Daoust-Savoie v. South Okanagan Montessori

2008 BCSC 1181 Daoust-Savoie v. South Okanagan Montessori

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Daoust-Savoie v. South Okanagan Montessori, 2008 BCSC 1181 Date: 20080829 Docket: KE62966 Registry: Kelowna Between: Marilyn Daoust-Savoie Plaintiff And South Okanagan Montessori School Society Defendant Before: The Honourable Madam Justice Ballance Reasons for Judgment Counsel for the Plaintiff: Stephen W. Turner Counsel for the Defendant: Andrew T. Vandersluys Date and Place of Trial/Hearing: January 14-17; 21-25, 2008 Additional Written submissions due: February 15, 2008 Kelowna, B.C.

INTRODUCTION [1] The dispute in this case is between the founder of a French immersion Montessori school and the society that governs it. The plaintiff alleges that the defendant society wrongfully dismissed her as principal and teacher of the school and is indebted to her in respect of unpaid wages and loans and for educational materials which it agreed to acquire from her. [2] This case demonstrates the risks inherent in a board of directors relying on the minutes prepared by former volunteer board members, to determine the nature and extent of matters discussed and decisions taken by that predecessor board.

BACKGROUND [3] The plaintiff, Marilyn Daoust-Savoie, is an intelligent and university educated woman. Her credibility is pivotal in deciding the principal issues in this lawsuit. The evidence revealed her to be a woman of character and utmost integrity and I found that those traits manifested in the credible manner in which she testified at trial. Her explanations in cross-examinations on points of controversy were given in a forthright and direct manner and she showed no tendency to exaggerate or distort her testimony. The content of her answers on matters of challenge were plausible. Overall, I found the plaintiff to be an extremely credible witness. [4] The plaintiff's first exposure to the Montessori method of education occurred in the early 1990's when one of her sons was enrolled in a Montessori daycare. The Montessori approach interested her and she decided to enrol in the Montessori foundation course to learn the principles and practices for pupils under the age of seven years. The plaintiff completed this ten month course in 1992 and received a diploma. She then spent the next two years or so working variously in a Montessori pre-school and school. [5] The plaintiff's husband, Jean Savoie, was a French immersion school teacher at that time. He is now retired. In about 1994 he and the plaintiff completed an advanced course on Montessori teaching through a university

located in Washington State. [6] The Montessori method of instruction involves the use of a wide array of unique educational materials, many of which are manipulatives meaning that they are used hands-on by the students. These materials are relatively expensive. From the early days of her involvement in Montessori education, the plaintiff along with her husband, began to acquire Montessori materials in the core subjects of math, science and english. [7] In 1994, the plaintiff received a temporary teaching certificate issued by the B.C. Government pursuant to the Independent Schools Act, declaring that she was authorized to teach in Montessori schools. This certificate did not explicitly restrict the scope of her instruction to any particular subject area(s). [8] In time, the plaintiff established a Montessori pre-school of her own called "Westcoast Pre-school", located in the Fraser Valley. Westcoast Pre-school was run by a not-for-profit society incorporated by the plaintiff, her husband and other interested parents. The plaintiff and two other parents each loaned the governing society the sum of approximately $6,000 in order to launch the pre-school on the understanding that they would be repaid when the society received government funding, which was expected to occur in the following twelve to eighteen months. The plaintiff and her husband acted as two of the five directors

of the board of the society. [9] I accept the plaintiff's evidence that in the Montessori structure, the terms "head teacher" and "principal" are typically used synonymously. The role of the head teacher/principal is to administer the school (as distinct from the society), including responsibility for the school curriculum, maintenance of student records and to ensure that the school generally complies with the rules and guidelines laid down by the Ministry of Education. [10] The plaintiff was one of two teaching staff at Westcoast Pre-school and also acted as its principal/head teacher. [11] The on-going funding of the Westcoast Pre-school was an ever-present challenge. In about 1996, its financial viability became dubious, prompting the directors of the society to suggest to the plaintiff that she ought to work for free in order to keep it afloat. The plaintiff was not agreeable to making such a significant personal sacrifice and instead resigned. By this point in time, the plaintiff and her husband had spent approximately $15,000 on Montessori materials which they had allowed Westcoast Pr e-school to use. When the plaintiff resigned, she took her Montessori materials with her. [12] It was within this timeframe that the plaintiff and her husband decided to move to the Okanagan with their two children. They purchased a home in Summerland and renovated the garage for use as a

Montessori morning pre-school which the plaintiff soon opened. Within less than one year the pre-school, called "Great Beginnings", was licensed by the government. Kindergarten classes were added by 1998 and the plaintiff then began to acquire Montessori materials appropriate for the kindergarten level. [13] It was amply established on the evidence that the plaintiff is a naturally gifted teacher. She decided to home school her sons. This was known to the parents whose children attended Great Beginnings Pre-school and some of them urged her to open a Montessori French immersion elementary school in the Summerland area. The plaintiff agreed to do so. She intended to continue to run Great Beginnings Pre-school independently of the elementary school. [14] It was decided that the school, called the South Okanagan Montessori School (the "School"), would be governed by a separate society consistent with the structure that the plaintiff had followed with respect to Westcoast Pre-school. Borrowing heavily from the constitution and bylaws that she had used to form the earlier society, the plaintiff put together the necessary paperwork to establish the defendant, the South Okanagan Montessori School Society (the "Society") in February 1999. [15] According to its constitution, the purposes of the Society are to provide education for children ages kindergarten to grade twelve in an

independent school which follows the Montessori educational methods and philosophy. Part 4 of the constitution stipulates that if the Society were dissolved, its net remaining assets or funds "shall be transferred to [Great Beginnings Pre-school]". The constitution expressly decreed that provision to be "unalterable". [16] Part 6 of the constitution mandated a minimum of five executive directors of the Society which included the respective offices of president, vice-president, secretary and treasurer. For the most part, other than the plaintiff and her husband, the executive directors of the Society were volunteer parents of children who attended the School. [17] Reproduced below from Part 8 of the constitution are the duties ascribed to these offices: 1. The President shall: (1) The president shall preside at all meetings of the society and of the directors. (2) The president is the chief executive officer of the society and shall supervise the other officers in the execution of their duties.

2. The Vice-president shall: (a) assist the president in the discharge of their duties and in the absence of the President, shall act in this stead. (b) shall carry out special assignments as may be conferred upon him by the President.

3. The Secretary shall: (a) conduct the correspondence of the society; (b) issue notices of meetings of the society and directors; (c) keep minutes of all meetings of the society and directors; (d) have custody of all records and documents of the society except those required to be kept by the treasurer; (e) have custody of the common seal of the society; and (f) maintain the register of members.

4. The Treasurer shall: (a) keep the financial records, including books of account, necessary to comply with the Society Act; and (b) render financial statements to the directors, members and others when required; (c) prepare a complete financial statement for the Annual General Meeting; 5. (1) The offices of secretary and treasurer may be held by one person who shall be known as the secretary/treasurer. (2) When a secretary/treasurer holds office the total number of directors shall not be less than 5 or the greater number that have been determined pursuant to Part 6-2(2).

6. In the absence of the secretary from a meeting, the directors shall appoint another person to act as secretary at the meeting. [18] The plaintiff understood that government funding for the Society would not be available in the School's inaugural year. Consequently, in 1999 she and her husband loaned the Society the sum of approximately $15,000 to assist in the establishment of the School. The parties also reached an agreement concerning the plaintiff's Montessori materials. The terms of that arrangement are controversial and will be explored in greater depth later in these reasons. [19] The School opened its doors in September 1999 at a local recreational centre. In these reasons, I will refer to the school term of September 1999 through to June 2000 as "Year 1"; September 2000 to June 2001 as "Year 2"; September 2001 to June 2002 as "Year 3"; and September 2002 to June 2003 as "Year 4". [20] In Year 1, the plaintiff acted as president and her husband as the vice-president of the Society. Mary Kelley and Charlotte Vankataraman shared the job of secretary. The treasurer position was filled by Dawn Schaefer. Laura Dean was a director-at-large, joined by Eunice Randall about half-way through the year. [21] The plaintiff was also the principal/head teacher of the School and taught english and french on a part-time basis while continuing to run Great Beginnings Pre-school. There

was one other half-time teacher at the School who was paid $15,000 for the year. [22] The directors of the board of the Society met on a regular basis and kept minutes of their meetings. Each year, the Society also held an annual general meeting among its members as required by its constitution and bylaws [23] The evidence is uncontroverted that the plaintiff was passionately committed to the success of the School and devoted extremely long hours, day in and day out, performing tasks well beyond the demanding duties associated with being the principal and a teacher. She carried out all of the administrative work, applied for grant monies, created manuals, set policy and guidelines, developed a detailed written curriculum and, along with her sons and husband, provided daily janitorial services. [24] Because the School was just starting out and government funding was not expected to be in hand until well into the following year, the plaintiff agreed to a salary of $17,000 in Year 1. I find that she was considerably underpaid given the many services that she provided, but was prepared to accept the modest remuneration to help launch the School in its inaugural year. [25] In addition to conventional government funding, other sources of potential funding for the Society included monies received from general fund-raising efforts, as well as the prospect of obtaining a portion of

casino revenue through the B.C. Gaming Commission. Early on, the plaintiff applied for such casino revenue on behalf of the Society. [26] The Society faced unanticipated difficulty in obtaining entitlement to gaming revenue. The lack of gaming revenue further pinched its already tight financial circumstances. As one of the former board members put it at trial, the Society was operating on little more than a prayer at that time. [27] Christine Ormiston agreed to do the bookkeeping for the Society in exchange for free tuition for her son. She acted as the Society's bookkeeper from approximately mid-way through Year 1 until sometime in the spring of 2003. Ms. Ormiston set up a detailed ledger, which was based on a double-entry bookkeeping system, to record all receipts, disbursements and accounts payable for the Society (the "General Ledger"). She agreed that the General Ledger was not the most straightforward set of books to understand on its face. Ms. Ormiston testified that she would collect various receipts, usually from the plaintiff, on a nearly daily basis and that they would frequently briefly discuss which category to allocate the various expenses in the General Ledger. Each month the plaintiff would deliver to her the Society's bank statements which Ms. Ormiston would balance against the entries in the General Ledger. [28] In the event that the plaintiff did not have a

receipt or it was not immediately clear how an amount should be allocated, Ms. Ormiston would record it in the suspense account category of the General Ledger. The suspense account was used by Ms. Ormiston as a place to park an item until she knew under which category to properly allocate it. She used it liberally. Ms. Ormiston testified that she did not have the time or the inclination to go through the suspense account regularly and allocate out the entries. Instead, she would make the majority of the reallocations in one fell swoop close to the June 30 year end of the Society. The plaintiff repeatedly demonstrated at trial how the chain of entries from the suspense account to the ultimate journal entry were cross-referenced and could be traced in the General Ledger. [29] Ms. Ormiston testified that if the plaintiff had lost a receipt or did not have one for a particular expenditure, then it would most usually be allocated out of the suspense account and against the plaintiff's personal loan account. In other words, it was very much in the plaintiff's best interests to keep and submit her receipts for each expenditure she made on behalf of the School. [30] Ms. Ormiston was never a member of the board and did not attend board meetings and nor did she prepare a budget. She recalled that the plaintiff would ask her about regularly recurring expenses and that she would track the

requested information in the General Ledger and provide it to the plaintiff. Ms. Ormiston entered all of the financial information on her computer and no one, except her, was able to enter or access that data. There is no question that she relied heavily on information supplied to her by the plaintiff in making entries in the General Ledger. In addition to liaising regularly with the plaintiff, Ms. Ormiston also dealt periodically with Ms. Jaager. However, she cannot recall ever having any interaction with Tim Phillips while he was the treasurer of the Society. [31] The treasurer in Year 1, Dawn Schaefer, testified that on many occasions in Year 1, the Society would issue a pay cheque to the plaintiff and the plaintiff would simply hand it back uncashed when the Society was low on funds. The plaintiff routinely agreed to defer payment of her already modest salary in Year 1 in order to help to loosen the financial constraints faced by the Society. At some stage, the Society stopped issuing the plaintiff pay cheques altogether, opting instead to simply record in the General Ledger the deferred payment of her salary as an amount she was owed. [32] The parties agree that at the end of Year 1, the Society owed the plaintiff the sum of $28,611.89, comprised of the approximate $15,000 loan that she had made to the Society with an interest component, plus her deferred wages, less the

aggregate of the payments made to her. [33] Ever innovative in attempting to keep the School running, in the early summer of 2000 the plaintiff suggested the implementation of two programs to address the Society's short-term cash flow concern; (1) an after school care program for Year 2, and (2) a five week summer school program to run in July and August 2000. These suggestions met with the board's approval. [34] As a result largely of the plaintiff's hard work, the summer program came together very quickly and was launched in July 2000. The plaintiff and other board members recognized that the estimated revenue to be generated by the summer program would help, though not fully rectify, the Society's pressing financial circumstances. With this in mind, the plaintiff approached Mary Kelley and asked her to pledge personal financial support. Ms. Kelley offered to make the Society a $10,000 loan repayable in twelve instalments of a specified amount commencing on October 1, 2000, with a final lump sum payment representing the balance in October 2001. The agreed rate of interest was 12%. [35] In August 2000, Lisa Jaager joined the board of directors as treasurer in place of Dawn Schaefer. Mary Kelley resigned as a co-secretary and became a director-at-large. The other secretary had not been attending the meetings, and Eunice Randall, a director-at-large, had been taking the minutes

in her stead. [36] Even though the plaintiff had already loaned the sum of $15,000 to the Society and had deferred payment of a substantial portion of her under-market wages in respect of Year 1, she offered to take a second mortgage on her home in order to provide an additional loan of $15,000 to the Society in Year 2. Certain of the board members expressed concern about the plaintiff placing her personal finances further at risk in this way. However, of necessity, her generous offer to inject further capital into the Society was ultimately accepted. The plaintiff's second capital loan to the Society was made in approximately five instalments throughout Year 2. [37] The terms of repayment of the plaintiff's loans were left more loosely defined than those pertaining to the loan made by Ms. Kelley. I find that the agreement was that the plaintiff would be repaid as and when the Society received the anticipated government grant monies, casino money, and other funding. It was understood by the Society that the plaintiff and her husband would be paying interest to their bank on account of the monies they borrowed to loan to the Society. I find that it was agreed by the parties that the plaintiff would be entitled to be paid interest on the loans she made in Year 2 and agreed that the rate of prime plus 3% was appropriate in the circumstances. I infer that the parties had in mind

the prospect that they might agree to modify the rate of interest if necessary in the future, but never did so. [38] The plaintiff continued in her role as the president of the Society and principal of the School in Year 2. The Society, through the plaintiff's efforts, had successfully established an after-school care program and playschool at the School. The licenses for both programs were granted in the plaintiff's name and was involved in managing the after-school program. In addition, the plaintiff taught kindergarten for part of the year and instructed in the elementary grades. There were also other part-time teachers, teaching a various intervals at the School that year. [39] A chief dispute in this litigation concerns the amount of the plaintiff's salary in Year 2. She contends that the amount agreed to was $40,000. She claims that her duties especially as principal were expected to be far more demanding and that the $40,000 figure was in line with her anticipated workload and in relation to the salary paid to the other teachers. She also emphasized that she had been underpaid in Year 1. According to the plaintiff, much like the year before, she ended up accepting a deferral of payment of a significant portion of her wages in Year 2 because of the Society's tight financial circumstances. The Society contends that the plaintiff agreed to work for the sum of $10,000 in

Year 2 and was paid that sum in full, and more. There was even a suggestion by the defendant that had the Society chosen to repay the plaintiff $10,000 against her outstanding loan, she would have worked that year for free. I will return to this issue in the discussion segment of my reasons. [40] In late February 2001 of Year 2, Danah Phillips joined the board as a director- at-large. [41] In time, the daily demands placed upon the plaintiff in relation to operating the School and its after-school program became so heavy that she decided to give up Great Beginnings Pre-school. At some point near the end of Year 2, she rolled over her pre-school business and transferred to the Society all of her Montessori pre-school materials for the benefit of the Society's playschool. She received no compensation in respect thereof. [42] In about 2001, the board decided it would be advantageous for the Society to obtain a line of credit to address its cash flow difficulties. To that end, it compiled a package for presentation to various banks. The plaintiff and her husband had conducted their personal banking at the Royal Bank for a number of years. The plaintiff approached the Royal Bank in the hope of establishing a line of credit for the Society. The Royal Bank granted the plaintiff, not the Society, a line of credit in the amount of $15,000 on the understanding that if all went well, it

would consider increasing it to $30,000 the following year. [43] There is no question that it was the intention of the Society and the plaintiff that the credit line be established for the benefit of the Society's purposes. It was also the parties' common intention that two signatures be required to access the Royal Bank line. However, as things transpired, the plaintiff was the only authorized signatory, perhaps because as far as the bank was concerned, the line of credit was hers. There is no evidence that the plaintiff somehow deliberately orchestrated having sole signing authority or that any of the board members were at all concerned by it. They trusted the plaintiff and because of her day-to-day involvement in so many aspects of the School and its programs, it made perfect sense for her to operate the line on behalf of the Society. At some point in time, the Society managed to obtain a separate line of credit from a credit union, which it drew on as needed. [44] The plaintiff alleges that at the end of Year 2, she was owed the sum of $53,514.56 by the Society. She claims that, of that figure, the sum of $33,330 represents the deferred payment of her salary for that year. In the General Ledger, under the category of 'Loans - Marilyn" for Year 2 is shown the final figure of $53,456.61. The plaintiff was not able to clarify the reason for the small discrepancy of $57.95

between that overall figure and her calculation. The category titled, "Contract Teaching" in the General Ledger records the plaintiff's wages in the amount of $33,330. That entry was subsequently reversed and the sum for unpaid wages was recorded under the category of "Loans - Marilyn". The plaintiff explained, and I accept, that Ms. Ormiston routinely combined the deferral of salary amount to the loan amount because it simplified matters. The important point is that the plaintiff's alleged unpaid wages for Year 2 in the amount of $33,330 were recorded in the General Ledger as a credit to the plaintiff. [45] The Society made much of the fact that the plaintiff often provided the information, such as the amount of her deferred wages, to Ms. Ormiston and suggested that the plaintiff provided inaccurate or misleading data to her own advantage. It was demonstrated time and again that the plaintiff comported herself honestly and selflessly in relation to the finances and other aspects of the School and the Society. I reject utterly the suggestion that she was in some measure manipulating the books for her personal gain with respect to the entry or characterization of her unpaid wages for Year 2 or otherwise. [46] At some point the Gaming Commission raised an issue about the fact that the plaintiff was a paid employee of the School and that she and her husband were also voting

members of the board. It was around this time that the board reviewed an administrative handbook of another independent school which suggested that the principal should attend board meetings but not be a voting board member. Based on the contents of that handbook and the concern expressed by the Gaming Commission representative, the board resolved that the plaintiff's position on the board become non-voting. There is no evidence that the plaintiff quarrelled with that resolution. [47] At some future date when it became evident that the casino monies were not going to become available to the Society, the plaintiff resumed her role as a voting member of the board. Although Ms. Phillips and Ms. Jaager mildly complained about that at trial, there is no evidence to show that the board objected to her reactivating her voting status. [48] Year 3 saw a further shuffle to the composition of the board of the Society. The plaintiff resigned as president and Danah Phillips assumed that office. Ms. Phillips' husband, Tim Phillips, became the treasurer. Mary Kelley moved into the role of vice-president, and Eunice Randall became the secretary. The directors-at-large were the plaintiff, Lisa Jaager, and a new appointment, Mike Noseworthy, who evidently was to assist the treasurer. [49] The plaintiff maintained her duties as principal of and a teacher at the School and operated the before and

after school programs. As was the case in prior years, the plaintiff worked tirelessly for the benefit of the School and continued to do the lion's share of the mundane daily janitorial work. [50] Tiffany Molzahn, who had previously worked at the School as a teacher-on-call, and then on a part-time basis, was hired as a full-time teacher for Year 3. She taught french and social studies. The plaintiff's subjects of instruction were english and math and she did the preparation for science as well. Ms. Molzahn was not involved in the before and after school care programs and had not completed any formal Montessori training. [51] The plaintiff's salary for Year 3 was initially set at $40,000, which the plaintiff claims was the same as her salary for Year 2. However, it became clear to her and the rest of the board members that it would be sensible to relieve the plaintiff of some of her administrative duties by hiring a part-time administrator for the Society. Lisa Jaager was eventually hired in that capacity. In order to facilitate the engagement of Ms. Jaager, the plaintiff agreed to reduce her $40,000 salary in Year 3 by the amount of $5,000, and have that sum applied toward the cost of Ms. Jaager's administrative services. Consequently, with this shift, the plaintiff's annual salary in Year 3 was $35,000. [52] The main responsibilities of Ms. Jaager's administrative position

were of a financial nature, including doing the banking, billing and fee collection and liaising with the bookkeeper and treasurer. Ms. Jaager confirmed at trial that she performed all of these tasks. She also prepared some kind of monthly reports for the board. [53] The Society received its first instalment of non-casino government funding in January 2001. It had been faithfully repaying Mary Kelley's loan each month. The final payout of her loan was made by the Society in October 2001 as scheduled. [54] The plaintiff testified that by late 2001 she had become anxious for the Society to commit to a fixed monthly repayment schedule in her favour and intended to raise it with the board at a meeting scheduled for December 5, 2001 (the "December 2001 Meeting"). The evidence indicates that the December 2001 Meeting was called as an emergency meeting to deal primarily with financial issues, including the plaintiff's request for a formalized repayment plan. In readying herself for that meeting, the plaintiff prepared a memorandum which she circulated among the board members. It read as follows: Board Meeting December 5, 2001. Re: Payback of the Loan from ourselves (Jean and Marilyn Savoie) Initially, the first year we lent the money to the school on the condition it was to be paid back in 5 years (with the rate of interest set each year), and the equipment and materials when the

school received casino money. Last year the school needed funds so we lent the school the funds ─ the casino money was not what we expected so I went without my full wages. The condition was that the school pay us $10,000 of either the payback and/or wages. We did not receive the $10,000 (the casino money paid to us was for the math materials). With the receipt of the French grant of $7,400 and the $10,000 deposit now being released to the school, we feel that the school is in the position to pay us $5,000 from last year. The $10,000 line of credit with the Summerland Credit Union could be extended to the end of January when the grant comes in. We feel it is in the best interest of the school to have its own credit rating and therefore we propose that the board approach financial institutions to do so. It could enlarge the Royal Bank credit line or ask the Summerland Credit Union. Presently Jean and I are working on reducing the interest on the school loans we have so the school's payback interest rate for this year is low also. We would like to ask the Society to look at the budget and arrive at a monthly amount, lump sums upon receiving any grant or donations amounts. Our goal is to have the school continue to grow and proper and we will continue to work hard for the Society. [55] After her presentation at the December 2001 Meeting, the plaintiff excused herself and left the

remaining board members to discuss her request. At that time, the board approved a course of repayment to the plaintiff in accordance with the following terms: I. 7 monthly payments of $550 payable on the 15th of every month II. 15% lump sum payments of any major grants received by the Society III. payment of 50% on any line of credit that the Society is able to obtain in excess of the $10,000 line of credit IV. the payment schedule was reviewable in June 2002 with another repayment plan to be set up based on the budget at that time. [56] Within a day or so following the December 2001 Meeting, Danah Phillips, as president of the Society, wrote the plaintiff a letter advising her of these terms of repayment. The first monthly payment of $550 commenced on December 15, 2001, together with a payment of $1,100 representing 15% of a grant received by the Society. There was no evidence from any of the witnesses for the defendant or based on any documents that there were any other terms of repayment or that the contents of Ms. Phillips' letter on behalf of the Society did not accurately reflect the true terms of repayment. It is, therefore, perplexing that in its statement of defence, the Society specifically denied that this repayment schedule was agreed to. [57] According to the minutes of the December 2001 Meeting, Mr. Noseworthy suggested that all loans and repayments already made

to the plaintiff and her husband be documented. Those minutes also indicate that a sub-committee was struck to undertake that task for presentation to the board at its February 2001 meeting. The members of that sub-committee were Danah and Tim Phillips, and the bookkeeper, Christine Ormiston. Ms. Jaager could not recall whether the sub-committee ever took any action. Mr. Noseworthy testified that he never did receive the information pertaining to the plaintiff's loans. I find that the matter simply languished and no further steps were taken by the board in this regard. [58] The composition of the board as a result of the annual general meeting in Year 4 was as follows: president - Danah Phillips; vice president - Mike Noseworthy; secretary/treasurer - Tim Phillips; directors-at-large - the plaintiff, Ron Henry and Lisa Jaager. [59] By Year 4, the School had relocated to a new building. The plaintiff enquired with the Royal Bank about the prospect of obtaining an increase to the line of credit, to enable the Society to construct a fence at the new premises. I accept the plaintiff's evidence that at that time she directed the bank to transfer the line of credit into the name of the Society, but that it would not do so. [60] The board met several times over the summer of 2002 to discuss ongoing business, mainly the new premises for the School. As was customary at the summer board

meetings, the board discussed the teachers' salaries for Year 4 when it met on June 5, 2002. The plaintiff testified, and the minutes reflect, that the board decided to pay her salary in the amount of $40,000 for Year 4, provided that she act as back-up for the after school program three days per week. [61] The board continued to adhere to the repayment schedule in favour of the plaintiff until September 2002. At the meeting on September 18, 2002, Ms. Phillips informed the board that the Society may not be able to continue repayment of the plaintiff's loans at the same rate. She reported that its ability to pay was dependent on the cost to be incurred with respect to the School's move. The board planned to look at the matter more closely when details of those moving costs were better known. At the next board meeting on September 29, the treasurer, Tim Phillips, presented the financial statements of the Society. The balance sheets circulated at that meeting show the Society's long-term indebtedness to the plaintiff in the amount of $42,195.02. They were signed as approved by Tim and Danah Phillips and accepted by the other members of the board. [62] Although not reflected in the minutes, shortly after Tim Phillips was appointed secretary/treasurer in Year 3, he stopped attending meetings of the board or performing any of his duties. It was not clear from the evidence whether he

had actually resigned or not: the significant point is that the Society did not have an acting secretary or treasurer. In the absence of a participating secretary, other board members, mostly Lisa Jaager, kept the minutes of the meetings. The degree of detail captured in the minutes varied depending on the note-taker. Evidently, no member of the Board was prepared to take on the more onerous role of treasurer, and for a period spanning several months, that position remained unfilled. Ms. Phillips, who was still the president of the Society, candidly testified that she did not know who was carrying out the duties of treasurer during that time interval. [63] During the board meeting on February 4, 2003, the plaintiff asked that a repayment plan be reinstated. Her request was not approved at that meeting. The board professed a need to determine its financial status before it could consider the plaintiff's request, and therefore tabled her request until a budget was reviewed and finalized. [64] After that February meeting, the plaintiff began to sense that support of her from the board and from Danah Phillips in particular, was waning. Minutes of three board meetings held in March 2003 are recorded with a decidedly critical tone in relation to the plaintiff and her alleged failure to prepare a so-called budget for the Society. Cast generally, the references were to the effect that

because the plaintiff had not completed a comprehensive one year budget for the board to review, it was unable to get any kind of a handle on the financial status of the Society and was therefore unable to make any kind of financial decisions, including in relation to the plaintiff's request that a repayment plan be reactivated. [65] At the same time that the board took the position that it was unable to commit to a repayment plan to the plaintiff without first having a complete budget in hand, it nonetheless resolved, on motions brought by Ms. Phillips, to reduce student tuition fees and the after school program rates. [66] A number of the minutes of meetings held while the treasurer position remained vacant, make general references to the plaintiff being involved, sometimes along with Lisa Jaager, in the preparation of a "budget". This was a matter of considerable focus at trial by the defendant. The witnesses for the defence testified that the plaintiff was supposed to be carrying out the task of compiling a budget in the absence of an acting treasurer. However, the plaintiff credibly refuted the defendant's contention that she had agreed to do so. The plaintiff often kept an informal tally of the financial picture of the Society on a one page spreadsheet. She had agreed to update her simple spread-sheet for the benefit of the board, because Ms. Jaager had left for maternity

leave in or about February 2003, and no one else on the board was prepared to take responsibility for keeping a record of the basic receipts and disbursements of the Society. The plaintiff was simply doing her best to maintain some sense of order and accounting of the daily receipts and disbursements and from those make some general financial projections. The plaintiff's agreement to pick up the slack and compile a running spreadsheet for the Society was another example of her volunteering to direct her energy in whatever direction was required to keep the School running. [67] I accept the plaintiff's evidence that at no time did she ever agree to or even purport to prepare a budget in the accounting sense of that word or prepare full statements of the kind that the treasurer of the Society was obliged to put together. She credibly explained, and I accept, that the references in the minutes to her preparation of a budget were intended to refer to her compilation of the simple spreadsheet showing receipts and expenses, including payroll. I accept also the plaintiff's evidence that Ms. Phillips was supposed to assist her in the updating of the spreadsheet, but never did so. [68] The preparation of an actual budget was the responsibility of the treasurer of the Society. All the board members were aware that there was no acting treasurer at the time. According to the duties

ascribed to the board members by the constitution of the Society, it was Ms. Phillips' obligation in her capacity as president, to ensure that the duties of the treasurer were properly carried out. There is no evidence that Ms. Phillips made a reasonable effort to discharge this duty. Quite the opposite, her testimony revealed that she had no awareness of her obligation in this regard. The evidence indicates that in the latter part of Year 4, the board was simply not disposed to confront the implementation of a repayment plan to the plaintiff or make a bona fide effort to address budgetary matters. [69] Ms. Ormiston stopped acting as the bookkeeper in the early spring of 2003. The board attempted to engage three other individuals to take her place, but none of them worked out. In April 2003, Denis Gagnon, a chartered accountant, assumed the roles of bookkeeper and treasurer of the Society. The plaintiff provided him with her spreadsheet and the other pieces of financial information that she had in order to assist his preparation of a budget. Eventually the board asked Ms. Ormiston to assist Mr. Gagnon in relation to the General Ledger and she attempted to do so. Ms. Ormiston recalled that "things in the General Ledger got mixed up with trying to train others". [70] The minutes of the board meeting held on April 15, 2003 record that the plaintiff expressed an intention to resign

as principal of the School by the end of 2003 due to "personal health issues". The minutes further state that the board discussed how to lessen the plaintiff's workload so that she would be willing to stay on and how the Society should go about looking for a replacement principal. At trial, Ms. Phillips endorsed the accuracy of those minutes. She testified that the plaintiff complained of being exhausted, stressed and over-worked. Ms. Phillips interpreted those complaints as being personal health issues and characterized them as such in the minutes. [71] The plaintiff takes issue with the accuracy of these minutes to the extent that they purport to reflect a desire on her part to resign as principal of the School, and that she was experiencing any personal health issues. She says that at this time she had just lost her father and when she returned from attending his funeral out of the country, she found that no-one had adequately maintained the upkeep of the School and that the premises were filthy. She was feeling overworked and under appreciated and complained to the board about it. The plaintiff persuasively denied suggesting that she ever expressed an actual intention to resign as the principal of the School. She explained that the complaints she voiced revolved around her doing so much of the cleaning and mundane tasks. She testified that she told the board that she did

not wish to continue carrying out those particular tasks or continue running the after school program. She felt that she was being stretched too thin. The plaintiff claims, and I accept, that she had no personal health issues at all. She also stated that if she had planned to resign as principal she would have done so in writing and in advance of doing so, would have insisted that the Society address to her satisfaction the significant issue of her outstanding indebtedness. According to the plaintiff, when she later saw the April minutes in May 2003, she repeatedly asked the members of the board to retract the comment made about her personal health issues. That was never done. [72] A topic which had been raised previously at board meetings concerned the Society obtaining an evaluation of the principal by the Ministry of Education. The cost of that assessment was expected to be in the range of between $1,700 and $1,800. There appears to have been a difference of understanding among the plaintiff and some other board members as to whether this assessment was mandatory or optional. Resolving that small point is unnecessary. [73] The board decided at its April 15, 2003, meeting that the evaluation of the plaintiff, in her capacity as principal, should proceed. That the board would resolve to incur this considerable expense in order to have the plaintiff's performance evaluated

seems at odds with the Society's position that, at that time, it understood that the plaintiff was intending to resign as principal. [74] Tim and Danah Phillips' son attended the School. In April and early May 2003, there were incidents of concern about his behaviour towards teachers and a student. The incidents were rightly reported to the plaintiff as principal. She reported the matter to board member, Mike Noseworthy. I accept the plaintiff's testimony that she informed Mr. Noseworthy of the clearly awkward situation on a "no-names" basis. When Mr. Noseworthy was asked about the matter at trial, he paused for an inordinately long time and blushed deeply. I find that the plaintiff had been careful to handle the matter professionally and to preserve confidentiality, but that Mr. Noseworthy had not done so. The Phillips' took great exception to what they perceived was the plaintiff's lack of discretion in identifying their son to the board and attempting to schedule a meeting about him with other board members and the teachers involved without their knowledge and at a time when they planned to be away on holiday. They expressed their concerns most stridently in a letter to the board dated May 18, 2003, in which they contended that the plaintiff's conduct in this regard had been "inappropriate, unprofessional and clearly in violation of [the Society's] policies and

procedures". [75] It was not explained in the evidence exactly how the matter of the son's inappropriate behaviours and the Phillips' complaint about the plaintiff's conduct were resolved, if they were. Although Ms. Phillips denied having any lingering bad feelings toward the plaintiff, there can be no doubt that from this point forward, the relationship between the plaintiff and the board members deteriorated rapidly. I conclude that this was not a coincidence. [76] The evaluation of the principal was carried out by Rita Smith in early June 2003. Consistent with the tenor of the plaintiff's complaints to the board, the report concluded the plaintiff was responsible for too many tasks, ranging from a multitude of administrative work, teaching duties, managing the after-school programs, daily janitorial work and the performance of basic secretarial duties such as answering the telephone. The report also noted that the plaintiff was in charge of supervising and evaluating staff, including a full-time classroom teacher, two teacher aides and a part-time music instructor. [77] Ms. Smith recommended that the principal be responsible for the day-to-day kindergarten to grade 7 educational program only, and that all other programs come under the board with each member taking leadership and co-ordinating volunteer or paid workers for a specific area. Ms. Smith noted that the Montessori

method of instruction requires that all teachers be trained through a recognized Montessori centre and that only the plaintiff had the requisite Montessori training. She recommended that all staff receive appropriate Montessori training and certification. [78] Ms. Smith observed confusion surrounding the roles and responsibilities of members of the board of the Society and the plaintiff as principal of the School. She urged that their respective roles and responsibilities be clearly stated in writing and published in order to streamline the governance structure. The recommendation that the board step in and relieve the plaintiff of her excessive number of responsibilities was evident throughout the report. The report advocated the plaintiff attending all board meetings in a non-voting capacity. It did not raise, either expressly or by implication, a concern about the plaintiff's qualifications to act as principal or to teach at the School. [79] In Ms. Jaager's view, the Smith report exaggerated somewhat the multiple roles and tasks carried out by the plaintiff. However, she agreed that it was generally accurate. In her evidence, Ms. Phillips did not raise any criticisms of the accuracy or content of Ms. Smith's report. [80] Following the recommendations of Ms. Smith, the plaintiff and Lisa Jaager resigned from the board but continued to attend board meetings. Tim Phillips then

rejoined the board as a director-at-large in order to ensure compliance with the minimum director requirement contained in the Society's constitution. [81] It would appear that Mr. Gagnon was not able to prepare a working budget for presentation at the July 8, 2003 meeting of the board. There is a dispute about the discussions that took place at this meeting around staffing and in particular who ought to be the head teacher. The minutes reflect that during that meeting it was noted that the projected student enrolment for the coming year would allow for one head teacher and one full-time teacher assistant. The minutes also record that members of the board discussed the idea of the current full-time teacher, Tiffany Molzahn, acting as the head teacher, but that the plaintiff felt, and the board agreed, that she was not ready for the job. [82] The plaintiff testified that the minutes are not entirely accurate in this regard. She explained that she did not support the School being be run by one head teacher and one teacher's assistant. She does recall answering "no" to the question posed about whether she believed Tiffany Molzahn was able to be the head teacher and claims that was the extent of the discussion on that point. The minutes of the July 8 meeting also indicate that the resume of Suzannah Atley for the position of head teacher had been received by the board. How or why

that came about was never adequately explained in the evidence. The plaintiff testified that Danah Phillips had asked her for an opinion of Ms. Atley's suitability as a pre-school teacher, but never as a head teacher of the School. [83] A few days later on July 11 the new treasurer, Mr. Gagnon, called an emergency board meeting (the "Emergency Meeting"). According to the plaintiff, a member of the board contacted her in advance of the Emergency Meeting and asked her to attend prepared with ideas on how to keep the School afloat based on the financial worst case. She credibly testified that she quickly devised some scenarios and typed them up and brought them along to the Emergency Meeting. At the Emergency Meeting, Mr. Gagnon reported that the Society was in a financial crisis. It had no available funds at its disposal and had fully drawn on its lines of credit. There were no monies to pay the teaching staff, being the plaintiff and Ms. Molzahn, at the next pay dates. His assessment of the Society's financial picture was very bleak. He suggested that the board consider closing down the programs and having the Society declare bankruptcy. The news was alarming for all those in attendance, except for the plaintiff who had weathered many a bleak financial forecast in the past. [84] Attached to the minutes of the Emergency Meeting is a one page document prepared by the plaintiff

marked "Scenario 1". The plaintiff testified that it was one of the various options she devised and brought to the Emergency Meeting as requested. Her evidence is that Scenario 1 was intended to be one of a number of options that the board might follow in the event that Mr. Gagnon's dire predictions of the financial status of the Society were borne out. [85] Scenario 1 was premised on the enrolment of thirty students and put forward the suggestion that Ms. Molzahn be the "head teacher" with two teacher assistants to cover both the School and the after school program. It further proposed that Ms. Jaager continue in her administrative position for the Society and that the plaintiff do "school admin. (no teaching)". The plaintiff persuasively testified that in describing Ms. Molzahn as a head teacher in this context, she was not proposing that Ms. Molzahn be the principal of the School, but rather that she act as the only full-time teacher. The plaintiff testified that her proposal contemplated that that she, the plaintiff, would give up the teaching component of her job but continue as School administrator (as distinct from the administrator of the Society), by which she meant the School principal. With respect to the use of the terms "School administrator" and "School principal", it is notable that in the employment contract between the parties, the plaintiff is not referred to

as principal of the School; she is described as the School administrator. I find that the parties used those two references inter-changeably. [86] To add further confusion, the minutes show that the board members and plaintiff were drawing a distinction between the terms "head teacher" and "principal" in these discussions. Ms. Jaager and Ms. Phillips were not able to clarify in any satisfactory way, their understanding of the distinction between the duties of head teacher and of principal. They both seemed unclear about the matter and were not able to say whether the role of head teacher incorporated the duties of a principal. Mr. Noseworthy was unable to shed any light on the matter. He testified that his interpretation of the plaintiff's proposed Scenario 1 was that the School would have one head teacher instead of a principal. In cross-examination, he admitted that the interplay, if any between the job of head teacher and of principal was not all that clear to him. [87] Nor did Ms. Jaager or Ms. Phillips have an accurate understanding of the duties carried out by the plaintiff in her capacity as principal. For example, the evidence amply establishes that the plaintiff, as principal, set the school curriculum and course outlines. Yet, Ms. Jaager testified that her understanding was that teachers, other than the plaintiff, prepared the curriculum and that the plaintiff merely

delivered it. The evidence of the defence went so far as to hint that the plaintiff was not even qualified or capable of preparing course curricula. There was no doubt that the plaintiff was qualified to act as the principal of the School and to teach there and had done so successfully for many years and had been favourably evaluated in her capacity as principal by Ms. Smith. . [88] The minutes of the Emergency Meeting characterize the plaintiff's Scenario 1 as being the plaintiff's recommendation for staff restructuring at the School for the coming year. They articulate the plaintiff's recommendation as being that Ms. Molzahn be the head teacher, that there be two teacher assistants as needed, and that the plaintiff act as "part-time contract school administrator as needed, and not as teacher". According to Ms. Phillips and Ms. Jaager, the Society merely decided to implement the plaintiff's Scenario 1. That depiction is not accurate. [89] The evidence establishes that what the plaintiff was proposing in Scenario 1 and throughout the Emergency Meeting, was that she would maintain her role as principal of the School and was prepared to relinquish her teaching commitments only if Mr. Gagnon's dire financial prediction came to pass in September. The minutes can be read to suggest that the board envisioned that the position of principal of the School would be extinguished due to

budget constraints. However, I find that what the Society truly had in mind, was that one person, possibly Ms. Molzahn, would assume the dual roles of full-time teacher and principal of the School. [90] As a means of addressing the urgent cash-flow crunch, the Board resolved to contact Ms. Molzahn personally and ask her to refrain from cashing her final post-dated cheques. They asked the same of the plaintiff during the Emergence Meeting and she agreed. The board had in mind that it would lay off both Ms. Molzahn and the plaintiff to enable them to collect unemployment insurance during the summer on the understanding that the Society would cover the shortfall in September. The board also planned to take the necessary steps to stop payment of the outstanding cheques issued both to the plaintiff and Ms. Molzahn, however, it did not successfully implement that course of action. [91] Unlike the plaintiff and Ms. Molzahn, Ms. Jaager was not laid off that summer; her employment income was not impacted [92] There was clearly some question about the accuracy of Mr. Gagnon's dismal assessment at the Emergency Meeting. The board recognized that it needed to take a closer look and resolved that Danah and Tim Phillips and Mr. Gagnon would meet to prepare a budget for the coming year and determine how many students would be required in order for the Society to be financially viable and

continue its operations in September 2003. [93] I accept Ms. Molzahn's evidence that in the early part of July 2003, she received emails from members of the board asking whether she would be prepared to act as principal and be the only full-time teacher, instructing in all subjects. She recalled that one of the emails cautioned her against speaking to other staff members about the matter. It sounded to her as though she was being asked to perform her job and the plaintiff's job as well as perform Montessori training for which she was not qualified. She testified that even sharing teaching with the plaintiff had been a tremendous amount of work. [94] Ms. Molzahn was given a remarkably short timeframe, something in the order of two hours, to consider the board's offer. Before Ms. Molzahn received these emails, she had assumed that she would be returning to the School on the same basis that she had left it in June. However, the board had not offered that she return to her old position. She was upset and taken by surprise by this turn of events. Ms. Molzahn had no interest in taking on the extra work load. She declined the board's offer and did not return to the School. She assumed that the plaintiff was aware of the goings-on and contacted her about it. The plaintiff learned that Ms. Molzahn had declined the offer and says that she heard nothing further about any potential

restructuring directly from the Board until near the end of August. [95] Unlike Ms. Molzahn, the plaintiff experienced difficulty in obtaining her record of employment from the Society. This, in turn, prevented her from applying for and receiving unemployment benefits. Eventually, she attempted to cash the post-dated cheques issued by the Society. She was able to cash two of them. As well, she used the Royal Bank line of credit to make certain personal purchases. [96] Upon discovering the plaintiff's use of the line of credit for personal items, Ms. Phillips, on behalf of the board, wrote to the plaintiff on July 31, 2003. The essence of the letter was that the board had made payments on the line in the past in "good faith" but that because the plaintiff had now used the line to cover her personal expenses, the Society would no longer make payments. Ms. Phillips demanded that the plaintiff "prepare clear documentation showing all expenditures made on behalf of the [Society] along with payments made by the Society". [97] The evidence of Ms. Phillips and Ms. Jaager establishes that the board held many meetings over the summer of 2003. Ms. Phillips described the meetings as "unofficial" board meetings and was not sure as to whether minutes of them had been taken. There were no minutes of such board meetings in evidence. Unlike in the past, the plaintiff was not given any notice of

or invited to join these meetings. The last board meeting she attended had been the Emergency Meeting. [98] Ms. Jaager testified that around the third week of August, 2003 she and the board realized that the Society was sufficiently financially secure to continue running the School and related programs for the following year. At various times that summer, not precisely established by the evidence, members of the board interviewed candidates for the combined position of the main or "head" teacher and principal. Around mid-August 2003, it hired Mr. Cal Johnson, a teacher with no Montessori training, for that position. [99] In August 2003 the board resolved to change the locks on the School premises. Ms. Jaager explained that this was considered necessary because of the staff turnover and because certain parents had keys. No one informed the plaintiff that the locks had been changed. [100] I accept the plaintiff's evidence that in August she went to the School to prepare for the coming year and found that her keys did not work. She claims that soon thereafter she discovered that Mr. Johnson had been hired as the head teacher and new principal by way of an announcement contained in a flyer that came to her by regular mail. The flyer arrived before the plaintiff received a letter from Ms. Phillips' dated August 20, 2003, sent by regular mail, informing the plaintiff of the hiring of

Mr. Johnson. That letter also stated that if student enrolment were sufficient, the board would like the plaintiff to return as a speciality teacher. An actual offer of employment was not made. [101] The plaintiff says, and I accept, that the next communications she received from the Society came in the form of two letters: one demanded that she provide a list of Montessori items purchased by the Society, and the other demanded that she compile documentation showing the monies owed to her and immediately return computer disks and student files. [102] The plaintiff's new email address was accurately set out in the minutes signed as accepted by the president on July 28, 2003. Ms. Jaager and Ms. Phillips both gave evidence about having made numerous but unsuccessful attempts to contact the plaintiff throughout the summer for the purpose of keeping in touch and inquiring about how she was doing. Ms. Jaager testified that she "tried" to e-mail the plaintiff in July and August and even e-mailed her son, but received no reply to any of her e-mails. Ms. Phillips' evidence was along the same lines. The plaintiff denies receiving any of these types of emails from Ms. Jaager or Ms. Phillips. None of the e-mails that Ms. Jaager and Ms. Phillips claimed to have sent to the plaintiff that summer were in evidence. No explanation was given, such as a computer malfunction resulting in the loss

of the various e-mails, to explain the omission of these important documents from trial. I find that casts doubt about the accuracy and even the veracity of the evidence given by Ms. Phillips and Ms. Jaager on this matter. [103] Ms. Phillips claims that she went to the plaintiff's home and that a neighbour suggested that the plaintiff had moved. While it was true that the plaintiff and her husband were in the midst of readying their home to sell it, they had not yet moved that summer. One of the board members, Ron Henry, came by their home a few times during August 2003 to help them build a deck. He mentioned nothing of the prospect of the plaintiff not returning to the School in the fall. [104] I accept the plaintiff's evidence that she made repeated inquiries that summer of Mr. Gagnon concerning the whereabouts of her record of employment and at no time did he inform her that she would not be returning as the principal or as teacher. [105] The plaintiff became so frustrated with the Society's failure to issue a record of employment to facilitate her application for unemployment benefits, that in mid-August she sent it a letter via registered mail demanding that it be provided. Ms. Jaager testified that she recalled receiving that letter and agrees that the plaintiff's record of employment was issued late. In fact, it was not received by the plaintiff until mid-September 2003.

DISCUSSION [106] There are four main issues in dispute. I will address them below under subject headings. (i) Montessori Materials [107] The plaintiff claims that at the beginning of Year 1, the Society agreed to purchase her Montessori materials for the sum of $31,921. It was understood by the plaintiff and the other founding board members that because of the 12 to 18 month lag in government funding, the Society would be cash strapped in its first and second years of operation. According to the plaintiff, with this financial reality in mind, she and the Society agreed that the Society would only have to pay for the materials as and when it had adequate funds in hand. She alleges that the Society has paid only the sum of $3,000 toward the purchase of such materials. [108] While the defendant concedes that the plaintiff supplied it many Montessori materials, it claims that it only agreed to pay the sum of $3,000 for them and has paid that amount in full. Moreover, it alleges that when became clear to the Society that the plaintiff was not returning to the School, it took a detailed inventory of all other items at the School which the members of the board believed belonged or might belong to the plaintiff and packed them up. Arrangements were made for the plaintiff's spouse to collect those boxed items in September 2005, long after this lawsuit was commenced. [109] It is

noteworthy that none of the witnesses who testified for the defendant at trial had been members of the board or in any way involved with the Society in its early days at the time that the plaintiff alleges this agreement was struck. The minutes of board meeting held on November 9, 1999 record the following remarks in relation to the Montessori materials: Materials belonging to [the plaintiff and her husband], on loan to the school, will eventually be sold to the school, as per the direction of the board [110] The plaintiff testified that she had prepared a lengthy typewritten list itemizing all of the Montessori materials and furniture to be purchased by the Society, and allocating a price to each of them. She testified that the amount was specifically discussed and approved by the board at that November 1999 meeting or possibly before then. The total amount was $31,921. A copy of that list was in evidence (the "Materials List"). [111] Dawn Schaefer was present at that November board meeting. She testified that the direction of the board was to purchase the Montessori items from the plaintiff in accordance with a list of materials the plaintiff had prepared. At trial, Ms. Schaefer was shown the Materials List and recalled seeing it during that meeting and testified that it had been circulated among the board members at that time. It was her view based on her own experience as a

former Montessori teacher and having purchased Montessori materials in the past, that the values ascribed to the various materials and furniture in the Materials List were reasonable. Ms. Schaefer also made the important point that because it was understood that the Society owned the materials, but that payment of them was deferred, the constitution provided that if the Society were to collapse, then the plaintiff would get those materials back. It seems an obvious point that if the Society did not own them, it would not be capable of returning them. [112] The evidence of Charlotte Vankataraman, who was also a board member in Year 1, supported the evidence of Ms. Schaefer. She testified that the plaintiff was "most definitely" to be paid by the Society for her Montessori equipment and materials. She clarified that the question was not whether the plaintiff was going to be paid by the Society, but rather when she was going to be paid. Ms. Vankataraman's recollection was there was a specific amount that the Society was to pay for the materials, however she could not recall it. [113] Ms. Randall's understanding was that the plaintiff had placed her Montessori materials in the School and the Society had agreed it would eventually pay her in respect of them. Ms. Randall knew that the materials were expensive but could not recall the total price agreed to. She believed it was in the

range of $20,000 or so. Her recollection was that the Society had in mind that once it received funds from the gaming commission, it would be in a position to make a significant instalment toward the payment of the materials. Ms. Randall also recalled that in board meetings that she attended, there was reference to a list of the materials which had been submitted to the board before she joined. She recalls that list being passed around and discussed at a subsequent board meeting. Her evidence is supportive of the plaintiff's evidence on the matter. [114] Years after the November 9, 1999 meeting and at a time when the Society was anticipating receiving gaming revenue, the plaintiff prepared an abbreviated version of the Materials List. That abbreviated list was not intended to represent a comprehensive list of the Montessori materials that the plaintiff supplied to the Society or that the Society had agreed to purchase: it was merely an invoice of sorts showing the allocation of a portion of the overall purchase price and acknowledging that the Society had paid $3,000 toward the acquisition of the materials. It was not intended to, and did not, set out the entire price for all the Montessori materials purchased by the Society, as urged by the defence. I do not consider the preparation of the abbreviated invoice as undermining the plaintiff's claim that the Society had agreed to

purchase the entirety of the items on the Materials List for the amounts therein indicated. [115] Neither Ms. Jaager nor Ms. Phillips were members of the board at the time that the arrangement was reached between the plaintiff and Society. They were not aware of the existence of the Materials List. Incredibly, given this lawsuit, they had not thought to inquire about the matter with former board members. Indeed, when Ms. Jaager was asked whether she had spoken about the alleged arrangements with any former board members, she appeared taken aback by such a suggestion. Her testimony was that "the minutes were good enough" by which I understood her to mean that she read the above-referenced extract of the November 1999 minutes as supportive of the defendant's position in relation to this aspect of the dispute. [116] In my view, those minutes are, at best, equivocal on the point. Moreover, it was demonstrated time and again throughout this trial that many decisions of the board were not fully documented in the minutes. The level of detail in any given set of minutes varied depending on who was taking them at the particular meeting. [117] The plaintiff has proven her claim against the Society in relation to its acquisition of her Montessori materials and equipment as documented in the Materials List. [118] There was evidence elicited primarily through the plaintiff's husband

indicating that a small number of the items which the Society had boxed up and which he collected from it in September 2005, may have been Montessori items that appear on the Materials List and that the Society had agreed to purchase from the plaintiff. The plaintiff is prepared to reduce her claim by the sum of $921 to reflect the possibility that certain of the materials were returned to her husband, despite the fact that the Society had agreed to purchase those items. That strikes me as a reasonable stance on her part. [119] The plaintiff is entitled to payment by the Society of the sum of $28,000, being the agreed purchase price of the Montessori materials of $31,921, less payment by the Society of the sum of $3,000, and the above-mentioned further reduction of $921. (ii) Royal Bank Line of Credit [120] The Royal Bank line of credit established by the plaintiff in or around 2001 for the benefit of the Society was used almost exclusively to cover expenses validly incurred on the Society's behalf. At times it was even used to repay the plaintiff in accordance with the fixed repayment plan. The only exception relates to the personal purchases made by the plaintiff in the summer of 2003. [121] The members of the board were understandably concerned when they discovered that the plaintiff had made personal charges against the line of credit. However, their suggestion that she had

acted improperly by using it, lost sight of the fact that the line actually belonged to her. In any case, the Society and not the plaintiff had been receiving the bank statements. Any member of the board, particularly Mr. Gagnon as treasurer, could have quite readily reviewed those statements together with the entries in the General Ledger to determine the proper extent of the Society's liability on the line. Yet, rather than taking that reasonable and businesslike step, the Society off-loaded responsibility for the entire accounting issue on to the plaintiff's shoulders and adopted the unreasonable posture of refusing to make any further payments on the line until September 2004, more than a full year later. At that time, it made one payment which did not come close to discharging the entirety of its liability, and then ceased making payments altogether. Evidently, some member of the board also arranged for the statements to be redirected to the plaintiff's home address. From time to time, she forwarded the statements back to the Society and requested that it pay on the line. It refused to do so. I find that the Society made a conscious decision to leave the problem at the feet of the plaintiff and, in that sense, took advantage of her. [122] The plaintiff made some payments on the line in order to attempt to keep the debt from ruining her credit rating. In time, the matter

was handed over to the bank's collection department which repeatedly contacted the plaintiff insisting on payment. Those exchanges could not have been pleasant for the plaintiff. In December 2005, the bank helped itself to more than $1,000 from funds on the deposit in the joint account held by the plaintiff and her husband, to apply against the line of credit. [123] The members of the board had purported to wash their hands of the Society's liability on the line of credit, even though they had no reasonable basis to believe, and did not believe, that the whole of the balance owing was due to purchases made by the plaintiff for her personal use. Ms. Jaager's testimony was clarifying in this regard. She stated that she understood that the Society legitimately owed the sum of about $9,000 on the line as at August 2003. That an amount was owed by the Society on the line was confirmed in its 2003 year end balance sheet which was approved at the annual general meeting held November 25, 2003. Interestingly, and unlike in previous years, on this balance sheet the amount owing to the plaintiff by the Society was now shown as zero. [124] Ms. Phillips testified that she did not review any of the statements pertaining to the line of credit and did not even know where they were kept. She admitted that she did not know whether the plaintiff had made any personal expenditures on the line

other than those incurred in the summer of 2003. It follows that, for all she knew, all of the other charges on the line were validly incurred on behalf of the Society. Ms. Jaager's evidence certainly indicated that was the case. [125] When questioned about why the Society had not made payments against the line, except for the one occasion in September 2004, Ms. Jaager answered that the Society had not done so because it was "in litigation" with the plaintiff. Ms. Jaager admitted in cross-examination that she was aware that the Society's failure to pay against the line could harm the plaintiff's credit rating. The members of the board knew full well that the ultimate legal responsibility for paying off the line fell to the plaintiff. [126] In the professed justification of its course of action, Ms. Phillips testified that "one or more" unidentified board members had performed some calculations and when all the monetary issues between the parties were taken into account, the Society concluded that the plaintiff in fact owed the Society a sum of about $5,706. Shortly before trial, Ms. Phillips and Ms. Jaager carried out their own calculations and satisfied themselves that the plaintiff had been "overpaid". Therefore, while the Society agrees that it owed money to the plaintiff at the close of Years 1, 2 and 3, it contends that by the end of Year 4, the tables had turned and the

plaintiff was indebted to the Society. [127] Even taking into account the ill-conceived position that the plaintiff had been overpaid, on the Society's own arithmetic and evidence, the alleged overpayment did not fully set-off the greater sum legitimately owed by the Society on the line of credit. The Society appeared content to saddle the plaintiff with thousands of dollars of debt for which it knew she was not responsible and could not afford. [128] It is difficult to reconcile the amount owed to the plaintiff by the Society on account of the line of credit without the benefit of review of all of the relevant bank statements. I accept the plaintiff's testimony that she has made payments on the line far in excess of the total amount of her personal purchases. She has calculated the sum of $11,767.80 owing by the Society as at October 23, 2006. That figure has not been challenged by the Society in any cogent way and appears to be accurate based on the rather poor state of the evidence as it stands. The line of credit attracts interest at the rate of prime plus 2%. To that sum, must be added any further interest, if any, which has since accrued at the applicable rate. [129] Judgment is granted to the plaintiff in the amount of $11,787.80, together with interest calculated as aforesaid. In the event that counsel are unable to agree on the calculation, they have liberty to apply

for directions. (iii) Unpaid Loans and Wages [130] As has been mentioned, the plaintiff contends that at the end of Year 1, the Society owed her the sum of $28,611.89, comprising both a deferred payment of her wages for that year and her capital loan (with an interest component) to the Society. The defendant does not dispute that it owed those monies to the plaintiff at that time. The controversy is triggered in Year 2. The chief dispute relates to the plaintiff's contention that the parties had agreed that her salary was to be $40,000 in Year 2 and she deferred the payment of a sizeable portion of it amounting to $33,330. [131] The defendant disputes the plaintiff's assertion that her annual salary for Year 2 was $40,000 and that payment of most of it was deferred and remains outstanding. Ms. Jaager testified that the topic of the plaintiff's salary for Year 2 was raised during a board meeting held on August 23, 2000, where it was generally agreed to be discussed later. She testified that the amount or range of the plaintiff's salary was not addressed at that meeting. This meeting predates Danah Phillips joining the board. The minutes of that meeting make this cryptic reference to the plaintiff's salary under the topic heading of "teacher update": [The plaintiff] will teach in the afternoon & full day Fridays, salary not mentioned. [132] Ms. Jaager does not recall any

subsequent discussion at the board level about the plaintiff's salary for Year 2 until the December 2001 Meeting. According to her, at that time the plaintiff asked that she be paid the sum of $10,000 in payment of either her wages for Year 2 or on account of the Society's loan indebtedness to her. Ms. Jaager testified that from this, she understood that the plaintiff had agreed to accept the sum of $10,000 in full satisfaction of her wages for Year 2. Ms. Phillips' evidence was along the same lines. [133] The plaintiff explained, and I accept, that the discussion about the amount of her remuneration had been deferred at the meeting on August 23, 2000, because it was understood that the amount would depend on a number of factors such as whether she would be running the after-school program, which had not yet been settled. She credibly testified that she would have never agreed to work as principal of the School, part-time teacher, and the manager of the after-school program in Year 2, for the paltry sum of $10,000: a sum that was considerably less than the modest amount she had agreed to be paid in Year 1 and equivalent to about half of the amount being paid to the part-time teacher who had no administrative or after-school program duties. As well, she denied that her being paid a salary of $10,000 for Year 2 was ever discussed as a potential arrangement at any time, or that

she had ever agreed to what she considered to be such patently unfair remuneration. [134] Eunice Randall was one of the other board members present at the August 23 board meeting. She testified, and I accept, that the range of salary for the plaintiff was discussed during that meeting but that the final figure had not been fixed. Ms. Randall recalled that the amount that the board members wanted to pay the plaintiff ranged between $35,000 and $40,000. She was very clear that a final figure for the plaintiff's salary in Year 2 was decided following the August 23 meeting, but could not recall the amount ultimately arrived at. According to Ms. Randall, the plaintiff's salary in Year 2 was not paid in full because the Society did not have sufficient funds throughout the year to do so. She testified that the plaintiff was "absolutely not" working for free. Ms. Randall also testified about the multitude of tasks performed by the plaintiff in relation to the School. Among other things, she was in charge of teaching the curriculum, spear-headed fund raising efforts including the preparation of all grant applications, and planned the outings for the students for the school year. Ms. Randall wondered how the plaintiff could pack so much into her days. [135] I am unable to accept that Ms. Jaager and Ms. Phillips genuinely interpreted the plaintiff's memorandum circulated at the December

2001 Meeting and the related discussion as some kind of an offer or agreement on the part of the plaintiff to accept the sum of $10,000 in full wages for Year 2. In assessing the matter in light of the totality of the evidence, it is difficult to conceive how they could have misconstrued the plaintiff's memorandum in the way that they contend. Their evidence to the effect that they understood that the plaintiff was prepared to take payment of $10,000 toward the reduction of the loan monies owed to her, and no salary at all for Year 2, is implausible and not supported by a plain reading of the plaintiff's memorandum or any other credible evidence. [136] Ms. Jaager was the acting treasurer of the Society at that time. She testified that she had a full-time job elsewhere and agreed that she was not very "hands-on" as treasurer. She did not participate in the day-to-day finances of the School and explained that was left to the bookkeeper, Christine Ormiston. In the course of the trial, it became obvious that Ms. Jaager was not well-acquainted with the contents of the General Ledger or the double-entry bookkeeping methodology upon which it is based. By way of example, she had never seen the journal entry indicating a deferment of payment of the plaintiff's wages in the amount of $33,330 in respect of Year 2 until after this lawsuit had been launched. Ms. Jaager suggested that this

figure had been entered in the General Ledger "retroactively", and in that sense, improperly, at the Society's 2001 year end. She was clearly not familiar with Ms. Ormiston's practice to reallocate a large number of items parked in the suspense account just prior to the year end deadline. [137] It is my assessment of the evidence that even though as board members they approved the balance sheets each year, Ms. Phillips and Ms. Jaager paid little more than a passing glance to any of the Society's balance sheets or the General Ledger at any given time. They did not have the slightest idea whether the plaintiff had actually been deferring the payment of her wages for the overall fiscal benefit of the Society. [138] I conclude that at no time did the plaintiff agree to receive the sum of $10,000 as her salary for her many services to the School in Year 2. At the December 2001 Meeting she asked the board to pay her the sum of $10,000 in partial payment of her deferred wages for Year 2 or partial payment of the Society's indebtedness to her, or a combination of the two. I find that the parties agreed that the plaintiff's salary for Year 2 would be $40,000 and that the sum of $33,330 remains unpaid and outstanding. I am not bothered by the fact that this agreement is not explicitly reflected in any of the minutes of the board meetings. [139] The Society does not dispute the fact that

in Year 2 the plaintiff loaned it additional funds. However, it placed great emphasis on its allegation that in Year 2, the plaintiff made numerous "unauthorized" payments to herself totalling nearly $32,000. The combined evidence of Ms. Jaager and Ms. Phillips indicates that what was meant by "unauthorized" is that each payment made to the plaintiff that year had not been expressly addressed and approved of by the board at any particular meeting; it did not mean that the sums paid were not validly owed to the plaintiff. [140] The Society's view seems to be that none of the payments made to the plaintiff on account of her valid loans were authorized until the board agreed to the formalized repayment schedule in December 2001. The plaintiff says otherwise. She claims that the pattern of repayment established from the outset was that the Society was to repay her as and when sufficient funds were in hand and that such practice was carried out routinely and with the knowledge and approval of the board. None of these payments were concealed from the board; they were all recorded in the General Ledger and were reflected in the bank account statements at all times available to the board. There was nothing clandestine about the plaintiff's conduct in this regard. I accept the plaintiff's description of the rather loose repayment arrangement. I find that it was precisely this lack of a

fixed repayment structure that played a large part in prompting the plaintiff to seek the board's commitment to a regular repayment plan at the December 2001 Meeting. In any event, Ms. Phillips agreed that after the payments had been made, the board accepted and approved of those made in Year 2, which comprised the vast majority. [141] Ms. Jaager and others including the plaintiff, would routinely signed a batch of blank cheques. Often times the plaintiff would co-sign them and complete the details as required. This pattern also operated for years and was known to the board and approved by it. [142] It did not take much prodding in the cross-examination of Ms. Phillips and Ms. Jaager to reveal that the methodology underlying the calculations used by the Society to support its determination that the plaintiff had been "overpaid", was a sloppy and unreliable piece of work. In essence, Ms. Jaager and Ms. Phillips went through the cheque stubs and one part of the General Ledger and added up all monies paid out to the plaintiff in each particular year. They then allocated, sometimes arbitrarily, the payments variously to the category of wages, invoice supplies, payments on the loan and what they categorized as "unidentified". Neither of them had gone through the General Ledger to track how those monies had been ultimately allocated by the bookkeeper. Ms. Phillips testified that she

had "no idea" how any of these entries might be reflected in other parts of the General Ledger. She admitted that she did not know how Ms. Ormiston kept the General Ledger, did not understand what the suspense account was used for and did not know how to read the General Ledger in order to see how monies paid out to the plaintiff were allocated. These were astonishing admissions. [143] I contrast the simplistic and flawed approach taken by the defendant witnesses with the careful and precise accounting given by the plaintiff in her evidence. It was immediately obvious in hearing from her that she was thoroughly familiar with the double-entry bookkeeping of the General Ledger. In most instances, she was able to demonstrate how various monies paid to her were either wages, loan payments or reimbursement for expenditures made on behalf of the Society. [144] Over the years the plaintiff agreed to provide bursaries for families in need whose children attended the School. The bursaries took the form of the tuition for the particular child being paid by deducting the tuition amount from the amount owed to the plaintiff by the Society. The bursaries given by the plaintiff from September 2002 to June 2003 totalled about $3,400. However, once Mr. Gagnon assumed the role of bookkeeper and treasurer, bursaries that the plaintiff never agreed to were credited against the debt owed to her by

the Society in the General Ledger. [145] It would seem that the theme of the accounting approach taken by the Society from the summer of 2003 forward was that if it had any doubt about the allocation of an expense item in the bank account, the line of credit or the suspense account then it would be deducted from the Society's outstanding indebtedness to the plaintiff. [146] It would be wholly unsafe for the court to put any stock in the calculations offered by the defendant purporting to indicate that by Year 4, it had overpaid the plaintiff. [147] It is difficult to calculate with much precision the amount owing to the plaintiff by the Society in relation to her deferred wages and unpaid loans, mainly because the evidence on the point was poorly developed. The difficulty is compounded by the stream of what appears to be unjustified allocations against the plaintiff's account and the fact that a current version of the General Ledger was not in evidence. I expect that Mr. Gagnon could have clarified a number of apparently questionable items, however, he was not called to testify. [148] The plaintiff has proved on a balance or probabilities that as at August 31, 2003 the Society owed her the sum of $41,844.08 in relation to her claim for unpaid wages and repayment of the monies she loaned it, with interest. Judgment is granted accordingly. (iv) Wrongful Dismissal [149] The

plaintiff is the original founder and the most significant personal funder of the Society. On the understanding that it would take roughly five years for the School to establish a solid financial foundation, she made numerous personal sacrifices of both time and money to launch and maintain the School in its formative years. [150] The Society entered into written contracts with its teaching staff for each school year. The evidence establishes that it did so primarily to satisfy requirements laid down by the funding arm of the government in order to qualify for grant monies. The main consideration as to whether or not a contract for a teaching position would be renewed from year to year was whether there would be sufficient student enrolment and hence sufficient government funding the following school year, to keep the School afloat. [151] The only contract of employment between the parties in evidence related to Year 3. I will note here as an aside, that the contract respecting Year 2 was not put in evidence as it evidently could not be located by either party. Ms. Jaager testified that the plaintiff's contract for Year 4 could not be found but that the terms of it were in substance no different from those contained in the contract which governed Year 3. She explained that the only differences would be in relation to the applicable dates and the amount of the plaintiff's

remuneration. I accept that. [152] The Society asserts that its employment relationship with the plaintiff came to an end with the expiration of their employment contract in August 2003 and that it had no obligation to renew her employment for the coming school year. Further, it contends that relying in part on the plaintiff's alleged proposal to stay on as a simple contract teacher and in light of pressing financial considerations, it simply chose not to renew her contract. [153] The contract is a very brief document, spanning only 1 ½ typed pages. It contains no provision dealing with termination or notice entitlement. Under its terms, the plaintiff agreed to provide her services as a teacher, as the School "administrator", which I take to mean School principal, and as the manager of the after-school and play school programs. Paragraph 11 of the contract reads as follows: Statement of Intention 11. This Agreement is intended to generally set out the terms of employment of [the plaintiff] by the [Society], but the parties recognize that the employment relationship established is one in which on-going consultation and co-operation between the two parties is required to ensure that the needs of the [Society], [the plaintiff], and the children enrolled at the [Society] are met. [154] The plaintiff claims that the terms of her employment with the Society fell into a separate

category from the other teaching staff. She contends that because she was the founder of the School and had invested significant personal funds, it was understood that the Society would renew her contract for so long as it was running the School. The plaintiff testified that her employment contract was not subject to annual renewal in the sense of there being any question as to whether or not she would be returning to the School. According to her, the focus of the discussions with the board about her contract in any given school year, was on the extent of her duties and the amount of her remuneration: it was not on whether she would be returning or whether the Society wished to renew her contract. [155] Eunice Randall credibly supported the plaintiff's evidence. She testified that, in her experience, the discussions at the board level in connection with the plaintiff's employment were not about whether her contract would be renewed per sé but revolved around the amount of salary the Society could afford to pay her. Dawn Schaefer and Charlotte Vankataraman both testified that they understood the plaintiff's status to be distinct from the other teachers because she was the leader of the teachers, the driving force behind the School and had a personal financial stake in its well-being. Ms. Schaefer testified that the other teachers were in a different "year-to-year" contract

category from the plaintiff. She explained that the plaintiff's employment could be characterized as being year-to-year in a general sense, but that it was understood by the Board that she would be returning because she was the founder and seen to be integral to its successful operation. Ms. Schaefer said that her expectation and the hope of the board was that the plaintiff would be with the School forever. [156] I conclude that while the plaintiff did share similarities with the other teaching staff, she was clearly in a category of her own in terms of her employment relationship with the Society. Unlike any other teacher, she was Montessori trained, founded the School, had made substantial loans to the Society, deferred payment of her salary, had sat on the board for many years and was the principal. I find that the Society recognized that the plaintiff was the single most important "key" employee of the School and it understood and agreed that her employment contract would be renewed so long as the School was operating, and assuming that she wished to continue and was not in breach of any of her fundamental employment duties. This agreement was established with the board from the very outset and, to my mind, it matters not that the plaintiff was the president of the board at the time. I have no doubt that the plaintiff would have not made the on-going and significant

personal financial contributions to the Society had there been any inkling that her employment was not of an indefinite duration. [157] The defendant points to the minutes of a board meeting held on June 5, 2002, which state that for Year 4 the plaintiff "will be hired on contract and not be an employee of the Society". The Society contends that this statement supports its argument that the plaintiff was not exempted from the ordinary practise of the board to hire teachers on a year- to-year basis, and that there was no automatic renewal of the plaintiff's contract terms at any time. Ms. Phillips was asked about this entry in the minutes and could not recall whether or not the larger matter of the nature of the plaintiff's employment status had been raised at that meeting. The plaintiff had not been present at that meeting. Moreover, and more importantly, is the fact that the plaintiff was not questioned about this statement appearing in the minutes. In any case, I find that it does not advance the Society's defence and does not undermine the testimony of the plaintiff, Ms. Randall, Ms. Schaefer or Ms. Vankataraman, which satisfies me that the employment arrangement between the Society and the plaintiff was unique. [158] I conclude that the plaintiff's employment relationship with the Society was not such that the Society was at liberty, as it contends, to simply choose not to

renew her employment contract at the end of Year 4. [159] Another component of the Society's defence seems to be that given its financial predicament at the close of Year 4, it could afford to pay for only one full-time teacher who was also required to act as principal, and that the plaintiff did not have the necessary teaching credentials to act as such. The plaintiff was not aware of any such professional restriction. Her temporary teaching certificate, which was valid at the relevant time, authorizes her to teach in Montessori schools with no apparent limitations. When a copy of the certificate was put before Ms. Phillips, she admitted she had never seen it before. In a similar vein, Ms. Jaager and Ms. Phillips both suggested that the plaintiff was not qualified to prepare the curriculum and lesson plans and hence was not capable of assuming the combined role of principal and sole teacher. However, the evidence amply demonstrates that in past years the plaintiff prepared some of the lessons and the School curriculum. The evidence does not indicate that she was incompetent or otherwise unlicensed or not qualified to do so. I am not satisfied on the evidence that the contention of the Society that the plaintiff was not qualified to be the sole full-time teacher and principal of the School, is accurate. There was also a paucity of evidence about the Society's actual financial

picture in the fall of 2003 and specifically, whether it could only afford to hire one individual in the combined roles of teacher and principal. [160] The Society's further contention is that the plaintiff had informed it that she no longer wished to be principal and that her Scenario 1 circulated at the Emergency Meeting supported her desire to resign. The fact that the plaintiff may have noisily complained about some of the aspects of her job in the spring of 2003 did not amount to a resignation by her as principal. At most, she expressed a conditional threat to resign at some undefined future date if her administrative burden was not partially relieved. Moreover, I find that the Scenario 1 which she offered during the Emergency Meeting had the plaintiff remaining as principal. The plaintiff was prepared to give up her teaching duties if, and only if, the dismal financial prediction given by Mr. Gagnon was borne out, but she was never prepared to give up her duties as principal even in that worst case. [161] I find that the written employment contracts between the parties did not fully capture all of the employment terms between them. The contract itself in paragraph 11 expressly acknowledges the fluid nature of the relationship. This is not a case where the plaintiff was subject to a fixed term contract which came to an end, thereby relieving the employer of any further

obligations. The purpose of the employment contract was more to satisfy the requirements for government funding than it was to comprehensively record the employment relationship between the parties. The evidence supports the finding that the plaintiff and the Society comported themselves as though the plaintiff was a permanent employee for so long as the School was operating. [162] I find that the plaintiff faithfully discharged and diligently performed her duties to the Society and reject the defence allegations of fundamental mismanagement, misrepresentation or other improper conduct. [163] I find that on or about August 27, 2003 the Society terminated the plaintiff's employment without just cause and without reasonable notice. I pause here to remark that the plaintiff's agreement to be "laid off" in the summer of 2003 at the board's suggestion did not constitute notice of termination of her employment. [164] I expect that it was offensive to the plaintiff to learn that another person had been hired in her place by receiving a generic flyer in the mail. The timing of the plaintiff's discharge was such that she was unable to obtain another teaching position for the first part of the 2003-2004 school year. She testified that it was too late for her to get on a substitute teacher list. I accept her evidence that she applied for a few teacher assistant positions but did not

secure employment. Her husband then got ill and so she did not look for work in February 2004. The plaintiff rekindled her efforts to find employment in or around March 2004 and eventually took a three-week retraining course for future prospects. She found a temporary position at a weight-loss clinic and later became certified as a mortgage broker. She has worked successfully in that profession since that time and last year earned approximately $46,000. [165] The Society's failure to provide reasonable notice of dismissal to the plaintiff is a breach of the employment contract and gives rise to damages in her favour. In Bardal v. Globe & Mail (The), [1960] O.W.N. 253, 24 D.L.R. (2d) 140, the court stated that the reasonableness of the notice depends on a multitude of factors peculiar to the particular case. They include the nature of the employment, the age, experience, training, qualifications and length of service of the employee and the availability of similar employment. The Bardal approach was approved by the Supreme Court of Canada in Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986 and in Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701. [166] It is well-established that the determination of an appropriate period of notice is not a mathematical exercise and that there is no standard "rule of thumb" to be applied. The process involves the weighing and

balancing of a catalogue of relevant factors, including, but not limited to, those set out in Bardal. [167] Employer misconduct is one of a number of other factors beyond those enunciated in Bardal which is material to the inquiry and can increase the quantum of damages (see generally: Lewsey v. Surrey (District) (1971), [1972] 1 W.W.R. 611, MacDonald v. Royal Canadian Legion (1995), 12 C.C.E.L. (2d) 211; Noseworthy v. Riverside Pontiac-Buick Ltd. (1996), 22 C.C.E.L. (2d) (Ont. Gen. Div.), reversed in part (1998), CarswellOnt 4889). [168] Baseless allegations of employee wrongdoing offered as a rationale for the dismissal may, standing alone or as part of other factors, justify the extension of the reasonable notice period. There is certainly an element to that in the case at hand. The Wallace analysis does not mandate that the allegations against an employee be wholly pretextual in order to extend the notice period: Robinson v. Fraser Wharves Ltd. (2000), 5 C.C.E.L. (3d) 81 (B.C.S.C.). A counterclaim or unsubstantiated allegations in the statement of defence may have a boomerang affect to the employer even where the employer believes and possibly continues to believe that the employee has engaged in some degree of the alleged misconduct. [169] The Society brought a counterclaim alleging that the plaintiff misrepresented her teaching qualifications to the Society and is not a

certified or qualified teacher and that as a result of her lack of qualifications, students at the School lagged behind in their learning and did not return. The counterclaim also alleged that the plaintiff wrongfully cashed a cheque in February 2003, failed to disclose a fire and safety inspection report in relation to School premises, wrongfully cashed her post-dated pay cheques, mismanaged the School's finances and administration and that when she left her employment, took property and records belonging to the Society which she refused or failed to return. It was not until counsel for the Society was directly asked about the status of the counterclaim after the trial opened, that the Society informed the plaintiff that it was not pursuing any aspect of it. [170] A number of the allegations contained in the Society's statement of defence follow those set out in the counterclaim. The statement of defence alleges that the plaintiff was responsible for the preparation of a yearly budget for the School and that the one she "presented" in March 2003 was flawed. As mentioned previously, the Society goes on to deny that it agreed to a repayment schedule in December 2001 and alleges that the plaintiff is fully liable for the Royal Bank line of credit. The dominant theme in the statement of defence is that the plaintiff was dishonest about her credentials and acted carelessly and

improperly in relation to the Society's financial matters. [171] The plaintiff contends that she is entitled to be compensated by extending the reasonable notice period in accordance with the Wallace analysis because the conduct of the defendant in relation to the termination of the plaintiff was so unfair and/or steeped in bad faith, and in light of its assertion of baseless allegations of misconduct on her part. [172] While I conclude that the Phillips' outrage at the plaintiff in respect of their perception that she dealt with complaints about their son in a flawed way was not wholly unrelated to the breakdown of the employment relationship between the parties, and although the Society rightly attracts criticism for certain other of its conduct surrounding the termination, including the unreasonable approach taken with respect to the Royal Bank line of credit, the evidence falls short of establishing that the Society engaged in bad faith conduct or unfair dealings in the course of the plaintiff's dismissal of the nature required to sustain a Wallace extension. In my estimation, the unfortunate manner of the plaintiff's termination was more the product of a bungling and misinformed and, to a mild extent, deliberately ignorant board, than it was a reckless, unconscionable or deliberately brutal event. Nor am I able to find that the Society's allegations of the plaintiff's

misconduct were deliberately fabricated or exaggerated for the purposes of the litigation so as to justify a bump to the notice period. In addition, while understandably upset over her dismissal, there was no cogent evidence to show that the manner of firing inflicted any emotional harm or mental distress on the plaintiff or that she suffered a loss of reputation or prestige. Likewise, there has been no evidence that the baseless allegations adversely impacted the plaintiff's ability to find employment or her reputation at large. [173] Based on the foregoing, I conclude that the appropriate notice period is six months and ought not to be extended based on the Wallace analysis. For the purposes of damages, I find that six months notice equals $20,000, based on the plaintiff's reasonably anticipated annual salary of $40,000 for the school year commencing in September 2003. [174] Counsel for the plaintiff declined the court's invitation to make submissions in relation to special costs. The plaintiff is entitled to her costs at scale B. "Judge Eric Rice for": The Honourable Madam Justice Ballance