Employee vs. Independent Contractor: What to Expect in a CRA Audit As a part of DSF’s ongoing Employment Law seminar series, I was asked to participate and provide a tax lawyer’s perspective as well as some anecdotal experience. For tax law purposes, the question of employee vs. independent contractor can be a very nuanced issue; provincial labour laws are not determinative as the Canada Revenue Agency (“CRA”) is tasked with applying the framework of federal legislation, such as the Income Tax Act[1], under which specific rules have been developed by the Tax Court of Canada, the Federal Court of Appeal and the Supreme Court of Canada. How is an “Employee” Defined under the Income Tax Act? It may come as some surprise for a piece of legislation as complex as the Income Tax Act (“ITA”), but the act itself contains no specific definition for “employee”. Subsection 248(1) simply reads employee includes officer; So while the definition in the ITA deems a corporate officer to be an employee, it goes no further in providing specific guidance. But where the statute remains silent, the common law has developed over time to fill in the gaps. The main distinction that can be drawn between an employee versus an independent contractor is often summarized as a contract of service vs. a contract for service. To determine the difference, each factor in the relationship ought to be examined. A dash of common sense is often in order, but the concept is defined almost completely by the common law in the taxation sphere. The Common Law Definition of “Employee” for Tax Purposes Although the common law is a creation of judges of Canada’s various Courts, for most taxpayers, the CRA is the ultimate decision-maker with respect to the determination of employee vs. independent contractor. That being said, the CRA must apply the law, and thus the decisions of the Courts when making such a determination. The first and perhaps most important case of note with respect to the contractor versus employee distinction is Wiebe Door v MNR.[2] In Wiebe Door, the Federal Court of Appeal was tasked with reviewing the Tax Court of Canada’s trial decision. The Tax Court judge had ruled that the contractors working for the appellant corporation must have been employees because of the “integral nature” of the workers to the employers’ business. The FCA overturned this decision on the basis that the Tax Court judge had made a mistake by placing too much emphasis on the “integration” test, and had failed to properly consider and weigh other relevant factors. But what are these “relevant factors”? In 671122 Ontario Ltd. v Sagaz Industries[3], Justice Major of the Supreme Court of Canada summarized the relevant factors that are generally to be considered: control – more control is generally exercised by an employer over an employee than by a client over a self-employed person. This control can be time of work, order of tasks, place of work and other similar factors; chance of profit versus risk of loss – self-employed persons usually take some degree of financial risk, and more opportunity for profit than employees; integration – as per the Tax court in Wiebe Door, an employee’s job will be an integral part of an employer’s business, whereas the tasks performed by a self-employed worker will likely be less integrated into the client’s day-to-day operations; and tools and equipment – self-employed contractors are more likely to supply their own tools and equipment, as well as being responsible for their maintenance. Justice Major also summarized the proper approach to reviewing the relationship holistically: “The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account. In making this determination, the level of control the employer has over the worker’s activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker’s opportunity for profit in the performance of his or her tasks.” The basics laid down in the above-referenced cases have been modified slightly over the years, though arguably not substantively. For example, in 1392644 Ontario Inc. v Canada[4], the Federal Court of Appeal introduced a “two-step” approach to the determination of employee vs. independent contractor for the purposes of the ITA. The two-step approach requires that the decision-maker first examine the parties’ written contract to determine if it creates an independent contractor relationship and if so to move on to considering the underlying “objective reality” of their actual behaviour. In the author’s opinion, this two-step approach makes a procedural, but arguably not a substantive change to the analysis – it has always been the case that all factors (including the written contract) are to be examined from an objective perspective, though forcing a decision-maker to refer first to the parties’ written contract may signal at least some form of deference to intention, though this was not helpful to the appellant in the instant case. It should also be noted that the traditional tax law adage of “form matters” could perhaps be utilized to some effect in “overriding” the finding of an employment relationship. For example in TBT Personnel Services Inc. v Canada[5] the CRA had determined that the appellant corporation’s truck drivers were employees and not independent service providers. Some of the impugned employees however had been operating through their own corporations. The Tax Court of Canada originally ruled that the incorporated drivers were not and could not be employees due to the use of the corporate form. On Appeal to the Federal Court of Appeal, the Crown conceded from the outset that the drivers who had provided services through their corporations could not be deemed to be employees in accordance with the lower court’s decision. Since the Crown conceded this fact from the outset, the FCA technically did not issue any ruling on this point, though in its reasons it appears to react favourably to the Crown’s admission. It seems likely on this basis that had the Court had a chance to rule substantively on this point that its conclusion would have been the same as that of the Tax Court, and that absent some form of sham the use of the corporate form will be determinative.[6] As an aside, those considering incorporation to avoid an employee/employer relationship should be wary of the “personal services business” rules in the ITA and plan accordingly with a professional advisor.[7] Why Does the CRA Care About Employee vs. Contractor? Canada’s system of income taxation is based upon the concept of self-reporting. A taxpayer earns income in the year, calculates their taxes payable by filing a return and pays their balance. While this works in a perfect world, the reality is that most people do not put taxes top of mind; in particular, getting a large bill at the end of the year that could be upwards of half of your earnings may put most in the position of not being able to pay the balance. Administering the taxation system, including collections is time-consuming and expensive, so the payroll system was designed as a first line of defense to protect Canada’s tax base. By placing the obligation to withhold and remit income tax, CPP and EI on employers, the vast majority of Canadians become automatically compliant with their obligations. This of course means that when a payroll amount is not remitted, the employer, not the employee is responsible for the shortfall. In an independent contractor situation, the employer simply makes gross payments to the contractor, and it is the worker’s job to prepare and file their return, as well as pay their taxes by the due date. Although the vast majority do just that, enforcing the obligations of those that don’t require major manpower. Thus it seems obvious that the CRA does have an administrative incentive to classify as many workers as possible as employees. What Can Trigger a CRA Audit? The CRA conducts payroll audits in the normal course of its operations just as it does for all taxes and programs it is tasked with administering. Payroll auditors are referred to as “Trust Examiners” and will often attend the business premises to conduct their payroll reviews. A normal payroll audit will encompass a review of the business’ income tax withholdings as well as amounts required to be withheld and remitted under the Canada Pension Plan[8] and the Employment Insurance Act[9]. While no two audits are identical, based on the author’s anecdotal experience there are a number of common reasons why a business may be selected for a payroll audit: The CRA may have an ongoing project focussing on a certain sector of the economy; There may be a tip provided from a disgruntled former worker or a provincial labour authority that alerts the CRA to investigate; Certain high-risk industries such as construction, spas or hair salons, are often selected for payroll and other types of tax audit, normally owing to those sectors’ large volume of cash transactions; An audit of a different tax account, such as GST/HST reveals discrepancies in payments to contractors or other third parties that will result in a referral to the payroll division; and The ever-present element of random selection or chance, combined with computer algorithms in the CRA’s internal system that analyze irregularities may trigger a closer look. In the course of a payroll audit, the Trust Examiner may come across ambiguities in the business’s relationship with any independent contractors, and possibly some indicia of an employment relationship and decide that further investigation is necessary. If so, the Trust Examiner will refer the issue to the CRA’s “Rulings Directorate” to further investigate the facts and make a final determination on the worker’s status. The Rulings Directorate is a specialized division of CRA that has the task of reviewing all of the evidence and circumstances and issuing an administratively binding opinion on the status of a particular worker as either employee or independent contractor. The Rulings Directorate does not conduct audits itself but acts in a supporting role for the Trust Examiner in these scenarios. The referral of a particular case to the Rulings Directorate is normally done at the behest of a payroll Trust Examiner in the course of an audit, but they will also review proactive requests; in some scenarios, the “employer”, the worker or both may request a ruling on their relationship proactively to avoid future payroll issues. Whether or not an unfavourable decision on such a request could trigger a further review or full payroll audit of the “employer” is not something the author has seen in practice, but could be a potential area of concern if one is considering such a proactive approach. What Happens in an Audit/Ruling? When a referral is made to the Rulings Directorate the assigned officer will generally begin by way of sending a written notice to the business owner. This letter will explain the purpose of the investigation and request that preliminary documentation, such as the contract with the worker, be provided for review. Normally the assigned officer will also ask for a telephone interview to be convened to discuss the relationship with the employer. In some cases, they may also conduct a field visit although this is becoming rarer as the CRA has moved to centralize these specialized divisions at certain specific Tax Services Offices to serve a large geographic area. The rulings officer will then normally contact the workers in question directly, initially via telephone and then to supplement their responses ask that a written questionnaire be answered. They may also ask for some proof of expenses paid related to their work, evidence of reimbursements or similar payments and any other documentary evidence that may be helpful in determining the form of the relationship. Based on the responses and the evidence provided by both the business and the worker, the rulings officer will then summarize the facts, apply the Wiebe Door and Sagaz factors and come to a determination. If a ruling is made that the workers were actually employees, this will normally trigger a full payroll trust examination if one is not already in progress. If an audit is in progress the Trust Examiner will use the ruling as the basis for increasing the income tax, CPP and EI withholdings for the relevant period. The conclusion of the trust examination will result in the issuance of reassessments for the income tax, CPP and EI withholdings, including interest and applicable penalties. The amounts will be due immediately – payroll assessments are not subject to the typical 90-day hold on collections as they are considered “trust funds” by the ITA, and so a referral will usually be made by the Trust Examiner immediately to the CRA’s collection division for follow-up. Additional Tax and Legal Considerations From the “employer’s” perspective, it should be noted that if the newly deemed employee has already reported and paid their taxes this will not relieve the employer of the obligation to pay which is mandated under the ITA; the reassessed amounts will be due and payable regardless. The result is a potential double tax that can be thought of as more akin to a penalty. One way to mitigate this may be to work together with the employee to refile their previous year’s tax returns to claim back a refund, though legal advice in this regard is paramount – if you are considering attempting this type of arrangement with an employee, advice from an experienced employment lawyer is advised due to the possibility of running afoul of the various employment or labour codes. This is beyond the scope of the author’s professional experience, but it is not hard to imagine a dispute arising, particularly in such a stressful context, if the employee is suddenly asked to refile their taxes in a particular way and to forward refunds to their employer – this could be taken by the employee as coercive behaviour for example. How such an issue would be treated under the labour codes and employment statutes is also not immediately clear to the author, but as with any dispute could end up being adding even more costs if litigation, arbitration or a workplace investigation ensues. From the “employee’s” perspective, the ability to deduct many typical business expenses from their income will be severely restricted. Unlike the rules applicable to business income, deductible expenses for employees are limited by section 8 of the ITA to those that are expressly permitted by that section. In addition, the employee will not be capable of claiming any deduction at all if they are not provided with a duly executed Form T2200 by their employer each year, setting out the specific expenses and nominal justification for their incurrence by the employee. This can lead to a higher tax cost for the employee overall and will require the employer’s active participation in creating and issuing the prescribed forms. It may also require that the parties redraft their written agreement. If there are any disputes, it may be wise for the aggrieved party to seek legal assistance in the same manner as advised above in the employers’ scenario. What if You Disagree with a Reassessment or Ruling? While a ruling that one is an employee is a formal administrative decision by the CRA, a taxpayer cannot object directly to the said ruling, rather the resulting reassessment and by extension, the underlying amounts imposed must be disputed. As stated above, a payroll audit encompasses the amounts of income tax withholdings, CPP and EI. Thus, when a “payroll” reassessment is issued, pursuant to a ruling or not, there are technically speaking three reassessments being created simultaneously, one under each of the three respective acts. Disputing these assessments is similar in concept to any other tax debt – a formal Notice of Objection must be filed within a 90-day period beginning on the date of the reassessment. For income tax assessments, as well as GST/HST assessments, it is common knowledge for practitioners that there is also a relieving provision that allows the taxpayer to request an extension of time to the 90-day objection period – so long as a formal extension request is filed within one year of the expiry of the initial 90-day period, the CRA can accept the objection as valid. What is not so widely known is that the Canada Pension Plan and the Employment Insurance Act have no corresponding mechanism; those acts contain no provision for the extension of time to file an objection and so if the initial 90-day period is missed, the reassessed amounts of CPP and EI will be deemed final and payable. The payroll amounts related to income taxes can however still be the subject of an extension of time request, though doing so will only solve part of the problem. Thus, taxpayers need to be extremely cautious with respect to the 90-day deadline to ensure that the amounts of CPP and EI, if incorrect, are objected to on a timely basis. Once the objections have been filed, from experience, the CRA will initially refer the CPP and EI portions of the objection to an Appeals Officer with specific knowledge of those particular acts for an initial decision, and that officer will then forward the file to a second Appeals Officer to handle the income tax portion. This can lead to longer than normal resolution times and may exacerbate collections issues if the account remains delinquent in the meantime. If the taxpayer is unsuccessful, they still retain a statutory right of Appeal to the Tax Court of Canada as with all other tax issues, though the 90-day period is strict for CPP and EI at this stage as well. Is Any Other Relief Available? If the taxpayer is not successful in the dispute process or does not wish to dispute, they can consider filing a Taxpayer Relief request to ask the CRA to cancel penalties or interest associated with the reassessments. Underlying principal amounts are not capable of being eliminated as a matter of law by a Taxpayer Relief request, so depending on the amount of interest and penalties this may or may not be worth the time and expense. The Taxpayer Relief Program and the cancellation of the penalties or interest are completely at the discretion of the CRA, and a high bar for relief is imposed. Those who may be considering such an application should seek legal advice and representation to ensure that their request is as effective and convincing as possible – CRA has published guidelines for when it will offer relief and so a good advocate can ensure the best chances of success. As Always, Seek Professional Representation From experience, a payroll trust examination, and if applicable the involvement of the Rulings Directorate can be an extremely confusing and stressful process. Those businesses that have concerns that there is a potential for the CRA to find an employment relationship, or that are in the midst of a payroll audit should seek advice from a professional that has experience managing the process. Proactive planning to avoid such a situation is obviously the most ideal scenario. That being said, if an audit is already in progress, professional advice and experience can often truncate the timeline and significantly reduce fees if help is brought in at the earliest possible stage. If you have questions about taking proactive steps or are in the midst of a payroll audit the author is happy to discuss how DSF can assist you to achieve the best possible outcome. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please contact a lawyer. Each case is unique and different and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” References: [1] Income Tax Act, RSC 1985, c 1 (5th Supp.). [2] Wiebe Door Services Ltd. v Minister of National Revenue, [1986] 2 CTC 200 (FCA). [3] 671122 Ontario Ltd. v Sagaz Industries, 2001 SCC 59. [4]1392644 Ontario Inc. [Connor Homes] v Canada (National Revenue), 2013 FCA 85. [5] TBT Personnel Services Inc. v Canada (National Revenue), 2011 FCA 256. [6] The original Tax Court decisions were issued under the “Informal Procedure” rules, which are akin to a provincial small claims court with a similar relaxed procedure and rules of evidence. Thus, while the Tax Court’s decision, in this case, is “persuasive” it technically did not set any binding legal precedent. [7] A detailed review of the “personal services business” rules are beyond the scope of this article, but in sum, the rules operate to ensure that those who are connected to a corporation cannot incorporate to achieve income deferral where they otherwise would have been an employee. [8] Canada Pension Plan, RSC 1985, c C-8. [9] Employment Insurance Act, SC 1996, c 23. By Fauzan SiddiquiBlog, Employment Law, TaxFebruary 17, 2022May 27, 2024
Caselaw Update: Reasonableness and Enforceability of Mandatory COVID-19 Vaccination Policies in the Workplace This is an update to our blog originally posted on July 6, 2021. There is no federal or provincial legislation requiring eligible individuals to be vaccinated against COVID-19. However, employers may impose their own vaccination policies as part of a good faith effort to follow public health guidance, stop the spread of COVID-19 and protect their business interests. Whether these policies are enforceable is a question which must be decided by the courts—but they have yet to do so. Labour arbitration decisions provide insight as to which policies may be reasonable and in which circumstances. It is likely that employer policies with respect to COVID-19 will be enforceable only where reasonable in the full context of all the facts and circumstances. Mandatory vaccination for employees may be reasonable in high-risk circumstances, while the same policy may be unreasonable where practical alternatives exist. Conditions with respect to testing and other restrictions for unvaccinated employees are also likely reasonable. A policy will likely be enforceable only where it is carefully custom-tailored to the particular facts and adaptable to the circumstances of the workplace and the employees. There may be consequences for employees who breach their employer’s vaccination policy. Facts and circumstances are dynamic. The shifting conditions of the pandemic—such as the emergence of the Omicron variant—present additional challenges and considerations for employers. Dynamic facts demand constant vigilance to ensure that policies are adaptable and reflect the circumstances of the day. Background Employers have a statutory duty to safeguard the health and safety of their employees pursuant to the Occupational Health and Safety Act.[1] By law, an employer must take every reasonable precaution to maintain a safe working environment.[2] These steps include following COVID-19 public health guidance in good faith. For example, an employer may impose policies mandating physical distancing, masking, screening—and vaccination. In Ontario, there are statutory protections for liability as a result of potential exposures or infections to COVID-19 so long as that person was making “a good faith effort to act in accordance with public health guidance,” pursuant to Supporting Ontario’s Recovery Act.[3] Under the Recovery Act, “person” includes “any individual, corporation or other entity.”[4] However, the Recovery Act excludes protections for many employers; i.e., any employer in a schedule one or two industry (as defined by the Workplace Safety and Insurance Act). This specification is broad and nearly all-encompassing. These employers do not enjoy statutory protections from their employees for COVID-19 liability.[5] Therefore, it is possible that an employee who becomes infected with COVID-19 in the course of their employment may be able to sue their employer—even if that employer was making a good faith effort to follow public health guidance. These statutory protections and exclusions have not yet been tested by the courts.[6] The court will ultimately need to determine whether the employer took all reasonable steps in the circumstances to prevent a COVID-19 outbreak in the workplace. Public Advice About COVID-19 Vaccines According to the World Health Organization, there are “safe and effective vaccines that prevent people from getting seriously ill or dying from COVID-19.”[7] Its advice is to “take whatever vaccine is made available to you first, even if you have already had COVID-19.”[8] The Canadian National Advisory Committee on Immunization “strongly recommends a complete mRNA COVID-19 vaccine series” for all eligible persons.[9] As per Health Canada, “vaccination is one of the most effective ways to protect our families, communities and ourselves against COVID-19.”[10] The courts have taken judicial notice of the fact that “all responsible medical authorities, without exception, have urged people to become inoculated.”[11] While misinformation abounds, myths and disinformation about COVID-19 vaccines have been debunked.[12] The court has also noted that some of the spread of this misinformation is deliberate and malicious.[13] Not everyone can be vaccinated; e.g., for medical reasons or upon other protected grounds pursuant to the Human Rights Code.[14] Others may be hesitant, while some may make a personal choice to remain unvaccinated based on their individual, sincerely-held beliefs and preferences. Depending on the reason, the individuals may or may not be entitled to accommodation. Enforceability of Workplace Policies (Testing, Restrictions, Vaccination, and Disclosure of Vaccination Status) “I’m strongly recommending that local employers establish a workplace vaccination policy to protect workers, their families and our communities.”[15] – Dr. Eileen de Villa, Toronto Medical Officer of Health (August 20, 2021) Courts recognize that health units and medical officers (like Dr. de Villa) should be afforded “significant deference.”[16] In light of this recommendation, an employer might conclude that requiring all employees to be vaccinated is an “obvious and simple” step to prevent exposures, infections, or an outbreak in the workplace.[17] However, such an argument places the interest of health and safety on a collision course with the human rights and other interests of employees, such as privacy and bodily integrity. Courts will need to decide how to draw the line between these competing interests. At present, there is no case law from the civil courts. In the case of unionized workplaces, courts have held that unionized plaintiffs lack standing to challenge the enforceability of an employer’s vaccination policy in court.[18] In sum, this dearth of judicial opinion means that there is still no clear and specific guidance from the civil courts for employers who seek to draft an enforceable workplace policy with respect to COVID-19. However, labour arbitration decisions (“awards”) for unionized workplaces may provide some about how courts may eventually evaluate the merits and enforceability of employer vaccination policies.[19] In general, arbitral awards focus on the facts. Awards are the result of balancing the competing interests using a highly contextual approach, taking care to evaluate the particular circumstances of each case. Arbitrators look for specific details about dangers, hazards, and how certain problems may interfere with business.[20] Other important factors could include the nature of the business, the type of workplace, the kinds of services offered, and the characteristics of the employees. At the same time, arbitrators remain alive to the issue that facts and circumstances are dynamic and subject to change—evolving along with the shifting conditions of the pandemic (e.g., the emergence of the Omicron variant). Ultimately, arbitral caselaw has shown that policies will be enforced where they are reasonable in the circumstances. An enforceable policy will likely be prudent, strike the right balance between interests, appropriately mitigate actual risks, and reflect the practical realities of the day. In general, an enforceable policy will likely be custom-tailored to suit the parameters and realities of the workplace, and the work of the employees (i.e., it is not a policy which is “one size fits all”). There are four types of policies which have been considered by labour arbitrators thus far: testing, restrictions, vaccination, and disclosure of vaccination status. Testing In Caressant Care Nursing & Retirement Homes v Christian Labour Association of Canada—prior to the availability of vaccines—the employer, a nursing home, required all employees to be tested every two weeks or else be subject to discipline; i.e., be “held out of service.”[21] The testing would be conducted by the employer on-site. The union contended that testing seriously breached the employees’ right to privacy and dignity. The employer asserted that it was upon request from or upon recommendation by the Province of Ontario. It was decided in Caressant that testing all employees under this timetable was reasonable. A nursing home is a contained environment and COVID-19 is often deadly for the elderly. The goal of clearly controlling COVID-19 infection in that environment outweighed the minimal intrusion of a test. In Unilever Canada Inc v UFCW Local 175, the employer, a food manufacturing facility, required all employees to be tested every week.[22] No specific penalty for noncompliance was specified. The union contended that the policy breached the collective agreement and the Human Rights Code. The employer disagreed and maintained that its testing policy was reasonable. The arbitrator determined that testing all employees under this timetable was reasonable. Even where there was no evidence of transmission, the arbitrator decided that it was prudent to exercise caution given the nature of the workplace, which is governed by a variety of food safety regulations. In Ellisdon Construction Ltd v LiUNA Local 183, the employer, a construction contractor, required all employees to be tested twice per week or else not be permitted to access the worksite.[23] The testing would be performed on-site. The union claimed that employees had concerns that the testing was experimental, invasive, and unreliable. The employer contended that the safety of the workplace and of the general public was at risk. It was decided in Ellisdon that testing all employees under this timetable was reasonable. Given the fact that the residential construction industry is an essential service, its workers put themselves at risk to an extraordinary threat. Further, the risk is increased by the nature of the industry; i.e., whereby workers routinely move between job sites and employers. The goal of preventing the spread of COVID-19 outweighed the intrusiveness of testing. In Ontario Power Generation (OPG) v The Power Workers Union, the employer, a public business enterprise, required all unvaccinated employees to be tested twice per week or be subject to unpaid leave or termination.[24] The testing would be self-administered by employees, at the expense of the employer. The union contended that a termination penalty without a formal disciplinary process was unreasonable. The company asserted that it was a reasonable measure to mitigate risk. It was decided in OPG that testing unvaccinated employees under this timetable was reasonable. This arbitral award was a “decision driven entirely by context.” In the backdrop of a global pandemic which has cost tens of thousands of lives so far in Canada, it was decided that a minimally intrusive test as a condition for returning to work was both “sensible and necessary.” Restrictions In OPG, supra, it was also decided that limiting access to gyms and other fitness facilities only to vaccinated employees was reasonable.[25] For some employees, physical fitness and evaluation were mandated by virtue of the physically demanding nature of their position. However, gyms are high-risk areas for transmission by their nature. Therefore, requiring employees to be vaccinated to access private fitness facilities is sensible for the same reason that the Province of Ontario requires public gym patrons to be vaccinated in order to enter. Vaccination Mandating vaccination may not be possible at all for certain individuals who are unable to be vaccinated. Some people cannot be vaccinated for medical reasons. Others may be entitled to vaccination exemptions pursuant to protected grounds under the Human Rights Code, such as religion or disability. Under the Code, employers have a duty to accommodate these employees up to the point of undue hardship for the employer, having regard to cost and health and safety issues.[26] Such accommodations could include testing or other alternatives. However, an employer has no duty to accommodate an employee who chooses to remain unvaccinated based on their personal choice.[27] According to the Ontario Human Rights Commission (OHRC): Receiving a COVID-19 vaccine is voluntary. At the same time, the OHRC’s position is that a person who chooses not to be vaccinated based on personal preference does not have the right to accommodation under the Code. … Even if a person could show they were denied a service or employment because of a creed-based belief against vaccinations, the duty to accommodate does not necessarily require they be exempted from vaccine mandates, certification or COVID testing requirements. The duty to accommodate can be limited if it would significantly compromise health and safety amounting to undue hardship – such as during a pandemic.[28] With respect to a workplace vaccination policy, mandating vaccination may be reasonable where risks are high and vulnerable populations require protection. It may also be reasonable where necessary to comply with an existing contractual relationship; e.g., an employment agreement, collective agreement, or lease. In contrast, it may be unreasonable where practical alternatives exist; e.g., working remotely, physical distancing, masking, screening, or testing. In Electrical Safety Authority (ESA) v Power Workers’ Union, the employer required all employees to be fully vaccinated or be subject to discipline, up to and including termination—with allowances for bona fide exceptions.[29] Unvaccinated employees were to be subjected to regular testing. The union contended that the policy violated its members’ bodily integrity. The company argued that it was a reasonable safety precaution. It was decided in ESA that mandatory vaccination was unreasonable. The “vast majority” of employee work was conducted effectively remotely. Consequentially, it was decided that it would be unjust to discipline or terminate employees for being unvaccinated where reasonable alternatives exist. A testing option for the unvaccinated was reasonable. The ESA decision also affirmed that under different circumstances, mandatory vaccination policies may indeed be reasonable. For example, in contexts where the risks are high and vulnerable populations require protection. The arbitrator specifically articulated that this particular decision was not “vindication” for those who choose to remain unvaccinated; i.e., “those who continue to refuse to be vaccinated are not just endangering their health but may also placing their employment in jeopardy.” In Power Workers Union v Elexicon Energy Inc, the employer, a hydro service provider, required all employees to be vaccinated or else they must complete “vaccine awareness training” and be placed on unpaid leave or be terminated.[30] The union supported voluntary vaccination and mandatory testing but drew the line at mandatory vaccination. It asserted that in light of the highly transmissible Omicron variant, vaccination does not prevent an infected person from transmitting COVID-19 to others. It was decided in Elexicon that mandatory vaccination was reasonable only for employees who (a) do not work from home, or (b) do not work entirely outside. The employer is a provider of essential services and it must be assured that its workforce is capable of providing electricity to the community.[31] The fact that Omicron may be more transmissible notwithstanding vaccination does not affect the employer’s duty to be cautious nonetheless—even against unknown harms. However, for employees who exclusively work from home, mandatory vaccination was unreasonable. Likewise, it would be unreasonable for employees who work entirely outside or who can be reasonably accommodated to work entirely outside. In Bunge Hamilton Canada v UFCW Local 175, the employer, an agricultural supplier, required all employees to be fully vaccinated or else they may be placed on unpaid leave pending a review of their employment status—with allowances for bona fide exceptions.[32] The union contended that it was unreasonable to discipline employees for being unvaccinated. The company asserted that the policy was necessary to prevent a variety of factors from materially interfering with its business, including complying with the terms of its lease. It was decided in Bunge that mandatory vaccination was reasonable. In brief, the policy was reasonable because mandatory vaccination was already the policy of the federally-regulated organization from which the business leased property for its operations (i.e., a port authority). If the employer permitted unvaccinated employees to come on-site, it would be in breach of its obligations under its lease. Testing was not a suitable alternative within this context. Finally, in UFCW Local 333 v Paragon Protection Ltd, the employer, a security company, required all employees to be fully vaccinated or be terminated—with allowances for bona fide exceptions.[33] The union contended that many of it members held genuine reservations due to concerns about the side effects of vaccinations. Some members objected to the choice between vaccination or termination. The company contended that this policy was supported by an existing collective agreement, and necessary as it was a “client customer-facing business” and the majority of its clients already required its employees to be fully vaccinated. It was decided in Paragon that mandatory vaccination was reasonable. Conveniently, an article in the collective agreement mandated employees agrees to vaccinations. This provision was remarkably prescient; it was agreed to in 2015 and did not contemplate a pandemic. However, the arbitrator also concluded that the vaccination policy balanced the rights of employees, other staff, clients, and members of the public. The arbitrator noted that “personal subjective perceptions of employees to be exempted from vaccinations cannot override and displace available scientific considerations.” Disclosing vaccination status In ESA, supra, it was decided that a policy requiring an employee to disclose medical information (such as vaccination status) “must be reasonably necessary and involve a proportionate response to a real and demonstrated risk or business need.”[34] For example, in Bunge, supra, a requirement for an employee to disclose their vaccine status to the employer was held to be reasonable.[35] Specifically, such disclosure would be a minimal intrusion into the employee’s right to privacy and was considerably outweighed by “enormous public health and safety interests.” In Teamsters Local Union 847 v Maple Leaf Sports and Entertainment (MLSE), an employee was placed on unpaid leave for failing to disclose his vaccination status.[36] The employer, a professional sports team operator, required its employees to be fully vaccinated or be placed on unpaid leave or be terminated. The employee worked at the Scotiabank Arena in close proximity with others. The employer’s policy was enacted the day after the Province of Ontario required patrons who attended events in the area to be fully vaccinated. The union did not dispute the vaccination mandate but contended that an employee’s vaccination status is private and should not be subject to disclosure. The employer asserted that being vaccinated for COVID-19 was a necessary employee qualification. The arbitrator determined that opposing disclosure of vaccination status is akin to opposing the vaccine mandate. The arbitrator stated, “I do not see how the Employer can enforce a vaccine mandate without requiring disclosure of an employee’s vaccine status.”[37] The arbitrator decided that the policy was reasonable and the unpaid leave was an appropriate outcome. When personal health information, such as vaccination status, is disclosed, privacy concerns must be addressed. Employers must keep the information confidential, safe, and secure. In MLSE, the arbitrator concluded that the employer had taken the appropriate steps to protect employee confidentiality. Purpose of Workplace Policies and the Shifting Conditions of the Pandemic (e.g., Omicron) The stated purpose of a policy may affect its reasonableness and enforceability. An employer may enact a policy with respect to COVID-19 for a variety of purposes. Such purposes may include but are not limited to: improve health and safety, promote vaccine safety education, improve workplace attendance, protect business interests or stop the spread of COVID-19. In November 2021, the Omicron variant of COVID-19 was identified.[38] It is far more transmissible than the original virus and it is expected that it can spread to vaccinated individuals.[39] This heightened risk of transmission has caused the Ontario Chief Medical Officer of Health, Dr. Kieran Moore, to reassess even having a public vaccine passport system at all.[40] As of March 1, 2022, the vaccine passport system in Ontario will end (although businesses will be permitted to continue to use the province’s proof of vaccination system, should they wish to do so) If the purpose of an employer’s mandatory vaccination policy is to reduce the spread of COVID-19, then it could be argued that the policy lacks a rational connection to the goal in light of Omicron. Stopping the spread of COVID has indeed been the stated purpose of many of the employer vaccination mandate policies considered in labour arbitrations to date. In Bunge, the purpose was to “prevent the spread of COVID-19.”[41] In ESA, the purpose was aimed at “limiting the risk of contracting and spreading the virus.”[42] However, other policies have considered transmission and harms, or have been more general in nature. For example, in OPG, the policy was aimed at “mitigating the risk of harm from, or transmission of, COVID-19 in the workplace.”[43] In contrast, in Paragon, the policy was to “minimize potential incidents of COVID-19 in the workplace.”[44] While vaccinations may be less effective in preventing the spread of the Omicron variant, it is expected that vaccines will remain effective in preventing severe illness, hospitalizations, and death from COVID-19.[45] Consequentially, employers should ensure that a mandatory vaccination policy has a purpose which is rationally connected to its means. As an example, a policy which is focused on reducing the harms caused by COVID-19 may be more reasonable than a policy focused on preventing the spread of COVID-19—in light of Omicron. However, even in light of the uncertainty of Omicron, employers should be cautious and guard against the unknown anyway. As stated in Lexicon: The Union’s argument that there is no evidence vaccinations will be more effective in preventing the spread of Omicron, even in conjunction with testing, masking, and distancing, than those measures alone without vaccination, is inconsistent on these facts with the precautionary principle which justifies that action be taken to protect employees where health and safety are threatened “even if it cannot be established with scientific certainty that there is a cause and effect relationship between the activity and the harm. The entire point is to take precautions against the as yet unknown.”[46] Nonetheless, employers should remain cognizant that there are multiple forms of harm which employees may suffer during a pandemic; e.g., mental health harms. Some employees may have mental health conditions that result in elevated anxiety towards receiving vaccination—such anxiety may amount to a disability. In the pre-pandemic era, debilitating mental health issues would have been a recognized legal disability. In the pandemic era, medical licensing bodies have restricted doctors from granting medical exemptions for vaccination on these grounds. The purpose of a vaccination policy should provide for reasonable protections and reasonable accommodations for people who may be at risk of various types of harm, including mental health harms. As the conditions of the pandemic continue to be dynamic and continue to evolve, it would be prudent to stay up to date with public health guidance to ensure that any employer policies are continuously tailored and re-adjusted to the factual realities of the day. For example, the definition of “fully vaccinated” may evolve if more booster vaccinations become the norm, perhaps as a response to Omicron and other future variants. Policies are neither “one size fits all,” nor are they “set it and forget it.” Consequences for Employees who Defy COVID-19 Policies Labour arbitrators have also considered the appropriate consequences for employees who fail to comply with COVID-19 policies, or who engage in otherwise untenable conduct in the context of the pandemic. For the most egregious violations, termination may be reasonable. In Garda Security Screening Inc v IAM, District 140, in the very early days of the pandemic, an employee was terminated for failing to self-isolate after being tested for COVID-19, as per the policy of the employer.[47] It was concluded that the employee clearly violated the employer’s policy and public health guidance and that her actions put “countless others at risk of illness or death.”[48] The employee tested positive—after working alongside her coworkers in proximity. This termination was held to be reasonable. In LiUNA OPDC v Aecon Industrial, an employee was terminated for providing false information in response to a COVID-19 screening.[49] The employee was experiencing symptoms and was advised that he could not attend work. However, the employee returned to work and falsely answered screening questions in the negative. Consequentially, the employee was terminated. The decision concluded that the employee’s “deliberate and cavalier attitude toward the COVID safety risks he represented both to his co-workers and in turn to the Company’s obligations to protect the workplace was unconscionable, unreasonable and totally unacceptable.”[50] This termination was held to be reasonable. In Ryam Inc Forest Products Group Chapleau Sawmill v USW Local 1-2010, an employee was suspended without pay for three (3) months for removing his face mask in the workplace and threatened to give his supervisor COVID by pretending to spit in his direction.[51] The arbitral decision reduced the suspension to two (2) months. Although the circumstances were very serious, the employee was afforded some leeway by virtue of his four decades of service and lack of disciplinary history. Where an employee does not comply with a mandatory vaccination policy Whether termination for being unvaccinated or failing to comply with an employer’s policy is reasonable depends on the facts. Nonetheless, Employment and Social Development Canada has issued guidance to employers with respect to completing Records of Employment (ROE). How an ROE is completed will affect the employee’s eligibility for Employment Insurance (EI). The guidance is specifically as follows:[52] When the employee doesn’t report to work because they refuse to comply with your mandatory COVID-19 vaccination policy, use code E (quit) or code N (leave of absence). When you suspend or terminate an employee for not complying with your mandatory COVID-19 vaccination policy, use code M (dismissal or suspension). If you use these codes, we may contact you to determine: if you had adopted and clearly communicated to all employees a mandatory COVID-19 vaccination policy if the employees were informed that failure to comply with the policy would result in loss of employment if the application of the policy to the employee was reasonable within the workplace context if there were any exemptions for refusing to comply with the policy Conclusion Employers may impose policies with respect to COVID-19 as part of their statutory obligation to safeguard the health and safety of their employees. In following COVID-19 public health guidance in good faith, employers may impose policies with respect to physical distancing, masking, screening, and vaccination. However, mandating vaccination also engages the interests of employees. A balancing exercise is necessary to ensure that any intrusions upon the employee’s rights are reasonable. Courts have not (yet) provided any guidance to employers with respect to what kind of policies will be enforceable. However, labour arbitration decisions may yield insight as to what kinds of policies will be enforced by the courts; i.e., policies which are reasonable in light of all of the circumstances. These decisions are driven by context and were highly sensitive to the particular facts of each case. What may be reasonable in one set of circumstances may be unreasonable for another—and circumstances may change. Important factors could include the nature of the business, the type of workplace, the kinds of services offered, and the characteristics of the employees. Some key generalizations emerge from the arbitral decisions. Testing or restricting the unvaccinated is likely reasonable. Mandating vaccinations may be reasonable under the circumstances; e.g., where risks are high and a vulnerable population requires protection. Lastly, requiring an employee to disclose their vaccination status is also likely to be reasonable. Reasonableness is highly contextual and requires specificity with respect to particular hazards and forms of interference with the business. It is critical to ensure that any COVID-19 policy is adaptable and custom-tailored to the realities of the employees, the workplace, and of the pandemic itself. Where employees violate these policies, penalties may result. Omicron is an example of how the ever-shifting realities of the pandemic will require constant vigilance from employers to ensure that policies reflect the realities of the day. Keeping employees safe requires a continuous contextual analysis. Ultimately, the key fact in any contextual analysis may be that in Canada, tens of thousands of lives have been lost to COVID-19—and the pandemic is not over. If you have any questions about Enforceability of Mandatory COVID-19 Vaccination Policies in the Workplace or employment law generally, please contact Marty Rabinovitch at (416)-446-5826 or Marty.Rabinovitch@devrylaw.ca. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique, and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situations and needs.” [1] RSO 1990, c O.1 [OHSA]. [2] Ibid, s 25(2)(h). [3] SO 2020, c 26, Sched 1 at s 2(1) [Recovery Act]. [4] Ibid at s 1(2). [5] Ibid at s 4; Workplace Safety and Insurance Act, 1997, SO 1997, c 16, Sched A; with exceptions; see: O Reg 175/98. [6] There are proposed class actions before the courts; e.g., Nisbet v Ontario, 2021 ONSC 3072. [7] “COVID-19 advice for the public: Getting vaccinated” (15 November 2021), online: World Health Organization <who.int>. [8] Ibid. [9] “Vaccines for COVID-19: How to get vaccinated” (14 January 2022), online: Government of Canada <canada.ca>. [10] “COVID-19: Effectiveness and benefits of vaccination” (14 December 2021), online: Government of Canada <canada.ca>. [11] R v Kongolo, 2021 ONSC 6619 at para 41 [Kongolo] citing R v Frampton, 2020 ONSC 5733 at para 6. [12] “The 12 Common Myths & Misconceptions About COVID-19 Vaccination” (19 May 2021), online: United Nations <un.org>. [13] Kongolo, supra note 11 at para 40. [14] Ontario, Ministry of Health, Medical Exemptions to COVID-19 Vaccination, version 3.0 (Toronto: 12 January 2022); RSO 1990, c H.19 [HRC]. Note: where an employee requires accommodation under the Code, an employer is required to provide such accommodation up to the point of undue hardship. [15] “Toronto Medical Officer of Health strongly recommending Toronto employers institute COVID-19 vaccination policy and support workplace vaccination” (20 August 2021), online: City of Toronto <toronto.ca>. [16] The Fit Effect v Brant County Board of Health, 2021 ONSC 3651 (CanLII) at para 88. [17] Electrical Safety Authority v Power Workers’ Union (7 November 2021) arbitrator: John Stout at para 33 [ESA]. [18] Blake v University Health Network, 2021 ONSC 7139 (CanLII) at para 15; Amalgamated Transit Union, Local 113 v Toronto Transit Commission and National Organized Workers Union v Sinai Health System, 2021 ONSC 7658 (CanLII) at para 3. [19] E.g., the Supreme Court endorsed a line of arbitral decisions which outlined the circumstances under which testing for drugs and alcohol might be permitted; see: Communications, Energy and Paperworkers Union of Canada, Local 30 v Irving Pulp & Paper, Ltd, 2013 SCC 34. [20] ESA, supra note 17 at para 26. [21] Caressant Care Nursing & Retirement Homes v Christian Labour Association of Canada, 2020 CanLII 100531 (ON LA). [22] Unilever Canada Inc v United Food and Commercial Workers, Local 175 (24 April 2021) arbitrator: Jules B Bloch [Unilever]. [23] Ellisdon Construction Ltd v Labourers’ International Union of North America, Local 183, 2021 CanLII 50159 (ON LA) [Ellisdon]. [24] Ontario Power Generation v The Power Workers Union (8 November 2021) arbitrator: John C Murray [OPG]. [25] Ibid. [26] “OHRC Policy statement on COVID-19 vaccine mandates and proof of vaccine certificates” (22 September 2021), online: Ontario Human Rights Commission <ohrc.on.ca>. [27] Ibid. [28] Ibid. [29] ESA, supra note 17. [30] Power Workers Union v Elexicon Energy Inc, 2022 CanLII 7228 (ON LA) [Elexicon]. [31] Ibid at paras 7, 79. [32] Bunge Hamilton Canada, Hamilton, Ontario v United Food and Commercial Workers Canada, Local 175 (13 December 2021) arbitrator: Robert J Herman [Bunge]. [33] United Food and Commercial Workers Union, Canada Local 333 v Paragon Protection Ltd (9 November 2021) arbitrator: F R von Veh [Paragon]. [34] ESA, supra, note 17 at paras 37-38. [35] Bunge, supra note 32 at paras 23, 25. [36] Teamsters Local Union 847 v Maple Leaf Sports and Entertainment (12 January 2022) arbitrator: Norm Jesin [MLSE]. [37] Ibid at para 20. [38] “Update with consideration of Omicron – Interim COVID-19 infection prevention and control in the health care setting when COVID-19 is suspected or confirmed– December 23, 2021” (24 December 2021), online: Government of Canada <canada.ca> [Omicron, Canada]. [39] Ibid; “Omicron Variant: What You Need to Know” (2 Feb 2022), online: Centres for Disease Control and Prevention <cdc.gov> [CDC]. [40] Sean Davidson, “Ontario needs to ‘reassess the value’ of COVID-19 vaccine passport system, top doctor says” (3 February 2022), online: CTV News <ctvnews.ca>. [41] Bunge, supra note 32. [42] ESA, supra note 17. [43] OPG, supra note 24. [44] Paragon, supra note 33. [45] CDC, supra note 39. [46] Elexicon, supra note 30 at para 6, citing Ontario Nurses Association v Eatonville/Henley Place, 2020 ONSC 2467 (CanLII) at para 78. [47] Garda Security Screening Inc v IAM, District 140 (Shoker Grievance), [2020] OLAA No 162 [Garda]. [48] Ibid at para 15. [49] Labourers’ International Union of North America, Ontario Provincial District Council and Labourers’ International Union of North America, Local 183 v Aecon Industrial (Aegon Construction Group Inc), 2020 CanLII 91950 (ON LA) [Aecon]. [50] Ibid at para 4. [51] Ryam Inc Forest Products Group Chapleau Sawmill v United Steelworkers Local 1-2010, 2021 CanLII 61491 (ON LA) [Ryam]. [52] “EI information for employers – COVID-19” (24 December 2021), online: Employment and Social Development Canada <canada.ca>. By Fauzan SiddiquiBlog, COVID-19, Employment LawFebruary 17, 2022March 27, 2024
Commercial Leases during Unprecedented Times Introduction There has recently been a significant increase in commercial lease disputes between landlords and tenants as a result of the COVID-19 pandemic and the many government-mandated stay-at-home orders and business lockdowns. As a result, courts have become inundated with disputes between commercial landlords and tenants over unpaid rent. The Federal government has approved a series of bills to support commercial landlords by providing supplemental income and providing a layer of security for commercial tenants. The Ontario Provincial government has also enacted several measures to safeguard commercial landlords and tenants, including Bill 192, Protecting Small Business Act, 2020, Bill 204, Helping Tenants and Small Businesses Act, 2020, and , Bill 229, Protect, Support and Recover from COVID-19 Act (Budget Measures), 2020,. Bill 229 implemented several notable changes to the Commercial Tenancies Act, 1990. Notably, Sections 81, 82 and 84 of the Commercial Tenancies Act, 1990 now state as follows: Eviction orders for rent arrears not effective during the non-enforcement period 81(1) despite anything in this or any other Act, a judge shall not order a writ of possession that is effective during the non-enforcement period that applies in respect of a tenancy referred to in subsection 80 (1) or (2) if the basis for ordering the writ is an arrears of rent. No re-entry during the non-enforcement period 82 No landlord shall exercise a right of re-entry in respect of a tenancy referred to in subsection 80 (1) or (2) during the applicable non-enforcement period. No distress during the non-enforcement period 84 No landlord shall, during the applicable non-enforcement period, seize any goods or chattels as a distress for arrears of rent in respect of a tenancy referred to in subsection 80 (1) or (2). What this means is that during a non-enforcement period, judges are prohibited from issuing eviction orders for non-payment of rent, and landlords are prohibited from re-entering and terminating leases due to any type of default by the tenant and from distraining on the goods of a tenant. These new restrictions may provide relief to some commercial tenants struggling to pay rent, and significantly limit a commercial landlord’s rights upon a tenant’s breach or non-compliance with a lease. While these new restrictions prevent a commercial landlord from exercising their right to eviction and distress, the provisions do not prevent landlords from suing to recover rent arrears. Relief from Forfeiture Relief from forfeiture refers to the power of the court to protect a person against the loss of an interest or a right because of a failure to perform a covenant or condition in an agreement or contract. In the context of commercial leases, relief from forfeiture is an equitable remedy that gives the court broad power to set aside any landlord termination of the lease and to reinstate the evicted tenant to the leased premises. In deciding whether to grant a commercial tenant relief from forfeiture, a court will consider the conduct of the applicant and gravity of the breaches, whether the object of the right of forfeiture in the lease was essentially to secure the payment of money, and the disparity or disproportion between the value of the property forfeited and the damage caused by the breach.[1] Courts will consider these criteria in the default of a tenant, specifically, if there is non-payment of rent: The rental arrears were significant; The tenant refused to pay rent outright; The landlord suffered a severe loss from the delay in paying rent; and The tenant acted honestly and in good faith.[2] What to Consider as a Commercial Landlord or Tenant Two recent Ontario decisions reflect the different possible outcomes in an application for relief from forfeiture. In The Second Cup Ltd. v. 2410077 Ontario Ltd., the Court declared that the termination was unlawful, reinstated the lease, and restored Second Cup’s rights as they existed prior to the landlord’s notices and termination of the lease. The Court considered the above factors due to the non-payment of rent by Second Cup and found the tenant’s rental arrears amounting to 25% of the rent to be insignificant in light of what was happening in the world as a result of the COVID-19 pandemic, specifically considering that the tenant did not have a history of default. In Ontario International College Inc. v. Consumers Road Investments Inc., the Court dismissed an application for relief from forfeiture after finding that the tenant-applicant had acted unreasonably. The tenant ultimately failed to meet the test for relief from forfeiture. Both cases are significant in showing how the Courts consider a number of factors, including the tenant’s ability to bring the lease into good standing, length of tenancy, and any history of defaults. If you have more questions about relief and renewals of commercial leases, you can contact Ryan Stubbs at 416-446-3309 or at Ryan.Stubbs@devrylaw.ca. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique, and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situations and needs.” *This blog was co-authored by Angela Victoria Papeo* [1] Jungle Lion Management Inc. v. London Life Insurance Company, 2019 ONSC 780 at para 34. [2] The Second Cup Ltd. v. 2410077 Ontario Ltd., 2020 ONSC 3684 at para 59. By Fauzan SiddiquiBlog, Commercial Litigation, COVID-19January 26, 2022March 27, 2024
Unvaccinated and Separated? What this means for time with your child In the past two years, COVID-19 has wreaked international havoc and the challenges are intensified when it comes to governance of parenting issues for separated parents. While the unvaccinated have found creative temporary solutions in the face of government restrictions by exercising at a home gym rather than attending a favourite spin class or ordering delivery instead of dining at one’s favourite restaurant, a comparable temporary option is not available for unvaccinated parents. Unvaccinated parents without valid medical exemptions are facing restrictions on parenting time with their child including temporary suspension of all in-person parenting time until they become fully vaccinated. Some restrictions imposed by the courts include reducing the frequency and duration of in-person visits, ordering in-person visits to take place exclusively outdoors and requiring the unvaccinated parent and child to wear masks for the duration of each visit. In the case of S.W.S v. R.S[1], the mother brought a motion to change the unvaccinated father’s in-person parenting time with their two children, ages 8 and 4, to virtual. While neither child, in this case, was immunocompromised, the court held that “the father’s choice not to vaccinate himself directly affects the physical safety of the children – a primary consideration under subsection 24 (2) of the Act.”[2]. The mother was fully vaccinated and followed all COVID-19 protocols and subject to the father becoming fully vaccinated, the father’s parenting time was reduced from alternating weekends and every Tuesday to just 2 hours every Sunday (in-person) with all parenting time to remain outdoors. In the case of A.G. v. M.A.[3], the mother brought a motion to suspend the partially vaccinated father’s in-person parenting time with the parties’ 2-year-old daughter. The father relied on a one-line medical note from his doctor claiming that he is medically exempt from taking the second dose of the COVID-19 vaccine due to a severe allergic reaction to the first dose of the vaccine. Notwithstanding the father’s lack of full vaccination, without an acceptable medical exemption, the Court concluded that the father’s partial vaccination status warranted some in-person parenting time with restrictions. The father’s in-person parenting time with the child was limited from 2 hours weekly to 1 hour per week (in-person) exclusively outdoors or virtual if the weather is too inclement. In reaching this decision, the following factors were considered by the Court: the child’s medical frailties which may leave her exposed to greater risk of contracting COVID-19; The father’s partial vaccination status exposes him to greater risk of contracting COVID-19.[4] In the determination of best interest of the child, the court places considerable importance on the child’s “safety, security and wellbeing” as mandated by the Children’s Law Reform Act. The father had not tendered acceptable evidence to the court to properly assess the conclusion of his doctor that he should be exempt from his second COVID-19 vaccine. If you are partially vaccinated or unvaccinated, consider: If possible get fully vaccinated. If you intend to rely on a medical exemption, ensure that your medical exemption is prepared by either a physician or a registered nurse and that your medical note complies with the requirements for medical exemption letters set out in the Ontario Ministry of Health’s paper on Medical Exemptions. Consider virtual parenting options if you need time; however virtual parenting time is not a suitable long term solution and it cannot replace in-person parenting time, especially if a child is young particularly when a child is young. If you have any further questions on the implication of COVID-19 and your parenting rights or you would like to speak with someone about your separation terms, please contact Sanaz Golestani from Devry Smith Frank LLP at Sanaz.Golestani@devrylaw.ca or call (289) 638 3174 for assistance with this matter. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see or speak to a lawyer. Each case is unique, and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” *This blog was co-authored by Angela Victoria Papeo* [1] S.W.S v. R.S 2021 ONCJ 646 [2] S.W.S v. R.S 2021 ONCJ 646 at. para. 35. [3] A.G. v. M.A., 2021 ONCJ 531 [4] Fully vaccinated, the court is referring to two doses of an approved vaccine. By Fauzan SiddiquiBlog, Family LawJanuary 25, 2022March 27, 2024
Notice Periods for Employees Terminated Without Cause May Exceed Twenty Four Months if the Circumstances are ‘Exceptional’ Employees who are terminated without cause are entitled to either notice or compensation from their employers. A variety of factors affect how much notice or compensation each individual may receive under their own unique set of circumstances. Some of these circumstances may be “exceptional” and warrant an amount of notice or compensation which goes above the typical maximum; e.g., the COVID-19 pandemic being possibly the most exceptional circumstance of them all. Notice Period for Termination Without Cause An employer is entitled to terminate an employee without cause provided that the employee is either given reasonable notice or given payment in lieu of reasonable notice. This is the “Notice Period:” an amount of time, or a level of compensation, to assist a dismissed employee find comparable work. At common law, the Notice Period is “reasonable notice,” which varies with the circumstances of any particular case. (For a history of the development of the common law, see Machtinger v HOJ Industries Ltd).[1] The Notice Period is also a statutory entitlement pursuant to the Employment Standards Act, 2000.[2] The employment contract may specify an entitlement upon termination without cause, so long as entitlement is equal to or greater than the minimum standards in the Act. In other words, one cannot contract out of the Act. In the event that a court must determine the Notice Period, it must engage in a balancing exercise. In Minott v O’Shanter Development Co, the Ontario Court of Appeal described how “determining the period of reasonable notice is an art, not a science. In each case, trial judges must weigh and balance a catalogue of relevant factors.”[3] These factors were outlined in 1960 by the Ontario High Court in Bardal v Globe & Mail Ltd as follows: the character of the employment,length of service,age, andavailability of similar employment, having regard to the employee’s experience, training and qualifications.[4] Note: These Bardal factors are applicable only where an indefinite-term employee is dismissed without cause without an enforceable termination clause. For greater clarity, these factors are not applicable where (i) the employment is for a fixed term, (ii) the employment contract contains an enforceable termination clause, (iii) the employee is dismissed for just cause under the common law, or (iv) the employee has commenced a complaint at the Human Rights Tribunal of Ontario (HRTO) for discriminatory termination. The Unofficial Ceiling of Twenty Four (24) Months As a general rule, the unofficial ‘ceiling’ for a Notice Period is twenty-four (24) months. The Court of Appeal held in Lowndes v. Summit Ford Sales Ltd that while “there is no absolute upper limit or ‘cap’ on what constitutes reasonable notice, generally only exceptional circumstances will support a base notice period in excess of 24 months.”[5] It will be up to the employee to establish that their circumstances are exceptional. Absent exceptional circumstances, the base Notice Period of twenty-four (24) months provides for a realistic maximum. Having certainty in this regard helps both employers and employees come to an agreement about the employee’s entitlement in the event of a without-cause termination. Ultimately, certainty provides for more confidence as to the outcome of a dispute about the entitlement. This certainty keeps litigation costs down. ‘Exceptional Circumstances’ Lengthening the Notice Period The notion of ‘exceptional circumstances’ reduces the certainty of the Notice Period, but the factors are not unpredictable. The courts often look at the Bardal factors to determine what circumstances qualify as exceptional. In 2016, in Keenan v Canac Kitchens Ltd, the Court of Appeal declined to overturn an award of twenty-six (26) months based on the employees’ ages at the time of termination (63 and 61 years old), their length of service (32 and 25 years), and the character of their supervisory and representative positions; i.e., “for over a generation, they were [the employer]’s public face to the outside world.”[6] In 2021, in Currie v Nylene Canada Inc, the Ontario Superior Court of Justice also granted an award of twenty-six (26) months to an employee who had worked for the same employer for her entire working life, was approaching the end of her career, and that she would face pronounced difficulty transferring her highly specialized manufacturing skills to another employer.[7] The general case remains to be that the unofficial upper ceiling of twenty-four (24) months is appropriate for most cases, but the court does reserve the right to extend the Notice Period when exceptional circumstances call for an exception to the general rule. The ‘Exceptional Circumstance’ of COVID-19 On March 11th, 2020, the World Health Organization declared a pandemic due to Coronavirus disease (“COVID-19”): an infectious disease caused by a newly discovered coronavirus. On March 17th, 2020, the Ontario Government declared a state of emergency due to an outbreak of COVID-19. The pandemic is an unprecedented circumstance that the court has considered when calculating Notice Periods. In the pre-pandemic era, in Michela v St Thomas of Villanova Catholic School, the Ontario Court of Appeal held that “an employer’s financial circumstances are not relevant to the determination of reasonable notice in a particular case.”[8] In other words, the employee’s entitlement to a Notice Period is not reduced just because times are financially dire for the employer (just as the employee would not be entitled to a larger Notice Period if the employer is enjoying prosperity). However, the court has recognized COVID-19’s negative effect on the labour market as grounds to lengthen the Notice Period. In Yee v Hudson’s Bay Company, the court noted that it “should take into account the recent COVID pandemic and resulting in significantly increased difficulty in obtaining comparable employment.”[9] For example, in Kraft v Firepower Financial Corp, the court awarded a terminated employee an award of ten (10) months after finding that the normal average award was nine (9) months; i.e., “one month more than the average for his circumstances during non-pandemic times.”[10] Further, in Pavlov v The New Zealand and Australian Lamb Company Limited, the court not only awarded the employee an above-average award but also awarded a bonus on a pro-rata basis with reference to the bonuses paid to other employees during the same time frame.[11] The court has yet to extend a Notice Period beyond the unofficial twenty-four (24) month ceiling due to COVID-19—but it would not be unfathomable. Conclusion Employees terminated without cause are entitled to a reasonable Notice Period which is generally limited to twenty-four (24) months. However, the courts have not imposed this limit as an un-crossable threshold, rather it reserves flexibility for itself to extend the Notice Period for circumstances that are exceptional. The Bardal factors which help to determine the Notice Period are also helpful to determine if any exceptional circumstances are present. With respect to the factor of ‘availability of similar employment,’ the courts have recognized the impact of the COVID-19 pandemic and have, accordingly, extended Notice Periods—but not (yet) beyond twenty-four (24) months. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” [1] 1992 CanLII 102 (SCC). [2] SO 2000, c 41. [3] 1999 CanLII 3686 (ON CA). [4] 1960 CanLII 294 (ON SC) at 145. [5] 2006 CanLII 14 (ON CA) at para 11, citing Baranowski v Binks Manufacturing Co, 2000 CanLII 22614 (ON SC) at para 277, citing Veer v Dover Corp. (Canada) Ltd, 1997 CanLII 12429 (ON SC). [6] 2016 ONCA 79 (CanLII) at paras 30-34, cited by Dawe v The Equitable Life Insurance Company of Canada, 2019 ONCA 512 (CanLII) at para 32. [7] 2021 ONSC 1922 (CanLII) at para 84. [8] 2015 ONCA 801 (CanLII) at para 17. [9] 2021 ONSC 387 (CanLII) at para 20. [10] 2021 ONSC 4962 (CanLII) at para 22 [emphasis added]. [11] 2021 ONSC 7362 (CanLII) at para 24. By Fauzan SiddiquiBlog, COVID-19, Employment LawJanuary 14, 2022January 17, 2022
Does my spouse get a share of the home I owned before we were married? For many couples, the matrimonial home represents the largest and most significant asset. It is therefore incumbent to understand how the matrimonial home is treated upon a breakdown of the marriage and how to protect and preserve your rights if you brought the home that is your matrimonial home into the marriage. Property Division in Ontario Property division rights for married spouses are governed by the Ontario Family Law Act. Upon a marriage breakdown or if one spouse dies, each spouse is entitled to an equal division of the value of all of the assets that have been acquired during the marriage, subject to certain exceptions. As part of this calculation, a spouse is entitled to receive a credit for date of marriage assets brought into the marriage unless the property becomes the matrimonial home. The Matrimonial Home In Ontario, there are special rules with respect to the treatment of the matrimonial home once a marriage ends. Part II of the Family Law Act deals entirely with the matrimonial home and defines what it is and sets out the unique treatment and rules regarding the matrimonial home. Section 18(1) of the Family Law Act defines a “matrimonial home” as: “Every property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence is their matrimonial home.”[1] For the purposes of calculating an equalization payment, if a spouse brings a home into the marriage and that home becomes the family residence, then the right to deduct the value of the home as a date of marriage asset is lost by that spouse. Instead, the value of the matrimonial home will be included as a date of separation asset for the spouse who owns the home. If you are married, you can have more than one matrimonial home, however, the Ontario Court does not have authority to grant one spouse the exclusive right to possession of the home if it is located outside of the province. Unique Treatment of the Matrimonial Home Under the Family Law Act Unless there is an agreement or a court order for exclusive possession of the matrimonial home granted to one spouse, under Section 19 of the Family Law Act, both spouses have an equal right to possession of the matrimonial home.[2] This means that absent an agreement or court order, neither spouse can lock the other out of the matrimonial home. The criteria that the Court will consider when determining the issue of exclusive possession is set out under section 24(3) of the Family Law Act. Another unique characteristic of the matrimonial home is the absence of court order or consent, neither spouse can sell or encumber any interest in a matrimonial home. Protecting your Home with a Marriage Contract Whether you are currently married or plan to get married, you can enter into a marriage contract to protect and preserve your rights in the event of a breakdown of your marriage. To ensure your rights are protected you should enter into a marriage contract that is prepared by an experienced Ontario family lawyer. For more information contact David Heppenstall at 416-446-5834 or david.heppenstall@devrylaw.ca. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” [1] Ibid, s 18(1). [2] Family Law Act, supra note 1, s 19. By Fauzan SiddiquiBlog, Family LawJanuary 11, 2022June 30, 2023
Practices to Help Curve Sexual Harassment in the Workplace – Tips for Employers – Part 1 of 2 Workplace Harassment Awareness In recent years, the #MeToo movement has helped bring attention to and spark the well-needed conversation of an important workplace issue that affects the safety and security of individuals in the workplace. As a result of these conversations, we have begun to see a shift take place in workplace culture, by adding policies and protections where victims of harassment and sexual misconduct are encouraged to come forward and speak out on these issues in an effort to hold wrongdoers accountable. The reporting of such occurrences in major sports leagues and Hollywood has brought a heightened, but long overdue, awareness, sensitivity and attention to the issues of harassment and misconduct within the workplace. Societal, political and technological responses have led organizations to listen and be more proactive in their approach of reviewing and updating policies, procedures and responses to issues of violence and harassment in the workplace. These changes are aimed at ensuring workplaces are better positioned to prevent and address such issues from taking place. To do this, it requires workplaces to take a proactive approach, by having a plan in place with policies and procedures to implement that prevent such occurrences from taking place. 1 Beyond avoiding the obvious reputational harm, organizations have a legal obligation to provide a safe, non-toxic work environment. 2 The aim is to ensure that all workers are given an equal opportunity to participate in a safe and respectful environment. Failure to do this can attract vicarious liability, bad press and even lawsuits against employers and perpetrators. 3 In order to address these issues and manage risks in the workplace, employers need to have channels of reporting, check systems and appropriate response mechanisms in place to address problems of this nature. TIPS FOR EMPLOYERS Being Proactive and Having Preventative Measures In Place to Prevent Workplace Sexual Harassment 1. Leadership & Setting the Tone Establish a strong commitment from management and from human resources in creating an open and respectful work environment and culture. This can involve ensuring informative resources and training seminars are available to educate all employees on sexual harassment and channels of reporting. Having internal policies that address sexual misconduct and promote a culture of zero tolerance helps set the tone. Providing education and training helps ensure that policies/procedures for reporting are understood by workers, which promotes more awareness and accessibility of such programs and supports. 2. Commitment and Implementation Ensuring that policies you have in place are being used effectively is key. Ask for feedback from individuals within the investigation processes, to comment on the channels of reporting and response structure. Ensure processes and policies enable timely communication of any issues. 3. Visibility & Accessibility & Awareness Ensure your policies and procedures are visible and accessible in the workplace. This could be in the form of visual posters, pamphlets, electronic resources or information on company website pages. Periodic check-in sessions with staff to ensure any questions or concerns are answered also helps. This information should be open, transparent and readily accessible for all workers. 4. Reviews & Checks 4Conduct periodic reviews of the channels of reporting, systems used, and investigation processes to ensure they are effective. This is an important step to identifying and correcting any gaps or flaws. It is in the best interests of everyone to ensure workplaces are safe, supportive and respectful spaces, where individuals are supported, respected and heard. If you have more questions related to sexual harassment in the workplace, if you have experienced sexual harassment within the workplace or are an employer wanting to better position yourself in this regard, please visit our website or contact Timothy Gindi at Devry Smith Frank LLP to discuss any questions regarding your rights and options. This blog was co-authored by Student-At-Law Amar Gill. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please contact a lawyer. Each case is unique and different and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” Sources [1] http://www.ohrc.on.ca/en/policy-preventing-sexual-and-gender-based-harassment/8-preventing-and-responding-sexual-harassment-0 [2] http://www3.ohrc.on.ca/sites/default/files/attachments/Sexual_harassment_in_employment.pdf [3] http://www.ohrc.on.ca/en/sexual-harassment-employment-fact-sheet [4] https://www.canada.ca/content/dam/canada/employment-social-development/services/health-safety/reports/workplace-harassment-sexual-violence-EN.pdf By Fauzan SiddiquiBlog, Employment LawDecember 20, 2021December 20, 2021
A Legal Guide to Cryptocurrency in Canada What is cryptocurrency? Cryptocurrency is decentralized digital money, based on blockchain technology. It is a form of currency that can be exchanged online for goods and services. However, it is not legal tender in Canada as it operates independently of any central bank, central authority or government. The Currency Act defines legal tender as only: Bank notes issued by the Bank of Canada under the Bank of Canada Act Coins issued under the Royal Canadian Mint Act How does the CRA Approach Cryptocurrency? The CRA’s position is that cryptocurrency should be treated as akin to a commodity for the purposes of the Income Tax Act. As a result, crypto transactions are subject to the same rules as barter transactions – transactions where one commodity is exchanged for another. Any income from transactions involving cryptocurrency can be treated as business income/losses or as a capital gain/loss, depending on the taxpayer’s circumstances. When is cryptocurrency taxed? Canadians typically do not pay any taxes to hold a cryptocurrency but doing any of the following can lead to tax liability: Gifting cryptocurrency Selling cryptocurrency Exchanging or trading cryptocurrency, including converting between cryptocurrencies Converting from cryptocurrency to CAD or another fiat currency Buying goods or services with cryptocurrency Do you need to declare your income from cryptocurrency transactions to CRA? Yes. Income or gains from trading in digital currencies are subject to tax under the income tax rules. Gains and losses from buying and selling cryptocurrencies must be reported in a taxpayer’s income when filing a tax return. Depending on the extent of the trading activities, the transactions may be characterizable as being on account of income or capital. Generally, if an individual is in the business of trading cryptocurrency, or is engaged in an “adventure or concern in the nature of trade” any gains or losses ought to be reported as being on account of income. If an individual is not engaged in the business of trading cryptocurrency, gains or losses can be reported as being on account of capital. Business Income: The case law provides guidance to CRA auditors who typically use the following factors to categorize cryptocurrency as business income: Volume of trades – the more a taxpayer trades in a given year may indicate an “active” business A product or service is promoted The overall behaviour is managed in a commercially viable way Activities are done “in a business-like manner” (such as acquiring inventory or capital assets or making a business plan) The net income will be fully included in income and taxed at the individual’s marginal income tax rate. CRA considers cryptocurrency mining, trading, exchanges, and ATMs to all be cryptocurrency businesses. Adventure or Concern in the Nature of Trade The CRA may also consider transactions to be an adventure or concern in the nature of trade, which would also result in a full income inclusion for the taxpayer, even if only a single transaction is undertaken. The relevant factors to consider are: whether the taxpayer dealt with the property in the manner consistent with how a dealer in said property would ordinarily deal with it whether the nature of the property itself precludes the possibility that its sale was a realization of an investment or of a capital nature whether the taxpayer’s intention as deduced is consistent with a trading intention Of the above factors, generally, the courts have held that the taxpayer’s intention is the most important and usually is determinative. The result is the same as business income, meaning that the taxpayer will be required to include 100% of the net gain into income. Capital Gains: Generally, a transaction will be considered on account of capital based on some of the following factors: The property was purchased to generate recurring income such as rent or dividends Evidence of an intention to hold long term There is an absence of evidence of business intention or behaviour related to the asset When characterized as a capital gain, only 50% of the net gain will be included in the taxpayer’s income for the year and will be taxed at the individual’s marginal rate. Reporting Ownership of Cryptocurrency to CRA Because cryptocurrencies are treated in a similar manner to any other type of asset, Canadians who hold bitcoin or other cryptos with an aggregate cost base greater than $100,000 on exchanges or physical wallets outside of Canada will need to report their holdings on the T1135 – Foreign Income Verification Statement which must be filed each year with the income tax return if applicable. Failure to do so results in a strict liability penalty of up to $2,500 per year, and there is the potential for additional Gross-Negligence Penalties in excess of $10,000 per year to be assessed. What if you fail to declare your (taxable) profits? Failure to report income from cryptocurrency transactions, or failure to declare cryptocurrency held offshore is illegal in Canada and can result in prosecution for a criminal offence under the Income Tax Act, the imposition of extremely punitive Gross-Negligence Penalties and more. Depending on your circumstances, however, it may be possible to correct the deficiency with CRA by proactively filing a Voluntary Disclosure Application. Late-filing or amending can be considered but will result in penalties, so seeking specific legal advice in advance is preferred. For all your tax-related queries please contact Nathaniel Hills via email at nathaniel.hills@devrylaw.ca or call 416-446-5841. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please contact a lawyer. Each case is unique and different and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiAdministration and Technology, Blog, TaxDecember 15, 2021May 27, 2024
The New Substantial Compliance Regime in Ontario On January 1, 2022, Ontario will become a substantial compliance jurisdiction in terms of the formal requirements that must be met in order to make and modify wills. Prior to the new laws taking effect, Ontario was a strict compliance jurisdiction. Under strict compliance, wills are invalid if they do not meet all of the formal requirements of execution, and a judge does not have authority to “validate” a will which does not meet these requirements. On April 19, 2021, Bill 245 – the Accelerating Access to Justice Act received royal assent and added a new Section 21.1(1) to the Succession Law Reform Act (the “SLRA”). The SLRA now allows the Superior Court of Justice to validate a Will that does not meet all the required formalities. However, the court must be satisfied that the document or writing “sets out the testamentary intentions of a deceased”.[1] The SLRA introduces a shift from strict compliance to substantial compliance and applies to deceased persons who died on or after January 1, 2022. Until the substantial compliance regime is tested by the Ontario courts, it is unclear exactly how the new law will operate. Until then, we can look to other Canadian jurisdictions for some guidance. British Columbia became a substantial compliance province in 2014. In Hubschi Estate (Re), the Supreme Court of British Columbia concluded that Mr. Hubschi’s non-compliant Will was valid. Mr. Hubschi wanted to distribute his assets to his foster siblings but did not meet the requirements under the Wills, Estates and Succession Act, SBC 2009, c 13. If the Will was found valid, his assets would be distributed to his foster siblings. However, if the Will was found invalid, his assets would be distributed to his blood relatives with whom he had no relationship. Mr. Hubschi created a Word Document before his death that said “Get a will made out at some point. A 5-way assets split for remaining brother and sisters. Greg, Annette or Trevor as executor”. The court was satisfied on a balance of probabilities that the document was an expression of Mr. Hubschi’s testamentary intentions and that the document contained Mr. Hubschi’s full, final and fixed intentions. The court looked to the following factors when inferring Mr. Hubschi’s intention: Mr. Hubschi was hospitalized prior to his death and could not retain a lawyer to incorporate his testamentary intentions in a Will;he had a close relationship with his foster siblings; andhe reviewed the document on the same day of his death. As evidenced by Mr. Hubschi’s case, the new law provides flexibility and can improve access to justice. However, this change in legislation will also inevitably cause uncertainty. In theory, it could result in voice notes, text messages, and sticky notes on an existing will, being admitted as valid testamentary documents. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please contact a lawyer. Each case is unique and different and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” [1] Accelerating Access to Justice Act, SO 2021, c 4, s 21.1(1). By Fauzan SiddiquiBlog, Wills and EstatesDecember 14, 2021December 14, 2021
“No Mulligans”- Challenges Faced By Insurers Requesting Multiple Medical Examinations In Personal Injury Cases Where the physical or mental condition of a party to a proceeding is at issue, a medical examination may be granted by a court of competent jurisdiction. This examination is generally regarded as a defendant’s right in personal injury cases. However, there are a number of considerations which affect the availability of multiple examinations for any given case. Where multiple examinations are requested, the primary consideration will be fairness, and it will be critical to establishing the necessary evidentiary basis supporting the defendant’s argument that fairness requires a second or further examination. Notably, a recent decision of Justice Nicholson of the Ontario Superior Court[1] has highlighted the conflicting considerations applicable to this right and cautioned legal practitioners against seeking “a second kick at the can.” General Rule: One Examination per Specialty per Defendant Typically, in a personal injury matter, an examination will be permitted for each specialty applicable to the plaintiff’s injuries. For example, an orthopaedic examination is appropriate where there are orthopaedic injuries; a psychiatric examination is appropriate where there are psychiatric complaints. Examinations by other specialists are appropriate where there are complaints within the area of expertise of those experts. The defendant’s right to a medical examination of the plaintiff in a personal injury matter arises under section 105 (2) of the Courts of Justice Act:[2] “where the physical or mental condition of a party … is in question, the court … may order the party to undergo a physical or mental examination by one or more health practitioners.” “Health practitioner” is defined as a person licenced to practice medicine, dentistry, or psychology. While the language of the statute is discretionary (i.e., “may order”), a first medical examination has been generally established by the courts as a right. Beyond the first exam, section 105 (4) of the Act permits “further physical or mental examinations.” The procedure is set out in Rule 33 of the Rules of Civil Procedure. Specifically, the order for the examination “shall name the health practitioner or practitioners by whom the examination is to be conducted.”[3] Similarly, Rule 33.02 (2) empowers the court to order a “second examination or further examinations.” Where there are two or more defendants, each defendant is entitled to a separate defence medical examination of the plaintiff by their own experts.[4] “Overlapping” Examinations A court will typically not permit multiple “overlapping” examinations to assess the same type of injury. For example, examinations by an orthopaedic specialist and by a physiatrist regarding the same orthopaedic injuries or an examination by a psychologist and a psychiatrist with respect to the same psychiatric complaints would not generally be permitted. However, grey areas arise where there are injuries or complaints that are partially within the expertise of one specialty and partially within the expertise of another. For example, where a plaintiff claims to have suffered a traumatic brain injury (TBI) as well as psychiatric complaints following an accident, an examination by a neuropsychologist with respect to the TBI complaints might be appropriate and an examination by a psychiatrist with respect to the psychiatric complaints might also be appropriate. The court will look at the degree of overlap between the complaints and may restrict the examination to either a neuropsychologist or a psychiatrist. In one case where examinations had been conducted by a psychiatrist and a neurologist, the court refused to order further examinations with a neuropsychologist, an orthopaedic surgeon, and a second psychiatrist.[5] In another example, an examination by a psychiatrist was refused where an examination had been conducted by a psychologist, on the basis that there was an inadequate evidentiary basis for the psychiatric examination and the examination could delay the trial.[6] In determining whether a further or “overlapping” examination will be ordered, the court considers whether the defendant will be prejudiced if no examination is permitted, and this will be weighed against any risk of prejudice to the plaintiff.[7] A key factor in determining prejudice is any possible delay in the trial. The decision will be based upon the evidentiary record, and the defendant has the onus to provide evidence supporting the need for a second or further examination and addressing the issues of fairness and prejudice.[8] Examinations by Accident Benefits Insurers A defendant in a tort action will be entitled to conduct defence medical examinations notwithstanding that the plaintiff may have been examined by the defendant’s Statutory Accident Benefits Schedule (SABS) insurer where the initial examination did not address all the issues and there was no abuse of process.[9] An examination under an insurance contract is separate and distinct from a medical examination under section 105. An examination under contract prior to litigation commencing does not pre-empt the defendant’s right to an examination under section 105.[10] The Test for Fairness (Bonello) The applicable test for further examinations was addressed by Justice Brown in Bonello v Taylor.[11] Justice Brown stated that the overriding consideration was trial fairness. In brief, the factors are: the assessment would be for a legitimate purpose (i.e., not to delay or cause prejudice); the party’s medical condition has changed or there is new information; a report by the defendant is needed to “match” the expert evidence from a specialist’s report from the plaintiff—although this is not automatic; the proposed examination would be necessary as a diagnostic aid, if conducted by a person who is not a health practitioner (e.g., a rehabilitation expert); there is sufficient persuasive evidence to demonstrate the need; evidence of unfairness is also taken into account; and whether the further examination would impose an undue burden on the plaintiff. Read a full summary of the factors in Bonello. When Is Further Examination Denied (Mitsis ) The recent decision of Justice Nicholson in Mitsis v Holy Trinity addressed many of these factors.[12] The plaintiff was pursuing a slip and fall claim and alleged that she suffered injuries including a fractured right shoulder and arm. Following examinations for discovery, the defendant arranged to have the plaintiff examined by a physiatrist (at that point, the plaintiff had not served any experts’ reports). Subsequently, the plaintiff served a report from an orthopaedic surgeon. In response, the defendant sought their own examination by an orthopaedic specialist. The defendant claimed that it would be prejudiced if a defence orthopaedic assessment were not permitted. Justice Nicholson stated that there had been no material change in the plaintiff’s condition and the defendant knew that the plaintiff’s injuries were primarily orthopaedic in nature when it elected to commission a physiatry exam. Justice Nicholson felt that there was no procedural unfairness to holding the defendant to its choice of experts, and denied the request for a defence orthopaedic examination. As an aside, Justice Nicholson commented that perhaps the defendant’s physiatry report was not as favourable as the defendant might have hoped: “One cannot help but be suspicious that the Defendant had hoped for a report more favourable to its position in the litigation from Dr. Perera [the defence physiatrist] and is now seeking a ‘mulligan.’” Conclusion The importance of establishing the necessary evidentiary basis for a second or further medical examination of the plaintiff cannot be overstated. An affidavit from the prospective medical expert setting out why a further examination is necessary is generally preferable to an affidavit based on information and belief from defence counsel’s clerk. The affidavit material must address the factors set out in Bonello. Establishing that fairness favours permitting the examination and that the plaintiff will suffer no undue prejudice will be key. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please contact a lawyer. Each case is unique and different and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” [1] Mitsis v Holy Trinity Greek Orthodox Community of London and Vicinity, 2021 ONSC 5719 [Mitsis]. [2] Courts of Justice Act, RSO 1990, c C.43, as amended. [3] Rules of Civil Procedure, RRO 1990, Reg 194, as amended [emphasis added]. [4] Maniram v Jagmohan, [1988] OJ No 2877. [5] Jones v Spencer, [2005] OJ No 1539. [6] Clarfield v Crown Life Insurance, [2000] OJ No 960. [7] Lawrence v Primmum Insurance Co, 77 CPC (6th) 388; see also Suwary (Litigation Guardian of) v Women’s College Hospital, 2008 CarswellOnt 887. [8] Abergel v Hyundai Auto Canada, [2002] OJ No 4387. [9] Jeyanthiran v Ratnam, [2009] OJ No 469. [10] Paul Revere Life Insurance Co v Sucharov, [1983] 2 SCR 541. [11] Bonello v Taylor, 2010 ONSC 5723. [12] Mitsis, supra note 1. By Fauzan SiddiquiBlog, Insurance Defence, Personal InjuryDecember 14, 2021December 14, 2021