Ontario Employment Law: Contractual Entitlement to Notice and the Question of Mitigation

In Bowes v. Goss Power Products Ltd., decided May 25, 2012, the Court of Appeal for Ontario was faced with an interesting question of law:

Is an employee, who is terminated without cause, required to mitigate his or her loss when entitled to a fix term of notice or pay in lieu of notice?

In the case, the employee, Peter Bowes had entered into a written contract of employment with Goss Power Products Ltd, which provided that he would receive six months' notice or pay in lieu thereof if his employment was terminated without case. The contract was silent as to any duty on his part to mitigate his damages in the event of a termination without cause. As it happened, only two weeks following the date of termination, Mr. Bowes was lucky enough to secure comparable employment at the same salary he had been earning with Goss.  

The employer took the position that even though the contract was silent as to any obligation on Mr. Bowes to mitigate his damages, he had an implied obligation to do so and had effectively mitigated most of his damages by obtaining this new position. Therefore, the employer argued it did not have to pay Mr. Bowes anymore than

In answering "no" to the question set out above, the Court noted that a contractually fixed term of notice is distinguishable from common law reasonable notice where a duty to mitigate is an implied term of the employment relationship. In this regard, Winkler C.J.O. stated:

When parties contract for a specified period of notice or pay in lieu thereof they are choosing to opt out of the common law approach applied in Bardal. In doing so, the parties should not be take as simply attempting to replicate common law reasonable notice.

Winkler C.J.O. continued:

In my view, there is nothing unfair about requiring employers to be explicit if they intend to require an employee to mitigate what would otherwise be fixed or liquidated damages. In fact, what is unfair is for an employer to agree upon a fixed amount of damages, and then, at the point of dismissal, inform the employee that future earnings will be deducted from the fixed amount. 

This decision illustrates that where a contract specifies the period of notice, or pay in lieu thereof, which an employee will be entitled upon a termination on a without cause basis, courts will not presume a term requiring the dismissed employee to mitigate its damages.

If you believe that you have been wrongfully dismissed, please contact a lawyer who can advise you as to your rights and entitlements.

- Robert Tanha, Toronto

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Ontario Employment Law: Prejudgment Interest On Wrongful Dismissal Damages

In Chandran v. National Bank, Pollak J. in his endorsement on costs dated July 21, 2011, neatly summarizes how prejudgment interest is calculated in a wrongful dismissal action as follows:

... [T]he prejudgment interest on the damage award is calculated as follows: - first, the interest owed from the beginning of the notice period to the end must be calculated monthly on the basis of what was owed at that time; - second, the interest on the total amount of the award outstanding at the end of the notice period must be calculated from the end of the notice period to the date of judgment.

Two calculations essentially need to perform to arrive at a figure for prejudgment interest. In the case, prejudgment interest was determined to be $15,931.93 for an employee with an annual salary of $98,824.00 and an entitlement to 14 months of pay in lieu of reasonable notice.

Pollick J. neatly set out his calculation of prejudgment interest, as follows:

This Court’s calculation of appropriate prejudgment interest on a monthly basis prior to the expiry of the notice period in this case as follows:

(i) Annual Salary of $98,824.00/ 12= $8235.33 a month

Interest Calculated Monthly:

Month 1	$8235.33 x 4.5% per annum for 14 months	$432.32
Month 2	$8235.33 x 4.5% per annum for 13 months	$401.44
Month 3	$8235.33 x 4.5% per annum for 12 months	$370.56
Month 4	$8235.33 x 4.5% per annum for 11 months	$339.68
Month 5	$8235.33 x 4.5% per annum for 10 months	$308.80
Month 6	$8235.33 x 4.5% per annum for 9 months	$277.92
Month 7	$8235.33 x 4.5% per annum for 8 months	$247.04
Month 8	$8235.33 x 4.5% per annum for 7 months	$216.16
Month 9	$8235.33 x 4.5% per annum for 6 months	$185.28
Month 10	$8235.33 x 4.5% per annum for 5 months	$154.40
Month 11	$8235.33 x 4.5% per annum for 4 months	$123.52
Month 12	$8235.33 x 4.5% per annum for 3 months	$92.64
Month 13	$8235.33 x 4.5% per annum for 2 months	$61.76
Month 14	$8235.33 x 4.5% per annum for 1 month	$30.8
	Total	$3242.40

(ii) Lump-sum prejudgment interest on the damage award from the end of the notice period to the date of the decision:

• the notice period ended mid November 2008. The award was made on April 26, 2011. The Plaintiff calculated the exact number of days in this period as being 893.

• the total damage award was $115,294.66 x 4.5% a year= $5,188.26 a year

• $5,188.26/365 days in a year= $14.21 interest a day

• $14.21 x 893 days= $12, 689.53 (total lump sum prejudgment interest owed)

On the basis of these calculations a total of $15,931.93 prejudgment interest is owed on the damage award.

This case demonstrates that  the method of calculation for prejudgment interest in a wrongful dismissal action is not something that can be ignored or taken lightly - it can amount to a significant add-on to the damage award.

- Robert Tanha, Toronto

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Ontario Employment Law: Summary Judgment In Wrongful Dismissal Actions

In Thorne v. The Hudson Bay Company, a case decided September 21, 2011, the Plaintiff, a 37.5 year employee who had been dismissed without just cause sued for wrongful dismissal after receiving a bare-bones severance package that was limited to her Employment Standard Act minimums.

The Plaintiff, an Allocation Associate,  moved for summary judgment, arguing that since there were few factual issues which were contentious between the parties, the judge could rule on the period of reasonable notice she was owed "without the need for the forensic machinery of a trial".

Based on consideration of the legally relevant factors, the Defendant employer took the position that she was owed 12-16 months of pay in lieu of notice. Considering the same factors, the Plaintiff employee took the position she was owed 24-30 months, a very divergent position indeed.

Under Rule 20.04 of the Ontario Rules of Civil Procedure, summary judgment motions are appropriate where the court is satisfied that there is "no genuine issue requiring a trial."

In the affidavits filed by the parties upon the motion, they took starkly contrasting views on the character of the Plaintiff's employment. While she did not have a supervisory function, the Plaintiff claimed that her job was far from entry-level and clerical. She, for example, provided operational support to the high volume merchandise industry which required a solid grasp of the employer's business. The Defendant argued that the Plaintiff's job was clerical, and stated she merely produced purchase orders.

Campbell J. held that a trial would be required to resolve the disagreement:

Having carefully examined the evidence that has been provided by the parties on this issue, it is apparent that they view the nature of the plaintiff’s job very differently. Their disagreement on this issue is not just a matter of the appropriate legal characterization of the job, but rather extends to the nature and details of the responsibilities performed by the plaintiff. The evidence filed by the parties on this motion, none of which has yet been subjected to cross-examination, is in stark conflict. In my opinion, it is simply not possible to fairly and appropriately resolve this important issue without the machinery of a trial. 

Faced with this fundamentally conflicting evidentiary record it is simply not possible to resolve this important factual dispute without the forensic machinery of a trial. Without hearing viva voce testimony from these witnesses as to their understanding of the specific details of the plaintiff’s job responsibilities, and being able to assess their credibility and the reliability of their evidence, and seeing the impact of cross-examination, there is simply no fair and accurate way of resolving the dispute between the parties on this important issue.

Hence, Justice Campbell concluded that in all the circumstances there was a genuine issue for trial given that character of employment remains a relevant factor in the determination of reasonable notice:

I appreciate that the court is entitled to assume that the parties have put forward their best evidence on the summary judgment motion and that, if the case were to go to trial, no additional evidence would be presented. See: Rogers Cable TV Ltd v. 373041 Ontario Ltd., 1994 CanLII 7367 (ON SC), (1994), 22 O.R. (3d) 25 (Gen.Div) at para. 4; Bluestone v. Enroute Restaurants 1994 CanLII 814 (ON CA), (1994), 18 O.R. (3d) 481 (C.A.) at para. 30; Dawson v. Rexcraft Storage & Warehouse Inc. 1998 CanLII 4831 (ON CA), (1998), 164 D.L.R. (4th) 257 (Ont.C.A.) at para. 17. But in some cases, like the present one, that assumption is of little assistance in actually resolving the factual dispute between the parties, as the court is limited to paper review of the evidence provided by the parties, without greater explanation, and wholly untested by cross-examination.

As an aside, for those judges and academic who have doubted the importance of character of employment in the determination of reasonable notice, Justice Campbell had this to say:

. . . it cannot be said that the resolution of this factual issue is of no importance to the outcome of this case. There are authorities which suggest that the character of the employee’s employment may be “a factor of declining relative importance” in the overall analysis of all of the Bardal factors. See: Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469 (CanLII), 2011 ONCA 469, at para.22-29; Medis Health and Pharmaceutical Services Inc. v. Bramble 1999 CanLII 13124 (NB CA), (1999), 175 D.L.R. (4th) 385 (N.B.C.A.) at para. 64; Vibert v. Paulin 2008 NBCA 23 (CanLII), (2008), 291 D.L.R. (4th) 302 (N.B.C.A.). Nevertheless, unless and until the governing legal standard for determining “reasonable notice” is changed in a more fundamental way, the character of the employment of the employee will properly remain a factor that must be taken into account in an appropriately “holistic review” of all of the Bardal factors. The fact that the parties in this case have devoted so much energy to producing evidence on this issue demonstrates their own appreciation of this legal reality.

When it comes to what he himself refers to as the "controversial scope of summary judgment motions", there is no doubt that Justice Campbell's reasons for decision raise as many questions as they do answers.

- Robert Tanha, Toronto

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Ontario Court of Appeal: McNamee v McNamee, 2011 ONCA

McNamee v McNamee - an interesting analysis of "gifts" that may be excluded from calculation of net family property under s. 4(2) of the Family Law Act.

Facts

Clayton McNamee, appellant, and Connie McNamee, respondent, were married for 18.5 years with their marriage conducted as an equal partnership by all accounts. The parties separated on August 5, 2007.

Mr. McNamee Sr. owned a concrete trucking company. In 1988, he invited his two sons, Clayton and Trevor to join his company to establish a constructional division and sales divsion respectively. The company became very successful, with annual sales of more than 5 million. Mr. McNamee Sr. controlled the business side and made the major financial decisions.

In 2003, acting on the advice of his lawyers, Mr. McNamee Sr. implemented a corporate freeze in order to protect his business from creditors and limit his taxes upon death. This was achieved by folding the business into a holding company, "Holdco"and freezing the value of the business at 2 million. He subsequently transferred his only two common shares in his concrete company to Holdco in exchange for 20,000 voting shares valued at 2 million. Moreover, he subscribed for 1000 common shares for an amount of $1 and transferred 500 shares to each of his sons.

The key issue is whether this transfer of shares to his son Clayton McNamee constituted a gift.

Mr. McNamee Sr. was determined not to let anyone get a hold of the shares he transferred to his sons without his approval. He also took actions to guard against any of the shares becoming part of any joint property in the event that his sons experienced a breakdown in marriage. For instance, as part of the estate freeze, Mr. McNamee Sr. retained complete control by ensuring that his preference shares were voting shares.

Declaration of Gift

There were two conditions that Mr. McNamee attached to the declaration:

1.) In the event of a marital breakdown, neither the shares nor any increase in the shares would form part of donee's NFP in the event of a divorce

2.) The donee was to be in sole control of the shares without any interference from his spouse

The actual Declaration of Gift was as follows:

DECLARATION OF GIFT

I, John McNamee, of the Village of Jasper, in the Province of Ontario, am the owner of 1000 Common Shares in the capital of [Holdco] (the “Property”)

I desire to gift the property to my sons, Trevor McNamee and Clay McNamee, (the “Donees”) in equal proportion.

To carry out my intended purpose, I hereby deliver to each of the Donees a share certificate representing 500 Common Shares in the capital of [Holdco] registered in the name of the Donee.

I acknowledge that it is my intent to vest absolute ownership and title in the Property in the Donee from the date of this declaration.

I hereby direct that the whole of the Property gifted to each Donee, the income arising therefrom, any appreciation in the value thereof, and any property acquired in substitution therefor shall not fall into any community of property which may exist between the Donnee and his spouse, and shall not form part of the net family property of the Donee for any purpose or purposes under the Family Law Act, R.S.O. 1990, c. F.3 and any amendment thereto or any successor legislation thereto, and is given to the Donee on the condition that it shall remain his separate property, free from the control of his spouse. This direction shall apply not only to the Family Law Act, but also to the laws of any other jurisdiction dealing with the distribution of property in the event of death or marriage breakdown.

Proceeding to the estate freeze, the appellant along with his brother and father signed a unanimous shareholders agreement. The appellant stated that his father had told him the transferred shares were a gift.

Trial Judge's Findings

The trial judge held that the shares were not transferred by way of gift and Mrs. McNamee was entitled to half their value.

Main Issue Subject to Appeal

1.) Whether Mr. McNamee's 500 common shares in his father's (Mr. McNamee Sr.) company had been received by way of a gift and thus excluded from the appellant's Net Family Property ("NFP"). If the shares were deemed to be gifted then they would not form part of the appellant's NFP.

Application of Law & Analysis of Issue on Appeal:

Shares transferred by way of Gift:

Section 4(2) of the Family Law Act, R.S.O. 1990, c. F.3, excludes gifts received during the marriage from a spouse’s net family property:

4(2) The value of the following property that a spouse owns on the valuation date does not form part of the spouse’s net family property:

1. Property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage.

The onus of proving exclusion under s. 4(2) is on the person claiming it: s. 4(3).

Elements of a Gift:

In order to constitute a valid legal gift, there must be:

1.) An intention to make a gift on the part of the donor, without expectation of consideration

2.) An acceptance of the gift by the donee

3.) A sufficient act to transfer the property to complete the transaction

The trial judge concluded that the transfer of shares to the appellant was not a gift based on four circumstances:

1.) The transfer was not a gratuitous transfer but a transfer for consideration

2.) Mr. McNamee Sr. did not intend to gift the shares

3.) Mr. McNamee Sr. did not divest himself of power or control over the shares; and

4.) The appellant did not accept the gift

Consideration Factor:

Consideration is the value that flows from a promissee to a promisor as a result of a bargain. The Court of Appeal stated that the appellant did not bargain for the shares he received. Also, the Court determined that the shares were not transferred by Mr. McNamee Sr. to his sons to ensure their continued involvement with the company. Rather, they were transferred in order that the estate freeze could be implemented.

Intention of Donor/Transferor:

The trial judge held that Mr. McNamee Sr. only intended to transfer the shares to his sons in order the complete the the estate freeze and not for the purposes of gifting. In particular the trial judge asserted:

Clearly on the evidence the intention of John in authorizing and directing the estate freeze was not for the purpose of making a gift to his boys. It was to creditor proof his business and thus better protect the future of his business.

The transfer of the shares was but one step that was necessary for the primary objective to be accomplished.

So long as the main objective was achieved with the requirements he demanded John was less concerned about how the shares were transferred to his sons. This is evident from his testimony when asked why he didn’t sell the shares to the boys. He answered that it was because they didn’t have any money.

The Court stated that the fact that the Mr. McNamee Sr. transferred shares to the appellant in conjunction with the estate freeze did not disregard the main purpose of the transfer of shares, which was the intention to transfer by way of gift. Moreover, the Court held that since the father did not sell his shares to the appellant, this reinforced the notion that a valid gift was made.

Delivery:

There is no issue concerning the delivery of the shares.

Acceptance of Shares and Divesting Power of Control:

The Court held it was of no consequence that the appellant was unaware about the Declaration of Gift until after the divorce . The appellant was aware that his father had previously indicated to him that the transfer of shares was intended to be a gift and that he paid no consideration for the shares.

The respondent contended that the appellant must understand the nature of the transaction and willingly accept title to the property is that transferred (see Ziff, supra, at p. 157). The trial judge held:

These authorities indicate that the question of whether or not the husband in the case at bar is found to have accepted his father’s gift would require that he know of the transfer of shares, at the time it was made. Indeed, at the very minimum, he would be required, under the rule in Wilson v. Hicks which is still good law in Ontario, to have understood the nature of the transaction and to have willingly accepted title to the shares. This understanding presumes an element of knowledge that he was the donee to the transfer of the shares at the time the transfer was made and of the terms and conditions attached to the shares.

Professor Ziff qualifies this concept:

Acceptance of a gift involves an understanding of the transaction and a desire to assume title. This is a requirement that is treated with little rigour: in the ordinary case, acceptance is presumed to exist.

The Court asserted that there was no evidence to suggest the respondent's inference that if the appellant had been aware of the Declaration of Gift at the time it was created he would not have accepted the transfer of shares from his father.

The Court declared that the trial judge erred in ordering half the value of the shares be included in the equalization payment to the respondent. Referencing s. 4(2) Family Law Act, the Court was satisfied that the shares were transferred by way of gift and thus should not form part of the appellant's NFP and be subject to an equalization payment.

Disposition:

The Court allowed the appeal and set aside the order of the trial judge requiring the appellant to pay the respondent the amount of $209,100 in addition to prejudgment interest on that amount.

- Alim Ramji, Toronto

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Anonymous Online Commenting Is Safe For The Time Being

This week's decision in Phyllis Morris' defamation case, where Justice Carole Brown ruled against forcing the identifiction of anonymous commenters on the Aurora Citizen's website, can only be viewed as a victory for civil liberties in this province. (The linked article refers to the commenters as "bloggers," thereby continuing the generalization of the term; the individuals in question were commenting on forums moderated by the site's managers.) Ms. Morris' action is against the Citizen, who she claims published comments that were defamatory towards her as Aurora's former mayor.

However, although Justice Brown rightly notes that

The public interest favouring disclosure [of the bloggers’ names] clearly does not outweigh the legitimate interests in freedom of expression and the right to privacy of the persons sought to be identified...

...what is somewhat troubling is that then she further qualifies her decision by pointing out that in addition to the interest of freedom of expression, Ms. Morris also didn't do all the legwork:

It is not the role of the court to parse the impugned articles and blogs before it to attempt to determine, by divination or divine inspiration, which statements it should assess in determining whether a prima facie case has been established.

While sarcasm aimed at a litigant whose pleadings are incomplete or insufficient is always welcome in this writer's eyes, one cannot help but feel that by including it the justice has in some way qualified her decision on a procedural level - allowing the question to be raised that, had Ms. Morris filed a more complete brief clearly identifying the comments she felt were slanderous, would the judge then have been more receptive to her motion. This offers an additional ground of appeal on the decision and one that allows others to call into question the free speech bonafides of Justice Brown's decision.

(This seems analogous in some ways to the BC case Crookes v. Newton, where a superior court-level decision stating that publishing a hyperlink to defamatory material was not itself publication of defamatory material in that instance, but left the question of whether or not hyperlinking itself could ever constitute republication of defamatory material to the eventual Court of Appeal decision. Which of course said that this is almost never the case.)

After all, if we are to look to existing precedent regarding anonymous online communication and how it is privileged as free expression, the United States can provide us with numerous (non-binding) precedents. Most notable in this instance is Anonymous Online Speakers v. United States Dist. Court for the Dist. of Nevada Reno, a Ninth Circuit Court ruling from 2010 that stated unequivocally that an author's decision to remain anonymous when publishing online was protected by the First Amendment.

Although the First Amendment is not exactly the same thing as section 2(b) of the Charter of Rights and Freedoms, protecting Canadian freedom of expression, there is a great deal of similarity between the two and Anonymous Online Speakers should certainly be given weight in any future decisions of this nature (such as the appeal Ms. Morris has already promised to pursue).

- Christopher Bird, Toronto

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Ontario Employment Law: Determining The Appropriate Period Of Reasonable Notice

In Harvey v. Shoeless Joe's Limited, a May 26, 2011 summary judgment ruling of Stinson J. of the Ontario Superior Court of Justice, the Court deals with the two of the questions that are central in every wrongful dismissal action:

1. Is the Plaintiff entitled to reasonable notice of termination at common law?
2. If so, what length of notice period is the Plaintiff entitled to receive ?

In quickly disposing of the first question, Stinson J. pointed out the Defendant's written offer of employment to the Plaintiff contained no provision with respect to notice of termination and that there was no evidence of discussion between the Plaintiff and the Defendant that could be taken to limit or otherwise vary the "implied contractual right to reasonable notice of termination."

With respect to the second question, the appropriate period of notice, Stinson J. turned to the oft-cited Bardal factors.

Length of employment

The Plaintiff was a short-term employee with only 5.5 months of service which strained towards a lower period of notice. That said, Stinson J. decidedly rejected the employer's argument that awarding a short term employee of less than 6 months of service more than a month's salary would open the floodgates to claims by short-term employees:

The defendant argues that granting a notice period in excess of one month would “open the floodgates” to claims by short term employees. I do not accept that submission. Firstly, the Bardal factors have stood the test of time for half a century, and have been repeatedly applied and accepted by trial and appellate courts in determining appropriate notice periods in a wide range of cases. Where trial judges have been too lenient or too strict, appellate courts have stepped in to correct errors in the application of the principles. Secondly, as the defendant unsuccessfully attempted in the present case, it remains open to an employer to protect itself by requiring the prospective employee to agree to a contractual termination arrangement that would take their relationship out of the common law notice scheme.

Character of employment

The Plaintiff held the position of Vice President Operations at a salary of $130,000.00, which involved many supervisory duties. This factor supported a higher period of notice.

Age

The Plaintiff's age, 41, was a neutral factor.

The availability of similar employment

Given that it took the Plaintiff 10 long months to find new work, this factor spoke for itself and favoured a higher period of reasonable notice.

In light of these four factors, Stinson J. concluded that the Plaintiff was entitled to 2.5 months of pay in lieu of notice.

If you believe you have been wrongfully dismissed, please contact a lawyer who can advise as to your rights under the Ontario Employment Standards Act and at common law.

- Robert Tanha, Toronto

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Ontario Employment Law: Disability and Frustration of An Employment Contract

Frustration of an employment contract occurs when, through no fault of either party, an event occurs that makes the contract impossible to perform.

Under Ontario law, where an employee is suffering from a permanent disability with no reasonable prospect of returning to work in the reasonably foreseeable future, frustration may arise. Where frustration occurs, both the employee and the employer are relieved of their obligations, the employment contract has come to a lawful, albeit unfortunate, end and no damages may be awarded for wrongful dismissal.

If an employer can demonstrate that such disability has created a frustration of the employment contract, the employer may lawfully terminate the employment, simply by providing the employee with the required severance entitlements as spelled out in the Ontario Employment Standards Act.

But, unsurprisingly, it's not quite that simple. A number of factors will be canvassed by a court that is considering whether the doctrine of frustration applies.

Is a Disability Permanent ? - Employers' Due Diligence Obligation

In Naccarto v. Costco, decided June 15, 2010, the defendant employer, Costco, sought to rely on the doctrine of frustration in defending against a wrongful dismissal claim launched by a thirty-seven year (37) old Return-to-Vendor Clerk who had been terminated from his employment after seventeen (17) years of service.

In the case, the Plaintiff, Mr. Naccarto, commenced a medical leave arising from clinical depression. At the time of termination, Mr. Naccarto had been on a medical leave for over five years.

The Defendant employer relied on the following, in support of its decision that the employment contract had been frustrated, giving it the right to terminate the Plaintiff's employment:

1. The Plaintiff's long and continuing absence from work, which equated to a period of five years;


2. The Plaintiff had been in receipt of long-term benefits which require a finding of "total disability"; and


3. The statements of one of the Plaintiff's doctor that he did not know when the Plaintiff's medical condition would improve and did not know when he would be able to return to work

According to the Defendant, this demonstrated that the Plaintiff was "permanently disabled" and could not fulfill the basic obligations he owed as employee for the foreseeable future, justifying its decision to terminate him.

The Court underlined that the "burden" is squarely on the employer to prove frustration of contract, turning immediately to the medical evidence:

The law with respect to the burden of proof on an employer to establish a frustration of contract has been very well set out by Justice Perell in the case of Dragone v. Riva Plumbing Limited, 2007 CanLII 40543 (ON S.C.), 2007 CanLII 40543 (ON. S.C.). In that case, the employee had been absence from work due to illness for a period of approximately fourteen months. The evidence was that the employee did not know when she would get better, but that based on the evidence there was at least hope that she would eventually be able to return to work. The Court found that a permanent incapacity to return to work had not been proven. Justice Perell found that the onus was on the employer to prove that the contract had become frustrated and that it was not the employee’s onus to provide medical evidence with respect to her ultimate prognosis.

In this case, although the duration of the illness is significant, a period of five years, the medical evidence does not support a finding that there is no reasonable likelihood of the employee returning to work in reasonably foreseeable future. Rather, the evidence is that the employee is still being treated by his doctor as a new psychiatrist is being sought.

Costco could have followed up with the doctor to ask further questions with respect to the likelihood of a return to work in the foreseeable future, but it did not do so. Costco has not, in my opinion, provided this Court with the necessary medical evidence to support a finding that it is unlikely that Mr. Naccarato will be unable to work in the reasonably foreseeable future.

In other words, an employer has a "due diligence obligation." It must satisfy itself on a reasonable basis as at the time of termination that the medical documentation supports a finding that "there is no reasonable likelihood of the employee returning to work in the reasonably foreseeable future."

If the medical evidence is negative or equivocal on this crucial point - as in the case under discussion - then frustration may not have been proven by an employer.

The fact that the plaintiff employee was on long-term disability benefits which required "total disability" did not necessarily mean he was "permanently disabled" as defined by the common law, for the purpose of applying the doctrine of frustration.

Is the Absence Disruptive to the Employer's Operation?

Turning to another frustration of the employment case, Dragone v. Riva Plumbing Ltd. [1999] O.J. No. 1543 (Gen. Div.), Pollack J. considered another factor, namely whether the nature of the services performed by the plaintiff employee in the case were integral to the organization, straining against a very long-term of absence being required for a finding of frustration:

. . . To determine if a contract has been frustrated, regard must be had to the relationship of the term of the incapacity or absence from work to the duration of the contract, and to the nature of the services to be performed.

In this case, the plaintiff employee's minor role in the organization meant that his long absence had not been a disruption to the Defendant Costco's business. He was easily replaced in his period of absence and no direct or substantial losses accrued to the corporate Defendant as a result of such absence.

Given the two above factors, Justice Pollock found that "frustration" had not been established in the case. Nevertheless, the court considered a further argument put forward by the Plaintiff:

Mr. Naccarato further argues that there is a trend of our courts to refuse to apply the doctrine of frustration of contract in situations where the employee is entitled to receive short-term and long-term disability benefits due to illness. The submission is made that as such benefits are provided by the employer, it cannot be said that the event of the employee’s illness is something that was not reasonably contemplated by the parties. The frustration of contract must be delayed until the expiration of the period during which the benefits are provided for by the employer. Costco’s response to this argument is that what is not within the contemplation of the parties is the duration of the employee’s illness and not the fact that the employee may get ill.

Justice Perell, in the Dragone case, considers the effect of the presence of the long-term sick leave and disability benefits:

The presence of long-term sick leave and disability benefits indicates a greater tolerance for the duration of an employee’s absence before frustration occurs. Indeed, it has been suggested that contracting for these benefits may postpone the time of frustration because it may be inferred that the contracting parties anticipated that the employee might take leave for illness. See: Antonacci v. Great Atlantic & Pacific Co. of Canada, [1998] O.J. No. 876 (Gen. Div.), aff’d. In part [2000] O.J. No. 280 (C.A.); E.E. Mole and M.J. Stendon, Wrongful Dismissal Handbook (3^rd ed.) (Markham: LexisNexis Canada Ltd., 2004), chapter B-4.”

An Open Question: Implications of An Employer's Provision of Disability Coverage

Justice Pollock's reasons leave open the question (raised in the Plaintiff's submissions) of whether or not a Defendant employer who offers an employee both long-term and short-term disability is barred from relying on frustration of the employment contract, for reason that it has contemplated the possibility of the Plaintiff's illness leading to a long leave of absence and essentially has contracted for it. He also leaves the question (also raised in the Plaintiff's submissions) of whether frustration of contract can only arise at the end of the period of benefit receipt by a Plaintiff employee, like Mr. Naccarato, for another day.

As a result of his rejection of the employer's defence of frustration, Justice Pollock finds that Mr. Naccarato was wrongfully dismissed, awarding him ten (10) months of pay in lieu of reasonable notice in view of his relatively young age of thirty-seven.

If you believe you have been wrongfully dismissed, please contact a lawyer who can advise as to your rights and entitlements both under the Ontario Employment Standards Act and at common law.

- Robert Tanha, Toronto

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Chief Justice Warren Winkler at Family Law Summit

Ontario Court of Appeal Chief Justice Warren Winkler has just completed a impassioned speech at the 5th Annual Family Law Summit at Toronto.

Continuing his call for reform to Ontario's family law system, and underlining his postion that the entire system is broken and needs restructuring from the ground up, Mr. Justice Winkler emphasized the need for change now.

Here are Justice Winkler's key, quoteworthy points (reproduced, in part from our live-tweets):

• The Family law system in Ontario needs reform now. He intended his September 2010 comments as a lightning rod for change to the whole system. He observes that much dialogue has resulted.
• Trend in Family Law: The well-to-do are opting out of the system and choosing private mediation/arbitration; Others going self-rep (up to 70% in Toronto)
• Asks if we are trending toward a two-tiered system? Notes Canadians don't like two-tiered systems.
• Family law system needs affordability, timing, efficiency.
• He proposes "presumptive judicial mediation" as cornerstone of new system..
• Justice Winkler's proposal: Triage Judge to handle cases that can't or shouldn't be mediated. The Triage judge will send an immediate message: It "won't be pleasant" for those acting badly
• Access to justice is a double-edged sword - it can also be used by one party to harass the other. The family justice system should not be permitted to be used to perpetrate wrongful conduct by either party. We must "take the system out of play"
• Under his proposed new system, every court attendance must be meaningful. Must eliminate wasteful court appearances.
• Need system of "one family, one judge"
• Goals of new family law system - Must be cheap, simple, understandable and affordable
• We have "studied" Unified Family Court far too long. Need UFC's across the Province now.
• He is committed to getting this change done now, and asks family law bar to help make it happen.

- Garry J. Wise, Toronto

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Ontario A.G. Chris Bentley at Toronto Family Law Summit

I'm spending today and tomorrow attending (via live videostream) the Law Society of Upper Canada's 5th Annual Family Law Summit at Toronto.

Ontario Attorney General Chris Bentley has just concluded a short speech, recapping the Province's family law initiatives launched during his four-year tenure in the role.

In opening, Mr. Bentley candidly remarked that he likely knows less about family law than any other person attending the Summit. He did little to dispel that impression in the remainder of a twenty-minute, rather self-congratulatory presentation that was surprisingly short on substance.

Here are a few highlights from the speech, which I've also been live-tweeting:

• The A.G. favours a Unified Family Court throughout the Province, but noted that the constitutional issues presented by overlapping federal and provincial jurisdictions in family law present an obstacle, as the Province can't create these courts on its own. While his enthusiasm for streamlining family law with one, unified system was clear, he made no mention of any consultations with the federal government aimed at actually getting there.

• On simplifying the court system by "getting rid of the paper and streamlining steps in the Family Courts," the A.G. was clear that he "won't do it." Curiously, he indicated he simply leaves it to the legal profession to address these concerns. I am not sure how the profession can directly facilitate any of the real solutions here, such as a court system that allows e-filing of documents or the elimination of duplicative court forms, at least some of which result from the Attorney General's own initiatives.

• Finally, with respect to the long-awaited implementation of the pension-equalization reforms provided for in Bill 133, Mr. Bentley stated "the period of consultations is over... An announcement on implementation will be made very, very soon." There were audible groans from the audience in response to this remark. Bill 133 received Royal Assent in May, 2009. The legislation's pension reform has been in limbo ever since, awaiting necessary, enabling regulations.

- Garry J. Wise, Toronto

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Ontario Human Rights Tribunal Digest - April 1-30, 2011

Each week, Wise Law Blog reviews important decisions from the Ontario Human Rights Tribunal.

SUBSTANTIVE RULINGS

Kerry Pinkney v. Datex Billing Services

In this case, the applicant alleged discrimination on the basis of sex in employment, contrary to the Ontario Human Rights Code. The applicant also claimed that she had been subjected to sexual harassment, sexual solicitation and reprisal. Specifically, the applicant alleged that she was terminated because she refused to have sex with the immediate supervisor of the respondent employer and that he, throughout the course of her employment with the respondent employer, continually badgered her to have sex with him.

The applicant identified the following incidents of sexual harassment:

1. The supervisor would regularly approach her while she was in the office, making unwelcome sexual advances towards her;
2. On one specific occasion, he threw himself at her and groped her;
3. He continued such misconduct even after the applicant emailed him asking that he discontinue such behaviour.

The respondent employer, in its evidence, claimed that the applicant had been terminated for cause. It pointed to the applicant's use of the company phone for personal business, among other things. According to the respondent, the applicant had had a close personal and social relationship with the supervisor and his wife, and that none of the conduct towards her had been unwelcome. In fact, the employer alleged that the applicant had been a willing participant and had often initiated the flirting with her supervisor, who denied that he had received an email from the applicant at any time indicating that his conduct had been unwelcome and asking for it to stop.

As is often the case in cases of sexual harassment, there were no witnesses to the alleged incidents of sexual harassment. Nonetheless, the Tribunal concluded that no sexual harassment or breach of the Code had occurred in the case, noting the following in support of its position:

1. The applicant had continued to socialize with the supervisor, including attending at their hot tub parties and going into a hot tub with him, even though according to her, he was continuing to make unwelcome sexual advances towards her;
2. If the applicant was trying to fend off repeated sexual advances from her supervisor, why had she voluntarily given him a massage at work when they were alone together in the office?;
3. The applicant had willingly sent her supervisor provocative pictures with titles that were somewhat suggestive;
4. If the applicant was being continually sexually propositioned, why had she not confided in the supervisor's wife, a woman with whom she was very close; and
5. The apparent email sent to the supervisor, objecting to his alleged sexual harassment, was riddled with irregularities, which could not easily be explained away.

With respect to the reasons for termination and the applicant's reprisal claim in that regard, the Tribunal accepted the respondent's position that the applicant had been dismissed for insubordination and for making personal phone calls. The fact that the supervisor might have overreacted, in taking the decision to fire the applicant, did not amount to "discrimination" as defined by Code.

PROCEDURAL RULINGS

Smith v. Meineke Car Care Centre and Michael Colacci

In this case, the applicant alleged discrimination under the Code. The mediation stage had been reached in the matter, and a Notice of Mediation had been sent to both the applicant and the respondent parties; neither had been returned as undeliverable. On the scheduled date of mediation, the applicant failed to attend and did not communicate with the Tribunal to explain its failure in this regard.

The Tribunal wrote to the applicant asking that he advise within ten days of his intentions with respect to the Application. Having received no response within the requisite time period, the applicant was deemed to have abandoned the Application and the Application was dismissed.

Jerry Smith v. Prodomax Automation Inc.

In this case, the applicant alleged discrimination in employment due to age contrary to the Code. The hearing stage had been reached, with a start time of 1:30 p.m for a summary hearing by way of conference call. In accordance with its usual practice, the Tribunal waited until 1:50 p.m. before proceeding with the hearing. At as that time, the applicant, who had been given notice of the summary hearing by conference call, was still not present for the call.

Rule 3.13 of the Tribunal's Rules of Procedure states that the Tribunal may proceed with the hearing, if a party has been notified, in the party's absence and to take any action that it deems appropriate.

In dismissing the applicant's case as abandoned for non-attendance, the Tribunal explained the justification behind this specific procedural rule:

The applicant did not attend at the hearing although notified of the hearing. The respondent incurred the costs of attending at the hearing. The Tribunal also set aside the time and resources for the hearing, which are precious given the caseload of the Tribunal and the expense required to facilitate these hearings.

Abdul v. Inside Out Toronto

In this case, the applicant alleged discrimination in the area of services, goods and facilities on the basis of race and place of origin. Specifically, the applicant believed she had been discriminated in her communications with the executive director of the respondent employer when she tried to adduce information and make inquiries about the mentorship workshops offered by it to members of the public in 2009. She says that despite her numerous inquiries, she was never informed of the dates, times, and location of the workshops. The executed director's stated lack of knowledge, the applicant says was a ruse for the organization's and director's deep-seeded racism.

The discrete procedural issue before the Tribunal, was whether the claim was time-barred for reason that the last incident of discrimination in the applicant's Application occurred more than one year before the application was filed, in 2009.

Section 34 of the Code provides as follows:

(1) If a person believes that any of his or her rights under Part I have been infringed, the person may apply to the Tribunal for an order under section 45.2,

(a) within one year after the incident to which the application relates; or

(c) if there was a series of incidents, within one year after the last incident in the series.

(2) A person may apply under subsection (1) after the expiry of the time limit under that subsection if the Tribunal is satisfied that the delay was incurred in good faith

The applicant, in her verbal submissions before the Tribunal, argued that the last incident of discrimination actually occurred in 2011, when the applicant had communicated with the Director for the sole purpose of restating her concerns about the discrimination she believed he and his organization had subjected her to.

In finding that the one-year limitation period had been violated, the Tribunal stated:

The Tribunal has set a fairly high onus on applicants to provide a reasonable explanation for the delay. . . The mandatory one-year limitation period is consistent with the Code's objective that human rights claims should be dealt with fairly and expeditiously. Thus, the Code requires an individual to act with all due diligence, and file their application within one year, when they seek to pursue a human rights claim.

I reject the applicant's contention that the alleged discrimination she experienced in 2009 continued until, or reoccurred in, 2011 simply because she attempted to recommunicate her concerns at that time. To allow an applicant to revive an out of time claim by simply restating old concerns would under the purpose of section 34 of the Code.

- Robert Tanha , Toronto

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