Court Sets Out 4 Elements to Set Aside a Release:

In Manak v Worksafe BC ( 2018 BCSC 182 ) Justice Branch had a case where a manger sought to set aside a Release that she had signed upon being terminated with allegations of just cause. Had cause not existed, 18 months would have been proper notice. The settlement was for 4 months.

The Court said all four of these factors were necessary to overcome a Release:

1. A grossly unfair and improvident transaction; and

2. The victim’s lack of independent legal advice or other suitable advice; and

3. An overwhelming imbalance in bargaining power caused by victim’s ignorance of business, illiteracy, ignorance of the language of the bargain, blindness, deafness, illness, senility, or similar disability; and

4. The  other party’s knowingly taking advantage of this vulnerability.

In this case the Court found that the Release was valid because:

  1. Although 4 months was very low, one had to factor in the significant chance that just cause would be upheld, therefore it was not grossly unfair that a compromise was agreed to. In this case the judge actually  held that just cause had been proven.
  2. Although in fact she did not have independent legal advice, she had sufficient time to do so but chose not to, she did her own internet legal research and she lied to her employer and told them that she had received legal advice before signing the Release.
  3. She was a manager, not a “low level ” employee. She was aware of the dismissal process, she had time and access to legal research, she spoke to other managers about her situation and she was not under undue economic pressure as either way she was going to get her ” healthy” pension.
  4. She had adequate time to consider her options. She made her decision in less time than the employer required. She carefully thought through the consequences. She negotiated some modest improvement in the settlement. There was no evidence of pressure from the employer other than the 24 hours that she was given by the employer to accept or reject the offer.

Plaintiff Gets Bonus Over Notice Period Even Though Employer Cancelled Bonus Plan Months After Dismissal :

In Manastersky v RBC ( 2018 ONSC 966 Monahan J. ) had a 58 year old  Managing Director with over 12 years service. One half of the Plaintiff’s  compensation was a Carried Interest Plan ( CIP). The plan contained a provision which allowed RBC to terminate the plan in June 2014, which they did. The CIP also contained a provision which allowed immediate vesting of all outstanding CIP amounts upon termination without cause.

The Plaintiff was terminated without cause in February 2014 and paid out his CIP entitlement up to the date of termination.

In awarding the Plaintiff 18 months notice, the Judge awarded the lost CIP for the entire notice period, even though that period was almost a year longer than the time in which the CIP had been cancelled. He based the quantum on a historical average of past payouts.

The judge did so for 2 reasons:

1) The provision that allowed RBC to terminate the CIP in June of 2014 was not clear language that detracted from his common law entitlement to reasonable notice.

2) Had he not been terminated in February  and was still employed in June when the CIP was cancelled, if RBC not  replaced the lost CIP with an alternative plan, that would have been a constructive dismissal .

I certainly agree with point #2 but point #1 is somewhat troubling. If the purpose of the doctrine of reasonable notice is to put the Plaintiff into the same economic position that he would have if  had been permitted to work out his notice period, then he , along with everybody else who received the CIP and had it cancelled, would have taken a economic hit. Why should he do better because he was let go?

The flip side is what if halfway during the notice period the compensation went up because the Employer did very well. Should the Plaintiff’s damages not reflect this uptick or should he be limited to his historical earnings?

In Chann v RBC ( 2004 ONSC 66310) the Court looked at what actually happened over the notice period in determining what his bonus would have been had the Plaintiff been allowed to work out the notice period. As overall bonuses were down 15% over the relevant period, the Judge used the same factor is calculating the  damages over the notice period.

Sexual Harassment Not Covered by Release Covering Issues Arising From Employment :

In Watson v Salvation Army ( 2018 CarswellOnt 2916) Justice Gordon had a situation where the Plaintiff was suing her former manager for sexual harrassment after having previously settled with her former employer and signed a Release which said as follows:

“This release of claims shall include any claims against anyone or any organization in any way related to or connected with my employment or ending of my employment.”

The Judge found that this did not protect the former manager  even though these events occurred at work because ” sexual harassment, intimidation and other improper conduct are not connected to employment . This are clearly separate items ” 

How to avoid this outcome ?

The Judge said ” specific language to such claims would need to be added to the Release to bar the present claim”.

Does this mean that every employment release must mention sexual harassment, sexual assault etc ? What about racial discrimination, physical assault, or generalized harassment ? Are these also ” not  connected to employment “?

Does this mean that she could go back and again sue the Salvation Army for vicarious liability for the sexual harassment that she endured from her former boss?

I think the Judge got this wrong.

Of course sexual harassment is ” connected with employment” insofar as it exists in most cases because of the employment relationship, especially like in this case where it is the boss harassing an subordinate.

That is why making a sexual advance to a subordinate in the  workplace is qualitatively different than making a sexual overture to a stranger in a bar.

Sexual harassment is all about the power that derives from the inherent power imbalance in the workplace.

One gets the feeling that the Judge didn’t want the former manager to get the benefit of the very low settlement ( $10,000) negotiated between the Army and the Plaintiff. At the time of her settlement the manager was still in the Army’s employ. I am sure that the Army intended at that time that this settlement would cover all their employees, including the manager.

If the Plaintiff wanted to settle with her employer but not her harasser, she could have negotiated  a carve out in the Release. In my experience that would have resulted in no settlement.

Settlements and releases are essential to resolving employment disputes. The only thing that the employer is buying is peace. Allowing releases to be set aside for anything other than fraud or misreresentaion will have a negative effect on resolving future employment disputes.


Refusing to Accept Offer From Purchaser Not Failure to Mitigate :

In Dussault v Imperial Oil ( 2018 ONSC 1168) two long term plaintiffs were told that Imperial was selling   the division that they worked for to Mac’s and that Mac’s would make them a comporable  job offer. The Plaintiffs rejected the Mac’s offers.

The legal issue was whether this was a failure to mitigate, thereby reducing the Imperial severance obligations.

Justice Faveau said NO for the following reasons:

1) The Mac’s offers came before the actual termination from Imperial and were not restated after the actual termination.

2) Because Imperial demanded that before paying out severance the Plaintiffs had to sign a release, it was reasonable not to accept Mac’s offer as this would deny the Plaintiffs any ability to later sue Mac’s for any shortfall.

3) As Mac’s was not prepared to recognize their years of service with Imperial, it was reasonable for the Plaintiffs to reject the offer.

4) The Plaintiffs had to agree with Mac that they would not disclose their pay rate to other Mac employees as their pay rate was higher.  This would make the future work relationship ” potentially difficult’.

5) The higher salary was only guaranteed for 18 months, less than the 26 month notice period awarded by the Court.

Off Duty Drunk Driving Employer Truck Not Just Cause :

In Klonteig v District of Kelowna ( 2018 BCSC 124) Justice MacNaughton had a situation where an Assistant Fire Chief ( Administration) was terminated after being given  a 90 day driving suspension ( but no criminal charge ) outside of working hours but while driving an unmarked District owned vehicle.

The Court found that this off duty conduct did not justify dismissal because of the following factors:

1) He was permitted to drive the District vehicle  for personal use and the truck had no markings showing it was owned by the District.

2) The public was not aware of the suspension of his licence.

3) His was not the face of the employer. His duties were largely administrative.

4) No criminal charges were laid.

5) There was no evidence that the plaintiff had lost the support or respect of the other employees. In fact almost every firefighter sent a letter of support in favour of the plaintiff.

6) The conduct of drunk driving was not as morally reprehensible as possession of child porno, consorting with a prostitute on company property or engaging in a dishonest tax scheme.

I understand all the points except the last one. Nobody ever died from consorting with a prostitute or  tax fraud.

Can’t say the same about drunk driving. According to MADD:

Crashes involving alcohol and/or drugs are a leading criminal cause of death in Canada. On average, approximately 4 people are killed each day in crashes involving alcohol and/or drugs. In 2013, there were a total of 2,430 crash deaths on public roads, involving at least one highway vehicle (e.g. passenger cars, vans, trucks, or motorcycles). Based on testing of fatally-injured drivers, it may be estimated that 1,451 (59.7%) of these deaths involved drivers who had some alcohol and/or drugs in their system.

Manitoba CA Fixes Multiple Notice Period Mistakes:

In Grant v Electra Signs, the Court of Appeal was dealing with a decision of the Queens Bench which awarded a 63 year old GM with 13.5 years service the following:

a) 12 months reasonable notice.

b) Plus 2 extra months for the manner of dismissal (  Keays v Honda ).

c) Less 4 months notice for poor mitigation.

Thus the plaintiff was awarded 10 months .

The CA ruled that :

a) 12 months was reasonable and that there is no rigid rule in Manitoba  that one year of service = 2/3 of a month notice.

b) To award Honda damages based on an increased notice period is wrong in law and although medical evidence is not required there must be some evidence that the plaintiff suffered some damages in excess of the normal feelings upon losing one’s job.

c) Even though the plaintiff  did nothing to look for a job, the failure of the Defendant to show that had he looked for a job within the notice period that he could have lessened his damages was fatal to their argument and thus no reduction of the notice period was appropriate.

In the end the Plaintiff got 12 months notice.

“In Accordance with ESA ” not Good Enough to Oust Common Law Reasonable Notice:

In Holm v AGAT Labs ( 2018 (ABCA 23 ) the Court of Appeal dealt with a clause that said that upon termination the employee would only receive the notice “in accordance with the provincial legislation for the province of employment” . It sets out in great detail that that is all the employee is entitled to.

The Alberta Employment Standards Code, just like the Ontario ESA, says that an employer must give “at least” the number of weeks set out in the Act, in this case 1 week. Therefore , the Court held, it is also permissible under the Act to pay more than the one week. As this creates an ambiguity, the interpretation that favours the employee should prevail. The Court quoted the Ontario case of Wood v Fred Deeley Imports ( 2017 ONCA 158).The plaintiff was therefore entitled to reasonable notice .

As the  Alberta Code and the Ontario Act use the same language, one could reasonably expect the same result in Ontario.

Of interest also is the  concurrent opinion by Justice O’Farrell who examined the issue of why would the parties have a six paragraph termination clause if all they meant to do was apply the doctrine of reasonable notice. In his reasons he sets out two vastly different approaches to determining the legality of ESA clauses.

          I am compelled to concur in the result reached by the majority. The chambers judge properly applied judicially-approved principles governing the interpretation of employment contracts.

[39]           However the contractual terms employed by the parties in this case have given me cause to question those principles. A lay person reading the entire termination provision of the contract (which is reproduced and appended to these reasons) might be forgiven for thinking that the parties did intend to “limit” termination notice or pay in lieu of such notice to the “minimums” set forth in the employment standards legislation, even though the parties failed to employ either of the quoted words of limitation. A reasonable observer might question why the parties needed a termination clause as lengthy and detailed as the one employed in this case to merely indicate their intention to be governed by the common law’s reasonable notice requirement. In other words, if the termination provision of the employment contract was not intended to limit termination notice or pay in lieu, what was it there for?

[40]           Perhaps the best way to explain the result in this case to the appellant employer is to say that in employment law it is sometimes not as much about ascertaining the parties’ intention as it is about applying judicially-mandated principles of interpretation designed to protect employees because of perceived, and sometimes very real, inequality of bargaining power as between employees and employers. At least two of those principles were operative in this case. One was the principle that termination clauses will only rebut the presumption of reasonable notice if they are absolutely clear. The other is that faced with a clause in an employment contract which could reasonably be interpreted in more than one way, courts are required to prefer the interpretation which gives the greatest benefit to the employee.

[41]           The problem, not so much with principles, but with the approach employed by the courts in interpreting employment contracts is that it may be less understandable than an approach which simply requires the court to ascertain the intention of the parties as disclosed by the words they used. Also, the rules employed in interpreting employment contracts involve presumptions against the employer which may or may not be justified in any given case. Inequality of bargaining power is not always a justifiable assumption. Small business employers and employers in the not-for-profit sector, for example, may be on a much more level playing field. Finally, prospective employers and employees who do not have access to employment lawyers may not be aware of the interpretational rules. Whether small business employers and their employees ought to be required to wade through mountains of jurisprudence in order to find the magic formula needed to achieve enforceable contract language is what is being questioned here.

[42]           The courts have repeatedly asserted that there is no magic formula for limiting termination notice or pay in lieu to the minimums in employment standards legislation. However, if the analysis is not simply one of ascertaining the intention of the parties but rather one of determining whether or not a particular clause is sufficiently clear to rebut the presumption of reasonable notice or to satisfy a judicially-mandated requirement that such clause be interpreted in favour of the employee, there will indeed be a formula of sorts. The formula will be what it takes to satisfy a court that presumptions in favour of the employee, mandated by previously-decided jurisprudence, have been rebutted. Perhaps the jurisprudence requires revisiting for situations where it is clear what the parties intended, but where the words chosen do not satisfy judicial canons of construction. This is not to suggest that the considerations articulated by courts in cases such as Wood v Fred Deeley Imports Ltd, 2017 ONCA 158 (CanLII) at para 28, 134 OR (3d) 481 are not useful. It is simply to suggest that perhaps more emphasis ought to be put on ascertaining what the parties intended.

This differing judicial approach is evident in Ontario, where one set of judges seem to follow the Wood v Fred Deeley approach of closely examining the wording of the clause for potential illegality and/or ambiguity and the “parties intention ” approach as set out in the recent Ontario Court of Appeal  case of Nemeth v Hatch.

Only time will tell which approach will prevail, unless one day the Supreme Court of Canada agrees to address this issue and tell us all once and for all how these contracts should be interpreted.


Wilson v ACEL Continues :

Mr. Wilson worked for AECL from May 2005 until his termination on November 16, 2009. He then filed a CLC unjust dismissal complaint, presumably in early 2010.

It took two years to get to arbitration at which time Arbitrator Shiff made a preliminary ruling  that said simply paying statutory notice and severance pay did not avoid the remedies section of the CLC. This was judicially reviewed first by the Federal Court, Trial Division, then the Federal Court of Appeal and finally to the Supreme Court of Canada, which ruled in Mr Wilson’s favour.

I thought that at that point, having won, Mr Wilson would either get his back pay and reinstatement or just a whole lot of money.

Nope. The matter was referred to a new arbitrator, Michael Bendal. Seven years after the fact, AECL raised for the very first time, a new jurisdictional defence involving the application of Public Servants Disclosure Protection Act, a whistle blowing statute intended to protect whistleblowers from retaliation.

AECL lost again before Bendel. ( 2017 CarswellNat 6877) Another set of dates will be set to finally hear the merits. That is unless AECL again seeks judicial review of the rejection of their jurisdictional argument.

I thought that there was a principle of administrative law which said that a Court should wait until the administrative procedure is completed before judicially reviewing the case, in order to avoid this start and stop process. One can only hope that if AECL tries to judicially review this newest ruling that the Court will tell them to wait until the case is over and then file their comprehensive application,

Justice delayed in justice denied.

Court Awards 10K for Dismissal + 20k for Aggravated Damages + 10k for Punitive Damages:

In Horner v 897469 Ont Ltd ( 2018 ONSC 121) Newton J. awarded non-notice damages for an employee who was bullied at work. In this undefended action, the Court found that Ms Horner had been bullied by a co-worker, which caused her great upset. She complained to the owner, who told her to take a few days off  and that he ” would figure it out in a few days”. A few days later he fired her, alleging cause in relation to her dealings with the bully co-worker. Having previously been diagnosed with depression, the termination caused her to fall into deeper depression. She lost 30 pounds, was under doctor’s care and has been unable to look for work. She did not get EI as the employer alleged cause.

The Court awarded $20,000 for aggravated damages and another $10,000 for punitive damages. A previous judge had awarded her 3 months notice.

Contrast this with Galea v Walmart ( 2017 ONCA 245) where the Court awarded $750,000 for conduct of a somewhat different sort where there was no medical evidence of mental distress of the Plaintiff.

UBER Class Action Fails Due to Arbitration Clause:

In Heller v UBER (2018 ONSC 718) Perell J. was faced with a motion by UBER to stay  a class action seeking to declare UBER drivers as employees for the purposes of the Ontario Employment Standards Act. He ruled that the arbitration clause, which required that all disputes arising from the agreement must be resolved through a mediation / arbitration procedure in Amsterdam, according to Dutch law in accordance with the ICC Arbitration rules, which require a minimum fee of approximately $7,500 to be paid by the driver, required a stay of the class action.

The Court held the following :

1) This relationship might be a commercial relationship, even though it may also be an employment one, and as such the International Commercial Arbitration Act , not the Arbitration Act, 1991 applies.

2) The issue of whether the arbitrator has jurisdiction in this matter is to be first decided by the arbitrator. This is called the Competence – Competence Principle,

3) As the ESA does not preclude resorting to arbitration, the Court should not refuse to stay the action on that basis.

4) It is not unconscionable to prevent an employee from pursuing his ESA rights through the Courts where there is an arbitration clause.

An appeal is likely, according to Plaintiff’s counsel.

Quere: What is the UBER drivers all filed separate ESA complaints with the  Ministry of Labour instead of a class action?

Would the OLRB rule that they did not have jurisdiction to hear the case because the parties has decided that the matter must be decided in a foreign country? Does not the “no contracting out” section of the ESA  ( section 5) relate to this issue? Sections 97,  98  and 99 (2) of the ESA deal with when a complaint under the ESA cannot be filed with the Ministry. Is this an exhaustive list or can there be non statutory exceptions?