Waksdale is Safe: OCA Refuses 5 Panel Bench in Dufault v Township of Ignace :

In their Notice of Appeal the Township asked the Ontario Court of Appeal to convene a  panel of five judges because they wanted to overturn the seminal Ontario Court of Appeal case of Waksdale v. Swegon North America Inc., 2020 ONCA 391.

In a ruling from the Associate Chief Justice dated June 10, 2024, this request was refused. This means that the Court will not be able to overrule Waksadle, which means that the contract in the Dufault case will be declared invalid and the trial judgement will stand.

Here is the interesting point. The trial judge in Dufault also found on some new and novel grounds that the contract was invalid.

Will the Court of Appeal rule on whether these additional grounds are valid or will they decline to answer those new issues because it would not change the outcome ?

In my opinion, most Courts do not like to decide important legal issues unless they have to. My bet is that they dismiss the appeal without commenting on the new and novel arguments.

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Beware of Making Excessive Request for Particulars :

In Certified Equipment Sales v Iuorio, 2024 ONSC 2948, Justice Vermeer was hearing a motion for particulars in a case involving accusations of sexual harassment by an employee against the owner of the employer .

The Employer made 35 demands, claiming that without them, they could not file a defence.

Here is an example of the type of particulars requested and the Judges’, comments :

Demand #17
The statement in Iuorio’s pleading:
[Mr. Corbo] installed GPS monitoring devices on Ms. Iuorio’s cell phone and later her vehicle, which he used extensively to monitor her off-duty conduct.
Demand for Particulars:
Full particulars on how, where and when Mr. Corbo allegedly extensively monitored “her off-duty conduct” and “physically monitored Ms. Iuorio’s home”.
Iuorio’s Position: She has no further particulars to give with respect to this demand.
Mr. Corbo’s Reply:
Mr. Corbo cannot admit or deny this allegation without further particulars.

[13] I find it ridiculous that Corbo claims that he cannot admit or deny whether he put tracking devices on the responding party’s phone and car in order to monitor her, without further particulars. He certainly has fallen far short of showing that such information is not within his knowledge. Moreover, any further particulars, would be the evidence Iuorio has regarding him monitoring her through tracking devices and he is not entitled to her evidence on this issue at the pleading stage.

Here is another example of where the Judge denied the request :

In oral submissions, Corbo’s counsel particularly and repeatedly emphasized the vagueness of the allegation of, “physical contact in the hallways”, suggesting that it was so vague, it could refer to unwanted intercourse or
kissing. However, given that Iuorio has sworn in an affidavit that she cannot provide any further details of the physical contact that contributed to the sexual harassment, it defies common sense that the physical contact would involve unwanted intercourse in a hallway at work, or similarly unwanted kissing in a workplace hallway. Those are details she would be able to provide.

The Judge also negatively commented on the Employer’s counsels’ behaviour during the cross examination of his client on the affidavit filed in support of the motion and on counsel’s allegation that the employee’ lawyer had acted inappropriately.

30] Moreover, I find that making unfounded allegations of impropriety of opposing counsel should not be taken lightly. I further accept that Corbo’s counsel improperly frustrated the cross-examination of his client. I therefore find that the responding party is entitled to costs on an elevated basis.

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Mental Distress Damages Do Not Require Medical Report or a Medical Diagnosis.

In Krmpotic v Thunder Bay Electronics Limited , 2024 ONCA 332 the Court upheld a $50,000 award for aggravated damages due to the manner of the dismissal and the Plaintiff’s reaction to that treatment .

The Court had no problem upholding the trial judges decision in spite of the fact that the Plaintiff did not present any expert  medical evidence as to a specific medical diagnosis.

This is what they said :

[32]      The duty of honest performance applies to all contracts, including employment contracts. It encompasses the employer’s duty to exercise good faith during the course of dismissal from employment. Breach of the duty of good faith occurs through conduct that is unfair or made in bad faith, as for example, by being “untruthful, misleading or unduly insensitive”. Callous or insensitive conduct in the manner of dismissal is a breach of the duty to exercise good faith.

[33]      While the normal distress and hurt feelings resulting from dismissal are not compensable, aggravated damages are available where the employer engages in conduct that is unfair or amounts to bad faith during the dismissal process by being untruthful, misleading, or unduly insensitive, and the employee suffers damages as a consequence. As the trial judge noted, in Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419, 120 O.R. (3d) 481, at para. 66, this court confirmed that aggravated damages compensate an employee for the additional harm suffered because of the employer’s conduct.

[34]      Mental distress is a broad concept. It includes a diagnosable psychological condition arising from the manner of dismissal but is not limited to that. There is a spectrum along which a person can suffer mental distress as a result of the manner of dismissal. At one end is the person who suffers the normal distress and hurt feelings resulting from dismissal, which are not compensable in damages. At the other end of the spectrum is the person who suffers from a diagnosable psychological condition as a result of the manner of dismissal. In between those two end points, there is a spectrum along which the manner of dismissal has caused mental distress that does not reach the level of a diagnosable psychological injury.

[35]      In my view, on a full reading of his reasons, the trial judge approached the issue of mental distress in that fashion. The fact that Mr. Krmpotic had not established, through medical evidence, that he had suffered a diagnosable psychological injury, was not the end of a consideration of the issue of mental distress damages. As the trial judge correctly understood, he had to go further and determine whether (1) the appellants’ conduct, during the course of termination amounted to a breach of their duty of honest performance; and (2), if so, whether Mr. Krmpotic suffered harm – beyond the normal distress and hurt feelings arising from dismissal – as a result of that breach. The trial judge found in Mr. Krmpotic’s favour on both matters: the appellants had engaged in conduct that amounted to bad faith during the dismissal process; and, Mr. Krmpotic suffered harm beyond the normal distress and hurt feelings that result from dismissal. These findings were fully open to the trial judge.

Also of interest is what the Court found was callous and insensitive employer behaviour.

[36]      The trial judge found that Mr. Caron breached the duty of good faith in the manner of dismissal in a number of ways. Mr. Caron claimed that Mr. Krmpotic had been dismissed for financial reasons and that the appellants’ financial statements would support that claim. However, he refused to produce the financial statements. Further, while the trial judge found that Mr. Caron was not directly untruthful with Mr. Krmpotic during the termination meeting, he had “no hesitation” in finding that Mr. Caron was neither candid nor forthright. He found that Mr. Krmpotic’s employment was terminated because his physical limitations restricted him from continuing to perform the wide array of job duties and responsibilities that he had performed for the appellants over the previous 29 years. He described Mr. Caron’s conduct during the termination process as the antithesis of what is required by the duty of good faith in dismissal. Mr. Krmpotic was terminated within two hours of returning to work after his back surgery. During the termination meeting, instead of being candid, reasonable, honest, and forthright, Mr. Caron engaged in conduct that was untruthful, misleading, and unduly insensitive.

My Comments:

As the trial judge found that the real reason the Plaintiff  was terminated was his physical limitations, this would seem to be a clear violation of the duty to accommodate under the Human Rights Code, which is much simpler argument than a bad faith argument. Moreover, under a human rights analysis, the damages could have been much larger as his damages would not be limited to the 24 month notice period  awarded by the Court as you are to put the Plaintiff in the same position had he not been discriminated against. This could lead to potential damages for the balance of his working life, just like in a personal injury loss of future income claim.

Also of note is that the employer had already paid the Plaintiff 16 months notice.

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CLC Adjudicators Can Easlily Order Substantial Indemnity Costs in Unjust Dismissal Cases.

In Amer v Shaw Communications (2023 FCA 237 ) Justice Gleason of the Federal Court of Appeal ruled that it is appropriate for an adjudicator under the Unjust Dismissal section of the Canada Labour Code to order substantial indemnity costs to the winning employee, even where the conduct of the Employer was not exceptionally bad .

This is what the Court said:

[100] In the case at bar, the appellant was of limited means, earning just under $40,000.00 per year when employed by the respondent. In addition, she was a single parent. Given the amount of damages awarded in the instant case, which were limited to out-of-pocket losses for a relatively short period and a modest amount of severance pay, it is entirely possible that the fees charged by the appellant’s counsel might have been close to or perhaps even exceeded the amount of damages awarded. Were this the case, the appellant would have been worse off for pursuing the complaint than she would have been had she not filed a complaint. Such a result would be the antithesis of a remedial order and defeat the purpose of the unjust dismissal provisions in the Code.

[101] On the other side of the ledger, the appellant was faced with a large respondent, with substantial resources and the ability to pay experienced labour counsel, who mounted a lengthy case over several days of hearing and through lengthy written submissions.

[102] In the circumstances, I believe that it was reasonably open to the Adjudicator to have awarded the appellant substantial indemnity costs. Anything less may well have led to a denial of any real remedy. There is ample authority from other adjudicators to support the award, and it is allowable under the jurisprudence from this Court. Moreover, the award is in keeping with the
purpose behind the unjust dismissal provisions in the Code.


My Comments:

Given the rationale of this decision, it would seem that the default position in these types of cases would be to award substantial indemnity in most Unjust Dismissal cases because the scenario that the award would be severely diminished if such costs were not awarded is true in most of these cases. Remember that this remedy is not open to managers so that most of the Complainants are modest wage earners.

The fact that a losing Complainant cannot face an adverse costs award makes this  under utilized remedy in many  ways  superior to a civil action where the usual rule is partial indemnity costs and the plaintiff could be subject to a substantial  adverse costs award.

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Vacation Pay Not Owing over Notice Period:

In Grimaldi v. CF+D Custom Fireplace Design Inc., 2023 ONSC 6708 Justice Bordin was asked by the Plaintiff to award him vacation pay over the 5.5 months of reasonable notice that he was awarded.

This is what the Court ruled :

101] As in Cronk, to award the plaintiff damages for vacation pay, on top of an award of full salary for the period of notice to which he was entitled (which necessarily includes payment of his salary for any vacation he may have taken had he worked during that notice period) is to provide double indemnity, or put another way, to provide compensation for a loss that he has not suffered.

[102] I find Mr. Grimaldi is not entitled to vacation pay.

My Comments: This issue occasionally comes up in my mediation practice. The only exception to this rule would be if the employee received their vacation pay added to each pay check but for the majority of people who simply take their vacation and continue to be paid during their vacation, this case would apply .

However since under the ESA vacation pay is payable on total earnings, not just the base wage, what if during the notice period an employee would have received a bonus? As vacation pay is probably owing on that bonus, would it not be logical to award vacation pay on the bonus only?

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Losers in Dufault v Ignace Ask OCA to Overturn Waksdale :

In the recent case of Dufault v The Corporation of the Township of Ignace , Justice Pierce held on a number of grounds that the termination clause contradicted the ESA and was thus void.

Some of the grounds were new and some were old and well established .

Among the old and well established grounds was the 2020 Ontario Court of Appeal case of Waksdale v Sweden North America Inc where the court found that because the common law concept of just cause is different than the higher standard of wilful misconduct under the ESA, a termination provision which states that upon a dismissal for just cause the employee is not entitled to any notice or pay in lieu of notice violates the ESA and is thus void. As a consequence the employee is entitled to what they would have received had the void clause not existed, which is either common law reasonable notice or the balance of the fixed term.

Well, the Defendant in this case wants the Ontario Court of Appeal to ”
revisit and overturn its 2020 decision in Waksdale v Swegon North America Inc. In that regard, the Defendant (Appellant) requests that this matter be heard by a five-member panel ”

The Appellants will have an uphill battle. Waksdale has been cited 47 times according to CanLll. I believe that it would be extremely unlikely that the OCA would overturn their own decision on this seminal employment case.

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Why Claiming a Failure to Mitigate for a 35 Year Employee is Almost Futile:

In Wall v M.H. Roe Sheet Metal ( no Canli citation yet) Justice Kumaranayake of the Ontario Superior Court found the proper notice period for a 56 year old Office Administrator with 35 years service was 24 months .

The only real issue was the Defendants allegation that the Plaintiff failed to conduct a reasonable job search thus the notice period should be reduced.

The Judge pointed out that the Defendant must prove that the Plaintiff conducted a less than reasonable search AND that if she had done so she would have obtained comparable employment .

In reviewing the evidence the Judge made the following rulings with respect to finding that she had not failed in her mitigation efforts.

1. The Defendant sent the Plaintiff 5,000 job leads however many of these were jobs for which the Plaintiff was unqualified .

2. The Plaintiff did apply for 59 jobs but was not granted a single interview.

3. The Plaintiff had worked for this single employer since age 21. She only had high school and her computer skills were poor..

4.. The Plaintiff did not look for a job in the first 4 months because she was in shock, did not have a computer and this was the time of the COVID lockdown.

5. Although she turned down the Defendants’ offer of outplacement counselling, because this service would have obligated her to accept temporary work, she was allowed to refuse the service.

6. The Defendant offered the Plaintiff $1,400 towards career counselling but provided no company names that would provide such a service for that price.

My Comments :

The Plaintiff made $3,515 per month. Even if the Defendant had got the notice period down to say 20 months, that would have saved them $14,060 . I suspect that even without considering any Rule 49 Offers , the Plaintiff will easily get a cost award in excess of $25,000.

I would love to know what the last offers were made before trial. Maybe when the cost decision comes out, we will know.

If you would like a copy of this unreported decision, email me at barry@barryfisher.ca

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Repudiation Upheld Thus Valid Termination Clause of No Effect:

In Klyn v Pentax Canada Inc., 2024 BCSC 372. Justice Edelman had a situation where the Defendant failed to honour their own termination clause. The result was that the Defendant could not rely on their otherwise enforceable termination clause and thus the Plaintiff was entitled to common law reasonable notice. This is what the Judge said :

[6]       The parties agree on the applicable law. Repudiation is a breach of contract by one party giving rise to the right of the other party to terminate the contract and pursue the available remedies for the breach. A breach is a repudiation of the contract if it is a breach of a contractual condition or of some other sufficiently important term of the contract so that there is a substantial failure of performance (see Potter v. New Brunswick (Legal Aid Services Commission), 2015 SCC 10 at paras. 144-145).

[7]       Mr. Klyn alleges a number of breaches of the contract upon his termination. Although Pentax made some payments to him between April and July, the payments only included salary and not commissions as required by the contract. Pentax has not provided a satisfactory explanation for the failure to pay commissions during that period, simply making a rather vague statement that there was a disagreement about the amount owed. I fail to understand why Pentax wouldn’t have at least paid the amount it considered to be required under the contract, in compliance with its understanding of its own obligations. The failure to comply with its own understanding of its obligations appears to me to be a clear breach of the contract.

[8]       In any event, the payments ceased completely in July 2022, presumably because Mr. Klyn did not comply with the demand to report mitigation efforts to Pentax. In submissions, counsel for Pentax conceded that although a duty to mitigate was part of the employment contract, the reporting requirement imposed by Pentax was not. Pentax does not take issue with Mr. Klyn’s efforts to mitigate. He found alternate employment, in what is a rather specialized field, starting in February 2023. I find the failure to make the payments required under the termination clause to be a clear and unequivocal breach of a central term of the contract. I find the employment contract was repudiated by Pentax.

[9]       The damages owed to Mr. Klyn will therefore be calculated based on the common law.

if you like a copy of this case, email me at barry@barryfisher.ca

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Refusal to Set Aside a Noting in Default Can be Costly ;

In YELLOW PAGES DIGITAL & MEDIA SOLUTIONS v. MASSOUMI ( unreported ) Justice Chalmers had the following fact situation:

1. Claim ( asking for One Million Dollars ) issued and served on Defendant on Day 1.

2. Lawyer for Defendant emails Plaintiff’s counsel on Day 9 and says he is in the process of being retained and wants to talk on the phone .

3. Counsel talk on phone Day 20.

4. Defendant files Defence. on Day 60 and discovers that Plaintiff noted him in default 2 days after their phone call without warning him that he would note him in default.

The Judge not only set aside the default but awarded the Defendant $1,000 in costs, along with these comments:

“I find the conduct of the Plaintiff and ( their lawyer ) to be unacceptable. There is no reason for ( Plaintiff’s lawyer) to have noted the Defendant in default only two days after the deadline for delivering a defence had passed when he knew ( Defendant’s lawyer ) was involved in the action. The fact that ( Plaintiff’s lawyer) proceeded with the noting in default without giving( Defendant’s lawyer) the courtesy of a call is inexplicable. This is not a situation of extended delay.( Plaintiff’s counsel ) had spoken with ( Defence counsel) only two days before. “

When Plaintiff’s counsel tried to justify his actions on the basis that he did not have instructions from his client to do so, this is what the Judge said :

“This is not a reasonable or acceptable excuse. As noted by Myers J. in Strathmillan: 

[19] [….] The decision to grant or withhold an accommodation to a colleague opposite is a decision for counsel. Section 47 of the Advocates’ Society’s Principles of Civility and Professionalism for Advocates makes this clear: 

[47] Advocates, and not the client, have the sole discretion to determine the accommodations to be granted to opposing counsel and litigants in all matters not directly affecting the merits of the cause or prejudicing the client’s rights. Advocates should not accede to a client’s demands that the advocate act in a discourteous or uncooperative manner.” 

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Forfeiture Clause for Breach of Confidentiality and Non Disparagement Provision in an HRTO Settlement Upheld:

In L.C.C v M.M. ( 2023 HRTO 1138) Adjudicator Lavinia Inbar was dealing with an allegation that the former employee had  breached a settlement agreement by publishing on LinkedIn the following statement :

“To all those inquiring, I have come to a resolution in my Human Rights Complaint against [the applicant corporation] and [the individual applicant] for sex discrimination.”

The Minutes of Settlement contained the following provisions :

Confidentiality: The Applicant may disclose the terms of these Minutes of Settlement to [their] immediate family, legal and financial advisors, on the condition that they also agree to maintain strict confidentiality of these Minutes of Settlement. Upon inquiry by any person about the resolution of the Application or conclusion of the Applicant’s employment with [the applicant corporation], the Applicant shall simply state that all matters have been resolved. The Applicant will make no mention of, or allude in any way whatsoever to, the receipt of money or the amount of money received from [the applicant corporation] in this Settlement.

Mutual Non-Disparagement: The parties agree that the purpose of this Settlement is to resolve any issues the Applicant has with the Respondents on a confidential basis and without any disparagement of the parties. Accordingly, the parties agree to refrain from making any oral, written or electronic communications about each other that are untrue, defamatory, disparaging, or derogatory, or acting in any manner that would be likely to damage the opposite party’s reputation in the eyes of customers, regulators, the general public, or employees, unless required by law. This non-disparagement includes but is not limited to any electronic communications through social media (such as Facebook, Twitter, Instagram, Youtube, Snapchat, etc.)

Breach: The Applicant agrees that if [they breach] any of the obligations under this Settlement, and in particular the confidentiality obligation set out in paragraph 7 and the non-disparagement obligation in paragraph 8, above, [they] will be required to repay to the [corporate] Respondent the Settlement Payment paid to [them] under paragraph 2 of these Minutes of Settlement as liquidated damages, and will be responsible for any additional damages incurred by the [corporate] Respondent.

Understanding: The Applicant hereby declares that she has had an opportunity to obtain independent legal advice regarding the matters addressed in these Minutes of Settlement or has freely chosen not to do so, and that she fully understands her obligations under these Minutes of Settlement. She voluntarily accepts the terms and conditions set out in these Minutes of Settlement and agrees to finally settle all claims or potential claims, as described above, that she has or may have in future against the Respondents.

The HRT found that the confidentiality provision had been breached because they were only allowed to tell others about the resolution if someone inquired about it. Instead they published it to the whole world .

Secondly it was found that by referencing both the names of both the Corporate and individual Respondents and by referring to the issue as sex discrimination, this would , in the eye of the average reader of the post, likely damage the reputation of the Respondents.

The Adjudicator went on to find that the forfeiture clause was not a penalty clause because given the importance to the contracting parties that both sides respect the settlement and the difficulty of determining damages, that the forfeiture clause was a in fact a reasonable pre-estimate of damages and thus enforceable.

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