Ontario Court of Appeal Rules That Sophistication of Parties Does Not Validate a Termination Clause which Breaches the ESA.
In Rahman v. Cannon Design Architecture Inc., 2022 ONCA 451 the Court of Appeal unanimously overturned a decision of Justice Dunphy in which he found that because the Plaintiff was a sophisticated individual who had legal advice when she signed the agreement an otherwise invalid termination clause was enforceable.
The Court of Appeal thought otherwise:
[24] In my view, the motion judge erred in law when he allowed considerations of Ms. Rahman’s sophistication and access to independent legal advice, coupled with the parties’ subjective intention to not contravene the ESA, to override the plain language in the termination provisions in the Employment Contracts. By allowing subjective considerations to distort and override the wording of those provisions, the motion judge committed an extricable error of law reviewable on a correctness standard: Amberber v. IBM Canada Ltd., 2018 ONCA 571, 424 D.L.R. (4th) 169, at para. 65. It is the wording of a termination provision which determines whether it contravenes the ESA – even compliance with ESA obligations on termination does not have the effect of saving a termination provision that violates the ESA: Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, 134 O.R. (3d) 481, at paras. 43-44.
In Rahman v. Cannon Design Architecture Inc., 2022 ONCA 451 the Court of Appeal unanimously overturned a decision of Justice Dunphy in which he found that because the Plaintiff was a sophisticated individual who had legal advice when she signed the agreement an otherwise invalid termination clause was enforceable.
The Court of Appeal thought otherwise:
[24] In my view, the motion judge erred in law when he allowed considerations of Ms. Rahman’s sophistication and access to independent legal advice, coupled with the parties’ subjective intention to not contravene the ESA, to override the plain language in the termination provisions in the Employment Contracts. By allowing subjective considerations to distort and override the wording of those provisions, the motion judge committed an extricable error of law reviewable on a correctness standard: Amberber v. IBM Canada Ltd., 2018 ONCA 571, 424 D.L.R. (4th) 169, at para. 65. It is the wording of a termination provision which determines whether it contravenes the ESA – even compliance with ESA obligations on termination does not have the effect of saving a termination provision that violates the ESA: Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, 134 O.R. (3d) 481, at paras. 43-44.
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