsequently build and test prototypes. In his view, the identification of user and system requirements is typically done at the marketing or project management level before it gets to a design engineer such as himself.
[28] Whatever the nature of his specific job tasks at prior employers, the question is whether or not the job duties listed in the revised Offer of Employment fairly represent what Mr. Moarbes was hired to do at Heka Electronics. I find as a fact that the listed job duties are broadly enough described as to be consistent with what Mr. Moarbes was actually doing while employed by Heka Electronics, particularly when one considers its small size. A watertight division of the research and development process into the discrete steps put forward by Mr. Moarbes is simply unrealistic and would be inconsistent with the broadly-listed job duties set out in the revised Offer of Employment.
[29] Again as a result of its small size and the resultant informality of the company’s operations, the evidence was clear that no one at Heka Electronics conducted formal salary or performance reviews with Mr. Moarbes as contemplated in the revised Offer of Employment.
[30] That said, in May 2012, around the time that Heka Electronics hired a human resources consultant at Knightsbridge Robinson Surrette to ensure that Heka Electronics’ salary ranges were within the proper market range, Mr. Moarbes requested that his compensation be changed so as to afford him greater flexibility in terms of attendance at work.
[31] The parties ultimately agreed to a four day work week, with an average of thirty-six hours a week, with the only stipulation being that “core business hours” of 9 a.m. to 3 p.m. had to be respected (such hours being when Mr. Moarbes was supposed to be present at the Heka Electronics office). His salary converted to an hourly rate that was consistent, on a pro-rated basis, with what he had previously been paid for eighty hours every two weeks. As a result, he had to then begin submitting timecards. The changes were made effective on and after June 19, 2012.
[32] In February 2013, Heka Electronics hired a German trained software engineer to work in its Chester office. Mr. Moarbes says that he was asked to train this older individual who was not licensed as an engineer in Canada but who, at the time of the hearing before me, had already submitted an application to the Association of Professional Engineers of Nova Scotia and who was awaiting that professional body’s decision on licensure.
[33] At all events, Mr. Moarbes’ employment at Heka Electronics was terminated on October 8, 2013 with the express reason being a shortage of work. Mr. Moarbes maintains that he was, in essence, forced to train a replacement employee that, as a result, created a surplus of engineers employed by the company. He stated that this constitutes bad faith on the part of Heka Electronics.
[34] However, I accept Dr. Schulze’s explanation and find as a fact that Mr. Moarbes was a hardware engineer and what was needed by Heka Electronics at the time was a software engineer. There was, in fact, a shortage in the amount of work for which Mr. Moarbes was trained and the software engineer did not directly replace Mr. Moarbes.
[35] The revised Offer of Employment states the following with respect to termination:
“The following terms of termination apply after the first six months of employment.
“Moarbes is not entitled to any notice of termination of employment, nor to any salary or other payment in lieu of notice, where Moarbes’s employment is terminated by Heka for breach of this Offer of Employment by Moarbes or for any other cause deemed sufficient in law, or in any other circumstances in which no notice or salary in lieu thereof is required by law.
“The employment of Moarbes, regardless of his position, responsibility or authority, may be terminated by Heka at any time without cause by giving Moarbes seven days advance notice of termination for each complete year or partial year of employment or by paying Moarbes’s salary in an amount equal to that he would have earned during such a period of notice. Any unused annual leave will be compensated. No unused Well Leave will be compensated. If this provision is in conflict with the Labour Standards Code of Nova Scotia, or any successor legislation, then that legislation will override this specific provision.
“Moarbes agrees that his rights to any notice of termination of his employment or to any salary or payment in lieu thereof are limited to those provided in this Offer of Employment.
…”
[36] The parties agree that Mr. Moarbes has been paid in accordance with the termination provisions noted above although only recently has the full extent of the obligation under the revised Offer of Employment been fulfilled.
[37] Specifically, I find that Heka Electronics inadvertently paid Mr. Moarbes three weeks of severance only (as well as an amount to compensate him for Heka Electronics’ obligation to Mr. Moarbes in terms of his RRSP contributions).
[38] However, at the commencement of the hearing before me, Heka Electronics tendered a further cheque to Mr. Moarbes in order to reflect the fact that he worked four days into a fourth year with Heka Electronics – in accordance with the termination provisions in the revised Offer of Employment, Mr. Moarbes is entitled to seven days advance notice of termination or pay in lieu thereof for every year or part year of employment and that is what he has now been paid.
ISSUES
[39] Mr. Moarbes raises a number of complaints but I believe that, when viewed through a legal prism, they can be divided up into the following issues.
[40] First, does the revised Offer of Employment contravene the Labour Standards Code such that it is void and unenforceable?
[41] Second, was the nature of Mr. Moarbes’ employment (including his job duties and compensation) at the time of termination so radically different than that contemplated at the outset in the revised Offer of Employment such that the termination provisions should not be enforced?
[42] Third, is the revised Offer of Employment unenforceable because its terms are unconscionable?
[43] Fourth, is the revised Offer of Employment unenforceable on the basis that the document is radically different from what Mr. Moarbes understood it to be?
[44] Fifth, if the revised Offer of Employment is unenforceable for any of the foregoing reasons, to what amount of reasonable notice of termination of employment is Mr. Moarbes entitled?
[45] Finally, has Mr. Moarbes substantiated his claims of bad faith on the part of Heka Electronics and, if so, what should the legal consequence be?
DISCUSSION
(a) Alleged Contravention of the Labour Standards Code
[46] Mr. Moarbes says that a number of the provisions of the revised Offer of Employment contravene the Labour Standards Code. He relies on the statute and a number of cases rendered in other Canadian jurisdictions that are discussed in copies of blog posts and internet legal newsletters that he provided to the Court. I will address his various arguments in turn.
[47] First, Mr. Moarbes argues that advance notice of termination is required by the Labour Standards Code and that, when given notice, the employee continues to earn salary, health benefits and other entitlements until the employment ends. Since the termination provisions of the revised Offer of Employment in this case only make mention of a severance calculation based on salary alone and not on all other entitlements as well (for example, well leave is expressly excluded by the employment contract while the employer-matching of employee-made RRSP contributions is not mentioned), Mr. Moarbes maintains that this contravenes Section 72(4) of the Labour Standards Code.
[48] In support of this argument, Mr. Moarbes refers to Miller v. A.B.M. Canada Inc., 2014 ONSC 4062, Stevens v. Sifton Properties Ltd., 2012 ONSC 5508 and Wright v. The Young and Rubicam Group of Companies, 2011 ONSC 4720. I have reviewed the actual reasons for judgment in those cases rather than relying on the secondary interpretations provided in the blog posts or the internet newsletters that were given to me.
[49] I begin by referring to Section 6 of the Labour Standards Code which provides that parties to an employment contract cannot “contract out of” any of the statutory minimum standards contained in the statute:
Effect of Act
6 This Act applies notwithstanding any other law or any custom, contract or arrangement, whether made before, on or after the first day of February, 1973, but nothing in this Act affects the rights or benefits of an employee under any law, custom, contract or arrangement that are more favourable to him than his rights or benefits under this act.
[50] Section 72 of the Labour Standards Code contains the minimum advance notice of termination provisions in the statute as well as various exceptions (none of which apply here). Subsection (4) provides for pay in lieu of such minimum advance notice of termination:
(4) Notwithstanding subsections (1), (2) and (3), but subject to Section 71, the employment of a person may be terminated forthwith where the employer gives to the person notice in writing to that effect and pays him an amount equal to all pay to which he would have been entitled for work that would have been performed by him at the regular rate in a normal, non-overtime work week for the period of notice prescribed under subsection (1) or (2), as the case may be.
[emphasis added]
[51] It is critical to Mr. Moarbes’ argument that the benefits he says should form part of the severance calculation are included within the meaning of the word “pay” contained in Section 72(4).
[52] The Ontario cases to which he referred me are not helpful to his argument on this point. The Employment Standards Act 2000, S.O. 2000, c. 41, s. 61(1) expressly requires the continued payment of benefits during the advance notice period.
[53] The term “pay” in specifically defined in the Nova Scotia Labour Standards Code at Section 2(n) as follows:
Interpretation
2 In this Act,
…
(n) “pay” means wages due or paid to an employee and compensation paid or due to an employee under Sections 32, 33 and 34, but does not include deductions from wages that may lawfully be made by an employer;
….
[54] Sections 32, 33 and 34 of the Labour Standards Code relate to vacation pay.
[55] In this case, the revised Offer of Employment expressly states that, on termination by Heka Electronics where there is no cause for dismissal, Mr. Moarbes is to be compensated for any unused annual leave (i.e. vacation time) and that fact is that he was so compensated.
[56] I see nothing in the Labour Standards Code that requires Mr. Moarbes to be compensated for unused sick days (described as “Well Leave” in the revised Offer of Employment) or any other benefits such as an RRSP contribution (even though Heka Electronics has actually paid him the maximum percentage of his earnings up to the time of dismissal – 5% of his salary to that date) as those types of benefits do not fall within the meaning of “pay” in the statute.
[57] Mr. Moarbes also argues that the revised Offer of Employment potentially offends the minimum notice provisions of the Labour Standards Code since it requires him to provide a minimum of two weeks’ advance notice of an intent to resign. He points out that, if he had given notice of an intention to resign at any time before two years of employment with Heka Electronics, the Labour Standards Code would only have required him to provide one week’s worth of advance notice.
[58] In support of this argument, Mr. Moarbes again refers to the previously mentioned Ontario cases. He says that they stand for the proposition that termination provisions that fail to comply with statutory minimum entitlements are void ab initio. Put another way, it is argued that if any of the contractual provisions in his employment contract could potentially run afoul of the statutory minimums in any circumstance (even if, on the facts here and now existing in the case before the court, any particular provision is in compliance with the statutory minimums) then the agreement violates those standards, the impugned provision is unenforceable and the common law should prevail.
[59] I do not believe that this argument has any merit in this case.
[60] In contrast to the Ontario cases, in no circumstance does the revised Offer of Employment violate the statutory minimums of advance notice of termination set out in Section 72(1) of the Labour Standards Code when it comes to a “without cause” termination of Mr. Moarbes’ employment by Heka Electronics. Mr. Moarbes admits as much.
[61] Instead, Mr. Moarbes points to the provision regarding his resignation whereby the revised Offer of Employment requires him to provide at least two weeks advance notice of his intent to resign. Mr. Moarbes says that this contravenes Section 73 of the Labour Standards Code which states that, during the first two years of employment, an employee is only required to give one week advance notice of resignation to the employer.
[62] There is a degree of absurdity in Mr. Moarbes’ argument. He refers to a provision that arguably serves to protect the employer’s interests by preventing employees from immediately resigning on the spot as a means of arguing that the termination provisions in the revised Offer to Employment are void. At the same time, the balance of the provisions as to the amount of advance notice of termination of Mr. Moarbes’ employment by Heka Electronics (that serve to protect his interest by stipulating a certain amount of advance notice of termination) are compliant with the Labour Standards Code.
[63] Be that as it may, the Ontario cases to which I was referred all cite the Supreme Court of Canada decision in Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986. In the Machtinger case, the Supreme Court of Canada held that, first, absent an express contractual term, it is presumed that dismissed employees are entitled to advance reasonable notice of termination as determined by the common law and that, second, any contractual provisions that purport to contravene a statutory minimum notice period by substituting a lesser period of time are null and void for all purposes.
[64] An important point to be taken from Machtinger, supra is that the Supreme Court only declared null and void those portions of the employment contract in question that contravened the statutory minimums in the employment standards legislation. In other words, the Court did not find that the whole employment contract in its entirety or even that all of the termination provisions were null and void.
[65] Applied to the case at hand before me, even if Mr. Moarbes is correct about the resignation provision and it is null and void from a legal perspective, then that provision and that provision alone is null and void. It is easily severable from the balance of the revised Offer of Employment, including the rest of the termination provisions. The text of the latter provisions are broken out into distinct paragraphs, with the paragraph pertaining to resignation being separate from the earlier paragraph pertaining to employer termination of employment without cause and the amount of notice to which Mr. Moarbes is entitled. Each paragraph is, in effect, a separate clause.
[66] To be frank, the provisions with respect to Heka Electronics’ ability to terminate Mr. Moarbes’ employment without cause, and the related entitlement to severance, are clear express terms that do not violate the minimum standards set out in the Labour Standards Code and they displace the amount of reasonable notice to which Mr. Moarbes would otherwise be entitled under the common law but for those provisions.
[67] I note that Mr. Moarbes raised some other alleged instances in which the revised Offer of Employment contravened the Labour Standards Code. For example, he says that he was not paid his severance until two weeks after the fact and this constitutes, in his words, a “technical violation” of Section 72(4) for which he should be compensated by way of increased notice. By way of further example, Mr. Moarbes says that he only received one pay cheque during the first month of his employment at Heka Electronics even though the revised Offer of Employment indicates that his salary was to be paid every two weeks. He says that the arrangement in the revised Offer of Employment whereby salary payments were expressly made “one pay period in arrears” contravenes Section 79(1)(b) of the Labour Standards Code.
[68] There is no substance to any of these complaints. The fact is that Mr. Moarbes has been fully paid for the work he did at Heka Electronics and he has been fully paid in terms of the severance to which he is entitled under the revised Offer of Employment. There is no evidence that, at any time before this hearing, Mr. Moarbes raised these particular complaints.
[69] I also question what remedy I could provide even if I were to find a breach of these statutory provisions since, in this case, it is clear that Mr. Moarbes has received that amount of compensation to which he was entitled under the revised Offer of Employment upon termination without cause. Mr. Moarbes has not proven (nor did he attempt to prove) any money losses or other ill effects upon him associated with any alleged breaches of these statutory provisions, so no further award of compensation appears to be available or appropriate.
[70] Considering all of the circumstances, I do not believe that the revised Offer of Employment is null and void by reason of any contravention of the Labour Standards Code and there is no basis for saying that it ought not to be legally respected in accordance with its terms.
(b) Alleged Changed Substratum
[71] Mr. Moarbes says that his employment was radically different than that contemplated in the revised Offer of Employment and, accordingly, the severance provisions ought not to be enforced.
[72] Although not expressly stated as such, this argument appears to be somewhat similar to the “changed substratum doctrine” whereby courts have held that a dismissal notice period in an employment contract cannot be relied upon if there have been significant, radical or dramatic changes in the employee’s responsibilities or status over the time since the parties entered into the employment contract: see, e.g., Wallace v. TD Bank (1983), 41 O.R. (2d) 161 (C.A.) and Schmidt v. AMEC Eart and Environmental Ltd., 2004 BCSC 1012 at para. 10.
[73] As previously noted, I have already found that the job duties described in the revised Offer of Employment were broadly enough worded to factually describe Mr. Moarbes’ actual job duties. The focus here is more on whether or not changes to his employment with Heka Electronics were altered to such an extent that the Court should intervene to correct any resulting unfairness in the application of the termination provisions.
[74] The most significant change in Mr. Moarbes’ terms of employment related to his pay – he changed from a salaried employee to an employee paid on an hourly rate. The amount of time that he worked also changed slightly in that it was reduced, albeit at Mr. Moarbes’ request.
[75] Mr. Moarbes also maintains, as previously described, that he took on responsibilities as a go-between the staff and the management of the company.
[76] In my opinion, the change in Mr. Moarbes’ pay was in no way significant enough to render the application of the written termination provisions unfair in any way.
[77] Moreover, while Mr. Moarbes may have taken on the role of go-between on occasion, there was no change in his job duties at the request of Heka Electronics. Instead, Mr. Moarbes took on any such responsibility on a unilateral basis and Heka Electronics did not, on the evidence before me, condone this behaviour. He certainly was not made a supervisor nor was he told that he could or should act as the office manager. He was never promoted.
[78] I reject the suggestion that the substratum of Mr. Moarbes’ employment changed so significantly that the termination provisions ought not to be enforced.
[79] I have also considered whether or not Heka Electronics misrepresented anything to Mr. Moarbes such as the amount of travel he would be asked to do (Mr. Moarbes says that he took the job, in part, because of the anticipated international travel component) or such as the possibility of overtime.
[80] The issue of overtime is readily dealt with. The revised Offer of Employment does not specifically promise any amount of overtime even though provision is made for it as a possibility. There is no evidence of misrepresentation with regard to overtime.
[81] With respect to travel, there is some disparity between what the original job posting said (“some travel”), what Mr. Moarbes was told verbally (travel “a couple of times per year”), what the contract says (Mr. Moarbes will be required to travel “frequently”) and what actually took place (two international trips over the course of his roughly three year employment).
[82] I am not convinced that any of these statements constitutes a positive misstatement of fact – a requirement for the Court to find a misrepresentation – as opposed to a statement of opinion about how much travel there might ultimately be in the future.
[83] Even assuming, for the moment, that there was a misrepresentation as to the amount of travel that Mr. Moarbes would be required to do, the evidence falls far short of substantiating any kind of fraud on the part of Heka Electronics (or any negligence on its part for that matter) in making the representations that it did. At best, one might think that any misrepresentation as to the amount of travel was an innocent one, the remedy for which, in equity, is recission if the transaction can be undone and if there has been no delay in seeking the remedy. In this case, a claim for recission would fail because neither condition can be met.
[84] If one were to take the viewpoint that any misrepresentation as to travel constituted a collateral warranty (not just a pre-contractual representation but an actual part of the parties’ contractual arrangement), Mr. Moarbes’ recourse would be damages for a breach of contract (the difference in the amount of the anticipated travel is not particularly significant so recission on this basis would be inappropriate).
[85] All of this being said, the reality is that Mr. Moarbes has not proven any loss or damage whatsoever flowing from any alleged misrepresentations as to travel and I would not be prepared to award any damages, even nominally, to Mr. Moarbes.
(c) Unconscionability
[86] In the case of Eager v. Blackburn, 2002 NSCA 41 at 39, the Nova Scotia Court of Appeal referred to the elements that must be shown for there to be a finding of unconscionability:
i. An inequality of bargaining power arising out of ignorance, need or distress of the weaker party;
ii. The stronger party must have unconscientiously used a position of power to achieve an advantage; and
iii. The agreement reached must be substantially unfair to the weaker party in that it is sufficiently divergent from community standards of commercial morality that it ought to be set aside.
[87] In my view, the Claimant has not proven unconscionability.
[88] In the first place, the agreement is not substantially unfair. While the amount of severance is less than that to which he would have been entitled under the common law, he received double the amount of the statutory minimum. Technically, the absence of this factor represents the death knell of the unconscionability argument.
[89] I also note that Mr. Moarbes presented himself to Heka Electronics as having an “above average business acumen.” Whether or not that is true in fact or was instead mere puffery on his part, it is clear that he is a well-educated, intelligent and articulate individual.
[90] When one thinks of inequality, one thinks of circumstances where one party knowingly exploits the other party who is ignorant, gullible or particularly vulnerable or weak. One also thinks of circumstances where one party takes advantage of some information or knowledge unknown to the other party as a means of striking an unfair bargain.
[91] None of these circumstances are present here. While I appreciate Mr. Moarbes’ suggestion that he knows more about employment law now than he did at the time of agreeing to the terms of the revised Offer of Employment, he was obviously well aware of the severance provisions in the Offer from the outset – he attempted to negotiate a change whereby severance would be one month for every year worked. He also suggested other changes as well. He was successful in relation to some terms and not in relation to others (including the severance provisions).
[92] I also appreciate Mr. Moarbes’ argument that, as he had been out of work for four months when Heka Electronics first made an offer of employment to him, he felt some degree of pressure in accepting what Heka Electronics offered to him. I am not convinced, however, that this justifiably could be argued as representing the kind or degree of inequality that the doctrine of unconscionability requires.
[93] Finally, there is no evidence that Heka Electronics specifically exerted pressure on Mr. Moarbes as a means of seeking an unfair advantage. While Mr. Moarbes was concerned that Heka Electronics was losing patience with his attempts to negotiate a better deal for himself in the Offer of Employment, the email from Heka Electronics on September 27, 2010, that set a deadline for a response actually says that the company “would like an answer” to the revised Offer of Employment by that time. The email does not say or even suggest that the revised Offer would be revoked at that time in the absence of a prior favourable response from Mr. Moarbes.
[94] There is obviously a line that must be drawn between those cases where an agreement is unconscionable and must be set aside and other cases where one party, with the benefit of hindsight, decides that the agreement was unfavourable, undesirable or improvident. In this case, I believe that the facts here fall wholly within the scope of the second scenario.
(d) Non est factum
[95] Mr. Moarbes argues that he was not aware that he was voluntarily yielding his common law rights to severance by agreeing to the terms of the Revised Offer of Employment. I interpret this argument as suggesting that the document was radically or fundamentally different from what Mr. Moarbes thought it was – an argument of non est factum.
[96] Justice LeBlanc recently considered the argument of non est factum in Northumberland Fisherman’s Association v. Patriquin, 2015 NSSC 30, beginning at paragraph 64 of his decision, and noted that the three following points are key considerations (at para. 65, citations omitted):
(a) The burden of proving non est factum rests with the party seeking to disavow their signature. It is a heavy onus when the person is of full capacity.
(b) The person who seeks to invoke the remedy must show that the document signed is radically or fundamentally different from what the person believed he was signing.
(c) Even if the person is successful in showing a radical or fundamental difference, the person raising the plea of non est factum must not be careless in taking reasonable measures to inform himself when signing the document as to the contents and effect of the document.
[97] I reject Mr. Moarbes’ evidence that he was not aware of that to which he was agreeing by accepting the terms of the Revised Offer of Employment. He is under no disability whatsoever (such as illiteracy) and he understood the terms of the Revised Offer of Employment (and the termination provisions in particular). His testimony that he “would have” continued further negotiations but for the email from Heka Electronics sent on September 27, 2010 that set a deadline for a response suggests that he was not entirely satisfied with the Revised Offer of Employment because he was well aware of what the proposed terms actually were.
[98] While Mr. Moarbes says that he did not have time to seek legal advice before agreeing to the Revised Offer of Employment because of the imposed deadline set by Heka Electronics in the email of September 27, 2010, he never raised this as an issue until now. He could have asked for more time from Heka Electronics in order to seek a review of the proposed employment contract terms with a lawyer. Whether or not such a request would have been granted cannot be known but the point is that Mr. Moarbes could have sought advice from a lawyer before agreeing to the terms.
(e) Amount of Severance Under Common Law
[99] There is no need to make this determination. The relevant terms of the Revised Offer of Employment are enforceable and they will be enforced.
(f) Bad Faith
[100] Mr. Moarbes focused on the employer requirement that he train a foreign engineer as evidence of bad faith on the part of Heka Electronics but I have already rejected that proposition.
[101] Even without this factual finding, it is clear from a legal perspective that there is no independent freestanding tort for breach of a good faith and fair dealing obligation by employers in dismissing employees: Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701.
[102] In the absence of such a tort for breach of bad faith as well as the absence of any breach of contract in this case or the commission of any tort such as, for example, the intentional infliction of mental suffering, there is an absence of any foundation for aggravated damages (such as those discussed in Honda Canada Inc. v. Keays, 2008 SCC 39) or punitive damages (such as those discussed in Whiten v. Pilot Insurance Co., 2002 SCC 18).
[103] On top of that, I find no behaviour on the part of Heka Electronics either before or at the time of Mr. Moarbes’ termination that could properly be described as evidence of bad faith.
CONCLUSION
[104] Mr. Moarbes has not proven his Claim. In this case, he sought to avoid the contractual terms of his employment by Heka Electronics but there is no legal or equitable basis that would justify satisfying that desire.
[105] While Mr. Moarbes characterized this case as one where there was a lot of miscommunication and unaligned expectations, I find that it is really a case of Mr. Moarbes having entered into a contract that he subsequently regretted but there is no viable reason why he should not be held to its terms despite how much he might dislike them now. His Claim should be dismissed.
[106] The Defendant sought costs if successful. In particular, its solicitor seeks reimbursement for the mileage incurred by its three witnesses, said to be ninety kilometres, round trip, for each witness, to and from the courthouse in Bridgewater, Nova Scotia, where the Small Claims Court trial took place.
[107] Given that Heka Electronics carries on business in Lunenburg County, I am not prepared to award costs in connection with the travel expenses of its witnesses, none of whom were subject to subpoena: see Section 15(1)(f) of the Small Claims Court Forms and Procedures Regulations, N.S. Reg. 17/93, as amended.
[108] Accordingly, the within Claim will be dismissed without costs to either party.