Frederiks v Executive TFN Waterpark Limited Partnership, 2022 BCSC 1725 (CanLII)
Frederiks was employed at a waterpark operated by Splashdown Waterparks Inc. (“Splashdown”), from 2000 to 2016. The defendants, the Executive Group, leased the land that the waterpark was located on, as well as adjacent lands on which it planned to build a hotel and residences. Frederiks went to work for the Executive Group in October 2016. The Executive Group terminated him on December 2019. Frederiks claimed that the Executive Group purchased the waterpark as a going concern and sought damages for wrongful dismissal based on 19 years of service. The Executive Group denied that and therefore its employment of him did not continue his employment with Splashdown, and that Frederiks was at most a three-year employee and that some of his employment was on fixed terms contracts, with breaks in between.
The case was heard on a summary trial basis.
The Court set the analytical framework as follows:
[16] The following analytical framework falls out of the authorities:
- a) if the Executive Group acquired the waterpark business as a going concern, then there is an implied term between the purchaser and the employees that the employees will be credited with their past service unless there is an express term in the new contract of employment to the contrary;
- b) if the Executive Group did not acquire the waterpark as a going concern, or if the successor employer stated expressly that it will not give the employee credit for the past service, then the issue of whether Mr. Frederiks was given appropriate notice of termination from his original waterpark employer is a matter between him and that original employer; and
- c) if the Executive Group did not acquire the waterpark as a going concern or gave express notice that it would not give credit for past service, then the contract between the Executive Group and Mr. Frederiks is an employment contract to be interpreted in accordance with the laws of contract interpretation:
Hall v. Quicksilver Resources Canada Inc., 2015 BCCA 291 at paras. 32–34; Sorel v. Tomenson Saunders Whitehead Limited (1987), 1987 CanLII 154 (BC CA), 15 B.C.L.R. (2d) 38 at paras. 40–41.
First, with respect to the nature of the transaction, the Court found that the Executive Group did not enter into contractual arrangements with Splashdown except to purchase some equipment. The Executive Group’s transactional relationship, except for the equipment, was entirely with the owners of the land that the waterpark is on and the land adjacent to the waterpark. Second, there was no evidence of transfer of goodwill between the Executive Group and Splashdown. Third, there was no purchase and sale of the business, nor any lease takeover or buyout. In fact, the equipment purchase occurred after Splashdown’s last day of operations, after its lease expired, and after the Executive Group hired Frederiks. Fourth, there was no evidence to support a finding that there was any communication between Splashdown and its employees about ongoing employment with the Executive Group. Fifth, there was no evidence that the Executive Group told Frederiks that his employment was continuing as part of “business as usual.” Sixth, the Executive Group did not retain the Splashdown name. The Court concluded that the Executive Group did not purchase the business as a “going concern.”
Frederiks worked for the Executive groups under two different contractual arrangements, and there was a break of several months between the two. The Court agreed with the employer that the first contract was a fixed term contract. Nevertheless, the Court found:
[82] While there was no specific term in Mr. Frederiks’ second contract regarding credit for his prior service with the Executive Group, when the first contract ended, negotiations followed almost immediately in an attempt to create a new employment contract. I consider the Executive Group’s conduct in this regard to be recognition of ongoing employment and prior service.
[83] Courts have considered that negotiating a vacation entitlement consistent with taking into account the length of service prior to an interruption in service can indicate recognition of prior service: Beach at para. 13. In the second contract that started in January 2018, Mr. Frederiks was given a salary increase, a larger paid vacation entitlement, and no probationary period.
[84] Additionally, failing to issue a record of employment at the outset of an interruption in employment can indicate recognition of ongoing employment:Wong at paras. 35–38. The Executive Group did not issue a record of employment to Mr. Frederiks between October 1, 2017, when the first contract expired, and January 15, 2018, when the second contract commenced.
Accordingly, the Court gave Frederiks credit for his entire service with the Executive Group, three years and two months. The Court noted that in the cases relied upon by the employer, the plaintiffs were between ages 42 and 44, had managerial responsibilities, and had served in the positions for 15 months, 21 months, and three years, respectively. The notice periods were assessed at nine months, eight months, and six months, respectively. In the circumstances, the Court concluded that 10 months’ notice was appropriate.
The Executive Group argued that Frederiks failed to mitigate his damages. The Court noted:
[103] Since the notice period is ten months, the Executive Group must establish both that Mr. Frederiks failed to take the steps as described and, that if he had, he would have found equivalent employment within ten months of December 6, 2019, in order for the failure to mitigate to be relevant. I also note that despite that Mr. Frederiks’ service with the Executive Group was just over three years, he had spent 20 years doing the same work. His ability to adjust to the reality of looking for work and market himself must take that longevity into account.
Given the start of the Covid pandemic in March 2020, which significantly impacted on the employment in the entertainment and recreational sector, and that Frederiks applied for 12 positions, the Court found that the employer failed to establish the burden that Frederiks failed to mitigate.
Lastly, the Court also found that the CERB benefits received by Frederiks were deductible (see generally: CERB benefits are generally deductible from an award for wrongful dismissal during the notice period: Yates v. Langley Motor Sport Centre Ltd., 2021 BCSC 2175 at para. 38; IBM Canada Limited v. Waterman, 2013 SCC 70 at paras. 27–28.).