Category: Uncategorized

In Rahman v Cannon Design Architecture ( 2021 ONSC 5961 Justice Dunphy had to consider whether the following clause was illegal in light of the Waksdale v Swegon North America Inc ( 2020 ONCA 391) decision of the Ontario Court of Appeal:

“CannonDesign maintains the right to terminate your employment at any time and without notice or payment in lieu thereof, if you engage in conduct that constitutes just cause for summary dismissal.”

In Waksdale it was found that language of this sort was contrary to the ESA as just cause was a lower standard than wilful misconduct as set out in the ESA and as such the entire termination clause is a nullity and therefore common law notice would apply.

Somewhat surprisingly Mr Justice Dunphy found that this case did not fall within Waksdale for the following reasons:

1. The Plaintiff  obtained competent  legal advice before signing the agreement.
2. The Plaintiff negotiated an improved termination provision and at no time objected to the just cause language. ( Note: the contract was negotiated years before the Waksdale decision )
3. The contract provided for more than the ESA if she signed a release, but presumably less than the common law.
4. She had a senior role, make lots of money and ” was a woman of experience and sophistication”.
5.  “The offer letter contains an explicit “for greater certainty clause” recognizing that the employer’s “maximum liability … for common law notice, termination pay, benefits continuation, severance pay, or payment in lieu of notice” shall be limited to the greater of the notice required in the Officer’s Agreement or the minimum amounts specified in the ESA
6. The Judge emphasized that the agreement represented the mutual intention of the parties, was unambiguous and provided a benefit in excess of the ESA minimums.

My Comments:

With the greatest of respect, I think that Mr Justice Dunphy approached the whole issue from the wrong perspective. Waksdale is a finding that the use of the words ” just cause ” is illegal as it contradicts the ESA standard. It also found that such a clause poisons the entire termination  provision, even the “without cause ” provision.

Illegality leads to nullity says the Supreme Court of Canada in Mactinger v. HOJ Industries Ltd., [1992] 1 S.C.R. It is therefore decidedly not an issue of what was in the minds of the parties when they entered into the contract nor is it relevant whether the clause is clear and unambiguous.

You could have a properly drafted and legally reviewed agreement with a Mafia hitman to kill your business rival. When he or she refuses to do the hit you cannot sue him or her in the Superior Court because the contract is illegal  and our courts will not enforce an illegal contract as a matter of public policy.

Moreover, as an illegality is a legal nullity, we are instructed to read the contract as if the affected clause is not there at all. It is legally incorrect to look at or to refer to an illegal clause as a way to uncover the true intentions of the parties.

Therefore all the reasons given by Mr Justice Dunphy should be irrelevant as they relate to traditional ways of attacking the formation of the contract which focuses on the intention of the contracting parties.

I would not be surprised if this matter were appealed.

If you like a copy of this decision please email me at barryfisher@rogers.com.

In Mazanek v Bill & Son Towing ( no citation yet ) Steele J. awarded $23,500 ( inclusive of disbursements and HST) on partial indemnity basis even though the recovery was within the jurisdiction of Small Claims Court. The judge seemed to do so for the following reasons :
1) The Plaintiff won and is presumptively entitled to costs.
2) The Defendant brought a $100,000 counterclaim which was not abandoned but in which they led no evidence.
3) There were 5 allegations of cause alleged which were litigated
4) The only defence offer was made 8 days before trial for only $5,000.
5) The Plaintiff spent 118 hours on the file while the Defendant spent 95 hours.

In Navaratnarajah v FSB Group ( 2021 ONSC 5418) Justice Morgan certified a class action on behalf of insurance sales agents ( called producers) who are claiming that they are employees rather than independent contractors.

What I found interesting about the case was the common issues that related solely to the remedy if there was a finding that they were employees.

These issues included : overtime pay, termination and severance pay, minimum wage protection, vacation pay, requirement to record hours of work, and reimbursement of EI and CPP excess payments made by class members.

Another interesting issue was whether a class action was the preferable procedure when each producer could file its own ESA complaint with the Ministry of Labour. However as that procedure is subject to a strict 2 year limitation period ( whereas in a class action the discoverability issue can be argued) then the Ministry approach would ” exclude at least some members from any access to justice.”

Moreover even though the fact that if the Plaintiff succeeds it may result in a unfavourable tax and business situation for many of the class members was held not to be a valid consideration in the certification process.

If you want a copy of this case, email me at barryfisher@rogers.com .

In Younesi v. Kaz Minerals Projects B.V. (2021 BCSC 614) Justice Kent was dealing with 40 something Engineering Manager who was induced to leave his prior employer of just 2 years and join the Defendant. After only a little over 2 months employment the Defendant decided that the Plaintiff was ” not a good fit ” .

The Court said that normal reasonable notice was 4 months but it was bumped up  to 6 months because of the inducement.

The Court also awarded $12,500 in mental distress damages because the Plaintiff had a “thin skull ” and took the termination much harder than the average person ashe felt that  his professional competence was being  questioned. The Court noted that as this part of the claim is a tort, you take your victim as you find them so even though the average person would not have gone through the distress that the Plaintiff would have, he must still be compensated.

In Kitchen v Brandt Tractor ( 2021 NBQB 064) Justice Terrance has a situation where after an asset sale the new employer offered the employee from the vendor employment and specified that his adye of hire would be the date of the transaction closing but there was no specific mention of whether his  prior service would be regognized.

This is what the Judge said:

[30] Nowhere is previous service mentioned in the context of termination or reasonable notice. The Employment Contract only recognizes past years of service for purposes of vacation. The defendant submits that because the Employment Contract only references vacation and is silent on the issue of reasonable notice then, by implication, prior service is excluded from the calculation of reasonable notice (expressio unis est exclusio alterius). I disagree. The purpose of advising the employee of whether or not prior service will be included in the calculation of reasonable notice on termination is to permit the employee to make an informed decision whether it is better in his interest to claim against his former employer for damages or accept the new offer of employment. An important part of that calculation is whether his prior years of service will be counted if he is terminated by the new employer. The offer of employment made by Brandt in this case is, at best, ambiguous. It does not expressly state that prior service will not be counted. In my view, the offer of employment made by Brandt was not sufficient to put the plaintiff on notice of the consequences of his decision to accept the new employment with Brandt. The defendant has failed to rebut the presumption identified in Sorel andrecognized in Stone.

[31] The plaintiff’s entitlement to reasonable notice will be based on 11 years and 8 months service.

MY COMMENTS:

Under the ESA this is not an issue as the Act provides for deemed continuous service where the purchaser continues the employment of the vendor’s employees whether the transaction is a share sale or an asset sale.

However under the common law, one must first distinguish between an asset sale and a share  sale. There is no issue with a share sale as the employer is the same corporate entity, only the owner of the shares changes. However the case law supports the proposition that that is different for an asset sale. This actually goes back to ancient anti slavery provisions which prevented the Master from selling the Slave.

Quere, isn’t it ridiculous that an employee’s legal rights flow from how a bunch of tax lawyers decide to set up a transaction? How is the employee supposed to know or understand the difference between these two types of sale ? I digress.

As a workaround to this absurd law, judges have created this presumption of inherited prior service. However like all presumptions, they  can be overturned with evidence to the contrary.

So if an employer successfully negates the presumption then for common law purposes there is new employment but for ESA purposes there is  continuous employment. Moreover if the contract purports to say that for all purposes service is not continuous, is that provision void as it is contrary to the ESA?

Who ever said that employment law was easy.

In Lamontangne v J.L Richards & Assocuates ( 2021 ONSC 2133) Justice Roger had a case where the employment contract had a termin ation provision which said “Employment may be terminated for cause at any time, without notice. ”

Under Waksdale v. Swegon North America Inc., 2020 ONCA 391 , the use of the term “just cause” instead of the defintion of wilful misconduct under the ESA has been found to invalidate the entire termination clause.

In this case the Defendant tried to distinguish thier clause by saying it only said ” cause” not “just cause “.

The Judge did not buy it. Here is what the Judge said :

[37] As a result, the “for cause” termination provision is illegal as it incorporates the common law “just cause” concept, which means that an employee could be terminated without any notice for conduct that is not “willful” or “bad on purpose”. This is an attempt to contract out of the minimum standards prescribed by the ESA and voids the entire clause. It does not matter what the employer might have done, the wording of the clause is determinative.

If you would like a copy of this case email me at barryfisher@rogers.com

In DALTON v FRASER VALLEY FIRE PROTECTION LTD ( 2021 BCPC 146) Judge Skilnick decided that the Plaintiff’s age was such an important Bardal Factor that the reasonable notice period was a pretty shocking 3 months notice. The judge also found that there was no enticement and the poorly worded probationary clauise did not apply .This is what the Court said.

[33]     Older employees, particularly those over 50, may be entitled to a longer period of notice. Age is a factor that bears so importantly upon the prospects for other similar employment and employers who terminate the employment of older employees must appreciate the difficulty that is thrust upon older employees who are on the receiving end of a wrongful dismissal.

My Comments:

Although age is definitely an important Bardal Factor, it is not usually that important where the service is short. In part this is because if older short service workers were automatically entitled to much longer notice periods that younger workers, this would simply create another barrier to the hiring of older workers.

By the way, the Plaintiff represented himself.

In McCallum v Saputo ( 2021 MBCA 62 ) JA Pfuetzner made it clear that under the common law an employer has no duty to investigate prior to dismissing an employee although if they do not and just cause is not found they run the risk of additional damages for not doing so.

In other words, if you hired Sherlock Holmes as a workplace investigator who concluded that you did have just cause but the judge disagreed with Mr Holmes, then the employer would lose.

On the other hand if you did no investigation at all but proved your case in Court, then the employer would win.

Companies often spend huge amounts of money on workplace investigations but then are shocked to find out that they are of little or no assistance when it comes to actually proving their case in a court of law. The witness statements taken down by the investigator cannot be used as direct evidence in Court and even the Plaintiff’s statements can only be used to contradict what he or she says in Court. Of course the investigators assessment of credibility and or their conclusions on liability are not admissible as this is the exclusive function of the judge or adjudicator.