Health and Medical Practitioners Not Liable for Failing to Disclose Unusual Risks to Medical Treatments if a Properly Informed Person Would Have Consented Anyway Warlow v Sadeghi[1] In 2010, Elaine Warlow began experiencing a painful toothache. It was a gum infection—probably due to some impacted food. Dr. Ali Sadeghi, an oral surgeon, recommended the removal of an impacted wisdom tooth where the infection was concentrated. Ms. Warlow consented. During the surgery, Dr. Sadeghi struck a nerve. As a direct consequence, Ms. Warlow was injured and left with chronic pain. Ms. Warlow’s life was devastated. Prior to the surgery, she was in good health, athletic, maintained an active social life and was about to begin a promising new career. Following her injury, her new career was finished before it could start, her earning ability decreased, she stopped exercising, and she became socially isolated. Ms. Warlow brought an action for damages against Dr. Sadeghi. At the Supreme Court of British Columbia, the core issue was whether Dr. Sadeghi properly informed Ms. Warlow about the risks of the procedure to remove the wisdom tooth. Although Dr. Sadeghi warned of the risk that she may experience “pins and needles” or “numbness,” there was no mention of the potential for permanent nerve damage. By this omission, Ms. Warlow’s consent was not informed. However, the trial judge concluded that a reasonable person in Ms. Warlow’s shoes with full knowledge of that risk would have proceeded with the surgery. Consequentially, the action against Dr. Sadeghi was dismissed. The Court of Appeal for British Columbia upheld that dismissal. The importance of health and medical practitioners providing sufficient information for patients to make informed choices about their care is paramount. But, if they fail to do so, they may not face legal liability if a properly informed person would have consented anyway. Background The fundamental first step of any medical treatment is to ensure that the patient consents.[2] Under the Ontario Health Care Consent Act, 1996, unless it is an emergency, no treatment may be performed unless consent is given by a patient who has the capacity to consent.[3] Where the patient lacks capacity, their substitute decision-maker must give the consent. Consent must be voluntary, without misrepresentation, and it must relate to the nature of the proposed treatment.[4] Consent may be either express or implied, and it may be withdrawn at any time.[5] Consent must also be informed. For a patient to be properly informed, they must be advised of the nature and expected benefits of the treatment, but also the material risks and side effects.[6] The properly informed patient would also be advised of alternative courses of action and the possible consequences of not undergoing the treatment. Lastly, the patient must have the opportunity to ask questions, and their questions must be answered. In sum, the patient must be given all of the information “that a reasonable person in the same circumstances would require in order to make a decision.”[7] Practitioners could be liable if they fail to provide this informed consent—even if they were otherwise performing within the appropriate standard of care.[8] Failing to provide the proper information is a distinct cause of action from an action in negligence. The Case of Warlow v Sadeghi In the case against Dr. Sadeghi, the trial judge found that he failed to properly inform Ms. Warlow of the risk that temporary or permanent nerve pain could result from the procedure to extract her wisdom tooth.[9] Dr. Sadeghi testified that he did indeed describe to Ms. Warlow the alternatives, the risks of the treatment, and the risks of not undergoing the treatment—all in a conversation which lasted only a few minutes.[10] In particular, Dr. Sadeghi informed Ms. Warlow that doing nothing could lead to hospitalization or death due if infection were to recur. Dr. Sadeghi conceded that he did not specifically articulate the risk of “permanent nerve pain” or “permanent neuropathic pain.”[11] Although he did state that there was a ~2% chance of injuring a nerve, he described the possible outcome as limited to “pins and needles” or “tingling.”[12] The trial judge described this somewhat benign characterization as quite different from the risk of permanent pain.[13] Dr. Sadeghi made the conscious choice not to inform Ms. Warlow of the risk of permanent pain because he felt that it was very remote. He had never seen any study or encountered a single case of permanent pain from this type of nerve injury.[14] In this respect, the risk was “unusual.” Nonetheless, the court held that Dr. Sadeghi should have disclosed the risk of permanent pain. As he did not, Ms. Warlow’s consent to the treatment was not properly informed. Lacking informed consent, the question then shifted to what would have been decided if Dr. Sadeghi did properly inform his patient. Establishing Liability Under the Modified Objective Test To establish liability for the health or medical practitioner where consent is not informed, the Supreme Court articulated the “modified objective test,” as stated in Reibl v Hughes and affirmed in Arndt v Smith.[15] After the plaintiff proves that a “material, special, or unusual” risk was not disclosed which ought to have been, the plaintiff must prove that a reasonable person in that position would not have agreed to the treatment even if adequately advised of the risks.[16] This next issue is a question asked in two stages, as per the Ontario Court of Appeal decision of Bollman v Soenen.[17] At the first stage, the question is: what would the patient themselves have done? At the second stage, the question is: what would a reasonable person in the shoes of the patient have done? At both stages, the answer must be that informed consent would not have been given in light of the new information. In Ms. Warlow’s case, the trial judge could make no determination as to what she would have done if she was properly informed. Ms. Warlow had the burden to testify as to what she would have done, but she did not.[18] Although she stated that she would not have given consent if she knew that she would “end up like this,” this was not helpful.[19] No one would consent to treatment if they knew they would be worse off. The issue was: if she was aware of the risk, would she have consented? Ultimately, the first stage could not be answered; Ms. Warlow’s informed choice could not be inferred. At the second stage, the trial judge reviewed the relevant circumstances to determine what an adequately informed reasonable person would have done in Ms. Warlow’s position. To answer this question, the trial judge considered how Dr. Sadeghi outlined that extraction of the wisdom tooth was the best option under the circumstances and that it was a common procedure.[20] The trial judge ultimately concluded that a reasonable person in Ms. Warlow’s position would have consented to the treatment even where properly informed of the consequences of nerve injury and the risk of permanent pain.[21] Given the fact that Ms. Warlow’s informed choice could not be inferred and that an adequately informed reasonable person would have consented to the treatment, Dr. Sadeghi was found not liable for any damages to Ms. Warlow. On appeal, the Court of Appeal for British Columbia upheld the lower court’s decision.[22] Conclusion The notion of informed consent is enshrined as critically significant by the legislature and by the judiciary. Absent circumstances of emergency, health and medical practitioners must provide their patients with all of the requisite information necessary for them to make informed choices about medical treatments. This information includes the benefits, risks, side effects, alternatives, and possible consequences of not undergoing the treatment. Where a health or medical practitioner fails to provide information about a risk to their patient which ought to have been disclosed—even if that risk is “unusual”—they may face liability for the damages which may result. However, even if informed consent is not given, practitioners will not face any liability if the properly informed patient and a properly informed reasonable person would have consented to the treatment nonetheless. “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.” Sources [1] Warlow v. Sadeghi, 2021 BCCA 46 (CanLII) [Warlow]. [2] Male v Hopmans et al, 1967 CanLII 146 (ON CA). [3] SO 1996, c 2, Sched A, ss 10, 18(4), 25(1). British Columbia has a similar statutory regime for medical consent; see: Health Care (Consent) And Care Facility (Admission) Act, RSBC 1996, c 181, s 5. [4] Ibid, s 11(1). [5] Ibid, ss 11(4), 14. [6] Ibid, ss 11(2)-(3). [7] Ibid. [8] Watson v Dr Shawn Soon, 2018 ONSC 3809 (CanLII) at paras 81-82. [9] Warlow, supra note 1 at para 3. [10] Ibid at paras 21-22. [11] Ibid at para 23. [12] Ibid at para 20. [13] Ibid at para 25. [14] Ibid at para 23. [15] Reibl v Hughes, 1980 CanLII 23 (SCC) cited by Arndt v Smith, 1997 CanLII 360 (SCC) cited by ibid at para 18. [16] Warlow, supra note 1 at para 33. [17] Bollman v Soenen, 2014 ONCA 36 (CanLII) at para 21. [18] Warlow, supra note 1 at para 39. [19] Ibid at para 38. [20] Ibid at para 41. [21] Ibid at para 27. [22] Ibid at para 42. By Justin DominicBlog, Commercial Litigation, Personal InjuryAugust 4, 2022August 5, 2022
Waksdale Prevails: Ontario Court of Appeal Overturns Enforceability of Illegal Termination Provisions in Rahman In Rahman v Cannon Design Architecture Inc, 2022 ONCA 451, the Ontario Court of Appeal recently overturned a lower court decision which upheld an otherwise illegal termination provision because the employee sought legal advice prior to signing her employment contract. A divergent approach to the one taken in Waksdale v Swegon North America Inc, 2020 ONCA 391. The Waksdale Decision On June 17, 2020, the Ontario Court of Appeal in Waksdale ruled that a contract’s termination provisions must be read as a whole, to the effect that if any aspect of the termination clause is found to contravene the Employment Standards Act, 2000 (“ESA”), the entire clause will be rendered null and void for all purposes, despite the existence of a severability clause. The Case of Rahman Facts Farah Rahman was employed by Cannon Design Architecture Inc. (“CDAI”) as a Senior Architect, Principal and Office Practice Leader for over four years. She was given four weeks of base salary when her employment was terminated, without notice or cause. Prior to the commencement of her employment, Rahman sought independent legal advice and negotiated the terms of her employment agreement, including the termination provisions. With the help of legal counsel, Rahman negotiated “material improvements” to the terms of her severance package under her contract. Rahman signed two employment contracts with distinct termination provisions. The first was an “Offer Letter” asking Ms. Rahman to join CannonDesign, a subsidiary company wholly owned by CDAI, as a “Principal”. The second was an “Officer Agreement” between The Cannon Corporation (a corporate entity separate from CannonDesign and CDAI) and Ms. Rahman, to become Cannon Corporation’s Senior Vice President and Principal Officer. The Offer Letter referred to the Officer Agreement, stating that the latter also formed the basis of her employment. It provided that in the event of a conflict between it and the Officer Agreement, the Offer Letter would govern. After her dismissal, Rahman brought an action for wrongful dismissal. She argued that, in accordance with the decision in Waksdale, the termination provisions of the employment agreement were not enforceable because the “just cause” provision would allow for termination without notice in situations in which the ESA still required notice to terminate an employment contract. The termination provision: “CannonDesign maintains the right to terminate your employment at any time and without notice or payment in lieu thereof if you engage in conduct that constitutes just cause for summary dismissal.” Rahman argued that according to Ontario Regulation 288/01, an employee can be terminated without notice only where they have been “guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer”— a standard Rahman argued was higher than “just cause” at common law. In addition, Rahman argued that the provisions of the initial “Officer’s Agreement” that had been sent to her before the employment agreement violated the ESA. The Officer’s Agreement and the employment agreement contained different termination provisions, and Rahman had not negotiated the Officer’s Agreement’s provisions. Ontario Superior Court of Justice The motion judge found that the contractual provision in the employment agreement which denied entitlements upon termination for just cause did not amount to an attempt to contract out of the Employment Standards Act, 2000 because the employer and employee had equal bargaining power in negotiating the employment agreement. The basis for the motion judge’s decision was that he found Rahman to be “reasonably sophisticated” as she received independent legal advice prior to entering into the contract. The Court found the termination provision to be valid and enforceable. The Court of Appeal On Appeal, the question before the Court was whether the motion judge erred in concluding that the termination provisions of the employment contracts govern the termination of her employment. Justice Gilese reasoned: [24] In my view, the motion judge erred in law when he allowed considerations of Ms. Rahman’s sophistication and access to independent legal advice, coupled with the parties’ subjective intention to not contravene the ESA, to override the plain language in the termination provisions in the Employment Contracts. By allowing subjective considerations to distort and override the wording of those provisions, the motion judge committed an extricable error of law reviewable on a correctness standard: Amberber v. IBM Canada Ltd., 2018 ONCA 571, 424 D.L.R. (4th) 169, at para. 65. It is the wording of a termination provision which determines whether it contravenes the ESA – even compliance with ESA obligations on termination does not have the effect of saving a termination provision that violates the ESA: Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, 134 O.R. (3d) 481, at paras. 43-44. [28] The wilful misconduct standard requires evidence that the employee was “being bad on purpose”: Render v. ThyssenKrupp Elevator (Canada) Limited, 2022 ONCA 310, at para. 79, citing Plester v. Polyone Canada Inc., 2011 ONSC 6068, 2012 C.L.L.C. 210-022, aff’d 2013 ONCA 47, 2013 C.L.L.C. 210-015. For example, in Oosterbosch v. FAG Aerospace Inc., 2011 ONSC 1538, 2011 C.L.L.C. 210-019, the court awarded damages for ESA notice and severance after holding that the employer had just cause to terminate the employee for persistent carelessness that did not meet the wilful misconduct standard. [29] There is nothing in the Operative Just Cause Provision that limits its scope to just cause terminations for wilful misconduct. In its plain wording, the Operative Just Cause Provision gives CannonDesign the right to terminate Ms. Rahman’s employment without notice or payment, for conduct that constitutes just cause alone. That means the Operative Just Clause Provision contravenes the ESA and s. 5 renders it void. Section 5 provides that no employer shall contract out of an employment standard and any such contracting out is void. The Court of Appeal found that the plain wording of the termination provision ran afoul of the ESA and was therefore void and unenforceable. The Court of Appeal ruled that the motion judge erred at law in considering the former employee’s “sophistication and access to independent legal advice” and used those factors, among others, to “override the plain language” in the termination provisions. Key Takeaways When the Rahman decision was released last year, it was found to be a major win in favour of employers. By reversing the decision, the Court of Appeal has upheld the Waksdale decision. It reinforces that termination provisions should be read together, in their plain wording, when assessing their validity and enforceability. The ever-changing legal landscape of employment law in Ontario should encourage employers to have their employment contracts regularly reviewed by a lawyer to ensure they are compliant with statutory requirements for enforceability purposes and to avoid expensive litigation. To incentivize employees to sign the new agreements with updated termination provisions, employers may provide consideration to employees in the form of a signing bonus, salary increase, or other incentives. If you have any questions regarding termination provisions and updating employment contracts, please contact Timothy Gindi at (416) 446-3340 or Timothy.Gindi@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 Owais Hashmi* Sources [1] Rahman v Cannon Design Architecture Inc, 2022 ONCA 451 [2] Waksdale v Swegon North America Inc, 2020 ONCA 391. By Justin DominicBlog, Employment Law, Labour LawJuly 19, 2022
The Duty of Good Faith in Insurance Law The duty of good faith is the guiding principle of insurance litigation. What is the Duty of Good Faith? The duty of good faith is a fundamental principle of the common that parties to a contract must perform their contractual duties honestly and reasonably.[1] In the insurance context, it is an implied obligation that the insurer and insured will deal with claims in good faith.[2] Section 439 of the Insurance Act reiterates this implied principle by stating that “no person shall engage in any unfair or deceptive act or practice.”[3] In summary, the relationship between the insured and insurer is contractual in nature that requires the “utmost good faith” in all dealings between the parties.[4] It is important to underline that the duty of good faith is distinct from a fiduciary duty. Unlike the fiduciary duty, the duty of good faith does not obligate the insurer to “treat the insured’s interests as paramount”, but rather to give as much consideration to the insured’s interests as they do to their own.[5] Who Owes whom this Duty? The duty of good faith is a two-way street. In the majority of cases, it is the insured alleging that the insurer breached their duty of good faith. Case law over the years has strongly stated that the insurer owes the insured a duty of good faith throughout the entire relationship. As emphasized in the Supreme Court case of Fidler v Sun Life Assurance Co. of Canada, the duty of good faith requires the insurer to investigate, assess and decide a claim in a manner that is consistent with good faith practices.[6] Nevertheless, the insured is also obligated to act in good faith. While it is argued that there are many power imbalances favouring the insurer throughout the relationship, the insured also has opportunities to exert the same. For example, in the pre-contractual stage, the insured knows all of the variables that are relevant for the insurer to calculate the risk of the policy. By making misrepresentations or withholding information, the insured may be able to secure a favourable insurance policy. The duty of good faith serves to prevent this by placing a duty on the insured, to be honest, and forthright in disclosing facts that are material to the policy.[7] Scope of the Insurer’s Duty of Good Faith The duty of good faith does not always require the insurer to be correct. As ruled in 702535 Ontario Inc v Non-Marine Underwriters, the mere denial of a claim is not itself a breach of the duty of good faith. [8] As long as the insurer’s decision was based on reasonable interpretations, whether correct or not in the end, then there is no presumption of bad faith. What needs to be examined is if there was any bad faith conduct on the part of the insurer, which must be decided on a case-to-case basis. Insurers are permitted to investigate when skeptical about insured claims, however, they must do so in a manner consistent with good faith. Further investigation into potential claims is permitted as long as the insurer is not willfully blind to substantiate their position and interests.[9] The insurer must also not delay a claim in hopes of achieving an economic advantage or increased bargaining power over the insured. What Constitutes Bad Faith? As stated, what constitutes a breach of the duty of good faith must be decided on a case-to-case basis. However, the following is a non-exhaustive list of actions that courts may determine as acts of bad faith: Denying claims without reason Delaying claims with no justification Failing to investigate a claim Offering substantially less compensation than the claim is worth Misrepresentations Damages for Breach An insurer breaching the duty of good faith can result in major repercussions. Aside from contractual damages, damages defined from the contract itself, insurers could face punitive, aggravated or Fidler damages. Aggravated and punitive damages are supplementary damages that require an independent actionable wrong in order to be claimed. In Whiten v Pilot, the Supreme Court determined that a breach of the duty of good faith constitutes an independent actionable wrong.[10] This independent actionable wrong is not directly related to any breach of contract and is a separate act that warrants its own compensation. Therefore, if an insurer is found to have breached the same, then they may be liable for damages beyond the scope of the contract. Fidler damages are distinct in that they are mental distress damages that arise from a breach of “peace of mind” or any other psychological benefit that would bring mental distress upon breach. These psychological benefits must be within the reasonable contemplation of the parties at the formation of the policy.[11] While rare, if found in breach, these damages can be significant and are in addition to all damages listed above. A lawyer who practices good faith in all their matters is essential for insurance defence. If you are looking for an insurance litigator or have any questions, please contact Charlie Fuhr, lawyer at Devry Smith Frank LLP (‘DSF’), at 416-446-3304 or at Charlie.Fuhr@devrylaw.ca. This blog was co-authored by summer law student Jaimin Panesar. “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] Bhasin v Hrynew, 2014 SCC 71. [2] 702535 Ontario Inc v Non-Marine Underwriters, [2000] CanLII 5684 (ON CA). [3] Insurance Act, R.S.O 1990 c I.8 at section 439. [4] Pucci v The Wawanesa Mutual Insurance Company, 2020 ONCA 265. [5] Usanovic v Penncorp Life Insurance Company, 2017 ONCA 395. [6] Fidler v Sun Life Assurance Co. of Canada, 2006 SCC 30. [7] Supra note 1. [8] Supra note 2. [9] Whiten v Pilot Insurance Co, 2002 SCC 18. [10] Supra note 9. [11] Supra note 6. By Justin DominicBlog, Insurance DefenceJuly 6, 2022July 6, 2022
The Courts Analyze “Material Change” – Again The court (again) explores – What constitutes a material change in the recent Court of Appeal decision, Licata[1]. In order to bring a motion to change before the court, to change a final order, there must be a “change in circumstances”, since the last order (dealing with support) was made.[2] The change in circumstances can be from “any change in the condition, means, needs or other circumstances of either spouse or of any child who is entitled to support”.[3] It is important to know that if you file a motion to change support, you MUST demonstrate that a material change of circumstances was not contemplated by the parties when the existing final order was made. Furthermore, you must show that if such a change had been known, at the time the final order was made, it “would likely have resulted in different terms”.[4] In Licata,[5] the father wanted to stop paying child support for his children, who had reached the age of majority and were enrolled in a post-secondary education program. The Order in existence had addressed the issue of the child being over the age of majority and determined that the child was still a “child of the marriage” as the child could not withdraw from parental control since he was attending university. Who is a “Child of the Marriage”? Some think that a child of the marriage is a child that is under 18. This is not true. A child of the marriage can be a child who reaches the age of majority. According to the Divorce Act definition, a child remains a “child of the marriage” if they are “under [parental] charge but unable, by reason of illness, disability or other cause, to withdraw from their charge or to obtain the necessaries of life”[6]. One way of meeting this onus of remaining under parental control is when a child is enrolled in a higher education.[7] What is a Material Change? The Supreme Court of Canada has set out the test for determining “material change”: a change in the condition, means, needs or circumstances of the child and/or the ability of the parents to meet those needs; the change must materially affect the child; and the change was either not foreseen or could not have been reasonably contemplated by the judge who made the initial order.[8] In Licata[9], the Court of Appeal restated that the starting point for a motion to change the support for the child would be a material change in circumstances that were not anticipated by the parties when the Order in existence was made. The onus of demonstrating a “material change” is on the party bringing the motion to change. In this case, the motion judge started from a position of there being a material change based on – the child reaching the age of majority. The Court of Appeal found that this was an error in principle because the final Order had already determined that the child was over the age of majority when the Order was made. As such, the child reaching the age of majority was not a material change that had occurred after the final Order (and therefore does not create a material change justifying a variation). What is a material change that would qualify for a variation in child support? The courts have determined that they will only consider a material change that is “significant and long-lasting”. A court will exercise caution before changing an existing support order. In Licata[10], this was not a case of initially proving a child remained a “child of the marriage”. This case was a motion to change that would require a change in circumstances in order to justify a new order. As such, the only relevant question for the Court of Appeal to consider was proving a material change in circumstances since the last order and more specifically, whether it was beyond the parties’ contemplation that a child of the marriage would take an extended period of time to complete university studies. Ultimately, the Court of Appeal found that the trial judge had erred in terminating child support stating that “child support should not be terminated until the father can demonstrate that there has been a material change in circumstances not contemplated at the time of the previous Order and that the child is able to withdraw from parental control.” This demonstrates that the first hurdle of a moving party applying for a variation order is whether there is a material change in circumstances. The Court of Appeal further stated that: “A motion to change must be based on the proper evidentiary foundation and an analysis of whether there is a material change in circumstances…” Filing a motion to change without a material change in circumstances will result in not only a case being dismissed but could result in a significant cost award against the moving party. If you are contemplating returning to court to vary/change an existing Order, it is worthwhile to discuss your case with a family lawyer prior to filing a motion to change. If you have more questions related to Family Law, please visit our website or contact Kenna Bromley at Devry Smith Frank LLP (‘DSF’) to discuss any questions regarding your specific family law situation and your options at 249-888-6641 or kenna.bromley@devrylaw.ca. This blog was co-authored by Summer Law Student, Kathleen Judd. “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] Licata v. Shure, 2022 ONCA 270 [2] Divorce Act, s. 17(4) [3] Federal Child Support Guidelines, SOR/97-175, s. 14(b) [4] L.M.P. v. L.S., 2011 SCC 64, [2011] 3 S.C.R. 775, at para. 32, citing Willick v. Willick, 1994 CanLII 28 (SCC), [1994] 3 S.C.R. 670, at p. 688 [5] Supra note 1 [6] Divorce Act, s.15.1(1) [7] W.P.N. v. B.J.N., 2005 BCCA 7, 249 D.L.R. (4th) 352, at para. 18 [8] Gordon v. Goertz, 1996 CanLII 191 (SCC), [1996] 2 S.C.R. 27, at paras. 10-13. [9] Supra, note 1 [10] Ibid By Justin DominicBlog, Family LawJuly 6, 2022
A Guide for Couples Looking for Help after COVID-19 Cancelled their Wedding (Part 1) The pandemic has derailed couples’ wedding plans for the past two years and hundreds of Canadians are now struggling to negotiate with vendors who refuse to refund or pay back deposits, citing their own dire finances resulting from COVID-19. These foiled plans and negotiation talks raise an interesting legal issue: how will the pandemic affect the interpretation of wedding vendor contracts? This is new territory for the courts, and since re-opening a few months ago, the Ontario Small Claims Court has yet to address the issue. This two-part series hopes to provide some guidance for couples who are in this precarious circumstance, and are looking for answers after a “pandemic cancellation.” The main question is whether a “non-refundable” clause or contract can be overturned. The short answer is yes! If a “non-refundable” clause exists, it is still possible for the courts to overrule this clause by relying on the common law doctrine of frustration of contracts or when there is a material adverse change. Frustration of Contracts A party may consider relying on the common law doctrine of Frustration, or otherwise known as “material adverse change”. Pursuant to this doctrine, and as statutorily prescribed by the Frustration of Contracts Act, a court may fully excuse both parties from their obligations where the performance of a contract becomes legally or physically impossible, or the contract is “frustrated” without fault of either party.[1] This can relieve parties from obligations and, in almost all cases, return any monies paid for in advance, such as deposits unearned without services. Based on the concept of “unjust enrichment” and quantum meruit a Latin term meaning “for what it is worth”), where a wedding vendor may have incurred expenses or provided benefits before a frustration of the contract occurs, then the supplier is entitled to keep a portion of the deposit for their services. Unjust enrichment is a legal concept based on the general equitable principle that no person should be allowed to profit at another’s expense without a legal reason for doing so.[2] Exception to Frustration of Contracts – Force Majeure In spite of a frustration of contract, there may be a force majeure clause, which makes a frustration of contract inapplicable. Couples may want to check their contract to ensure that there is no force majeure clause within their contract, which creates an exception to the Act. A force majeure clause is a provision protecting parties from events beyond their control even if those events make it impossible to fulfill the terms of the contract. This includes events such as those that are an “act of God,” war, a pandemic, and so on. The clause must state something to the effect that the contract will survive the pandemic (or other force majeure) and the clause must set out an alternative measure for fulfilling the contract. However, couples may be in luck as the recent amendments to the Consumer Protect Act, 2002 can potentially come into play when a contract clause appears to limit the Frustration of Contracts Act. What to Look Out For in the Future We plan to release a follow-up blog when the Ontario courts have issued decisions regarding wedding cancellation and frustration of contracts. This issue has been addressed in BC, where the “small claims” court in BC (British Columbia’s Civil Resolution Tribunal) denied that government restrictions due to the pandemic have radically changed parties’ original wedding agreements, and ruled that frustration of contracts is inapplicable. The legal decision turned on the judge’s perception of what are the “essential elements” of a wedding contract. Somewhat similar to BC’s ruling, though not related to weddings, the Ontario Superior Court ruled that frustration of contract didn’t apply to standard loan and security agreements (see Bank of Montreal v. 2643612 Ontario Ltd., 2021 ONSC 4401). It did not apply to the debtors in this case because the pandemic did not render the agreement “substantially” different. Seeing as the frustration of contracts is a fact-driven analysis, couples should seek advice from our lawyers at Devry Smith Frank LLP (‘DSF’) if they are faced with a situation involving an event that has been cancelled due to COVID. To further discuss your matter, please contact Graeme R. Oddy at (416)-446-5810 or by email at Graeme.Oddy@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 article was co-authored by Katherine Berze* [1] Frustration of Contracts, R.S.O. 1990, c. F.34, s. 2 (1); 1993, c. 27, Sched. [2] Kerr v. Baranow and Vanasse v. Seguin, 2011 SCC 10 By Justin DominicBlog, Commercial LitigationJuly 4, 2022
Can An Employer Still Enforce a Mandatory Masking Policy? Ontario’s public health laws in response to COVID-19 continue to evolve. DSF has previously discussed the enforceability of mandatory vaccination policies in the workplace. This blog addresses the enforceability of mandatory masking policies introduced by employers now that Ontario law no longer requires masking in most settings. Evolution of the Ontario Mask Mandate On June 11, 2022, the Ontario mandatory masking requirement was lifted in public transit[1] and most health care settings. The province’s masking mandate has been gradually adjusted since the onset of the COVID-19 pandemic, becoming more relaxed as the volume of infections in Ontario has decreased. The significant changes to the mandate enacted on June 11 were perceived by many as the end of the mask mandate. However, individuals are still required to wear a mask in certain circumstances, such as in long-term care and retirement homes. Hospitals, while no longer obligated by the province to require masking, may nonetheless elect to require masks to be worn in their facilities. Indeed, many hospitals, such as Toronto’s University Health Network, have continued to require masking. Masking Policies in the Workplace Similar to hospitals, although not mandatory, private businesses may choose to have a masking policy in effect. Under the Occupational Health and Safety Act (“OHSA”), employers are required to take every precaution reasonable in the circumstances for the protection of a worker. This includes protection from “occupational illnesses”, such as COVID-19. To ensure compliance with the OHSA, it continues to be prudent for employers to have a masking policy. One possibility would be to require employees to wear a mask when walking through the common areas of the workplace but be permitted to remove their masks when working alone in their office. Individuals who wish to continue masking are permitted to do so, even if their employer does not require it. Employees who refuse to comply with their employer’s masking policy may be subjected to discipline. Is Refusal to Abide by an Employer’s Masking Policy Just Cause for Termination? Employers may terminate an employee at any time without cause, as long as they provide the terminated employee with all payments and entitlements in accordance with the Employment Standards Act, 2000, their employment contract and the common law. If an employee can show that they cannot wear a mask for medical or religious reasons, they would be entitled to accommodation under the Ontario Human Rights Code or the Accessibility for Ontarians with Disabilities Act. In these instances, employers would have a duty to accommodate the employee up to the point of undue hardship, with regard to cost and health and safety issues. However, to date, qualifying for such as accommodation has proved to be extremely difficult and this is likely to continue to be the case. In Beaudin v Zale Canada Co. o/a Peoples Jewellers, 2021 AHRC 155, the Human Rights Tribunal of Alberta (“HRTA”) determined that a store’s choice to refuse service to a customer who refused to comply with its masking policy, even though at the time there was no public health requirement to wear a mask, did not amount to discrimination. In this instance, it was not disputed that the patron had a disability which prevented him from wearing a mask, but because the store offered alternatives such as shopping online (with free delivery) and curbside pick-up, and since the employer had good faith and legitimate health and safety reasons for introducing the policy, the HRTA dismissed the complaint. There are other cases in which human rights tribunals have decided against individuals who refused to follow the mask policies of private businesses.[2] In each of these cases, the tribunals concluded that the complainant was not entitled to an exemption from wearing a mask under the applicable human rights legislation. Employers may consider providing alternatives, such as permitting employees to work remotely to avoid human rights complaints about the enforcement of a masking policy. However, as the British Columbia Human Rights Tribunal concluded in The Customer v The Store, 2021 BCHRT 39, “[t]he Code does not protect people who refuse to wear a mask as a matter of personal preference”.[3] The above cases suggest that an employer will likely have a strong case if they choose to terminate an employee for cause and wilful misconduct for failure to comply with a masking policy. However, if COVID-19 becomes less of a public health and workplace safety concern and case counts decrease, it will become more difficult for an employer to establish just cause and wilful misconduct when terminating an employee for failure to comply with a masking policy. On the other hand, if a new variant and wave of the virus emerge and case counts increase, the employer’s case for cause and wilful misconduct, if an employee does not comply with its masking policy, will become strong again. Ultimately, masking disputes in the workplace will depend on the facts and circumstances of each case and whether the masking policy is reasonable in the circumstances. If you have any questions about mask mandates 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.” This blog was co-authored by Chloe Carr* [1] With the exception of the TTC’s “Wheel-Trans” Service. [2] See also: Szeles v Costco Wholesale Canada Ltd., 2021 AHRC 154; Rael v Cartwright Jewelers and another, 2021 BCHRT 106; Coelho v Lululemon Athletica Canada Inc., 2021 BCHRT 156; Ratchford v Creatures Pet Store, 2021 BCHRT 157. [3] The Customer v The Store, 2021 BCHRT 39 at para 14. By Justin DominicBlog, COVID-19, Employment LawJuly 1, 2022
What Happens To The Deposit When A Real Estate Transaction Doesn’t Close? It is routine in real estate transactions for a buyer to provide a deposit to the seller as a ‘guarantee’, serving to incentivize the completion of the sale. But what happens to a deposit if the sale falls through, further, what if it is not the buyer’s fault for the sale failing to be completed? In the event, an agreement of purchase and sale is “repudiated”–meaning one party chooses not to fulfill their obligations under the contract–the determination of who is entitled to receive the deposit will usually depend on which party is at fault. If Buyer is at Fault: Deposits typically are provided as security for the buyer’s performance of a contract, thus where a sale has fallen through and the buyer is at fault, the seller is presumptively entitled to keep the deposit as compensation for their lost opportunity. In Azzarello v. Shawqi the Ontario Court of Appeal stated “[it] is well-established by case law that when a purchaser repudiates the agreement and fails to close the transaction, the deposit is forfeited, without proof of any damage suffered by the vendor”.[1] Even if an agreement does not explicitly state what is to happen to the deposit if the transaction fails, the law will presume that the deposit is forfeited by the at-fault buyer unless there is a basis to rebut this presumption. If Seller is at Fault: As is provided in most standard agreements of purchase and sale, where a seller is at fault for a transaction not closing, the buyer will be entitled to have their deposit returned to them absent exceptional circumstances. In Kalis v. Pepper, the Ontario Superior Court was tasked with determining which party in a failed home purchase was entitled to keep the deposit. Ultimately, the deposit was returned to the buyer due to a lack of clear evidence that the buyer has repudiated the agreement.[2] Exceptions to the Presumptive Rule: While the above assumptions apply when determining who gets to keep a deposit in a failed real estate transaction, the default outcome may be overridden in some circumstances. If parties have specifically negotiated an alternative outcome for what will happen to the deposit in the event of a breach, and it is reflected in their agreement of purchase and sale, then courts will often respect that clause. Additionally, the courts have the discretion to displace the presumption that the non-breaching party will be entitled to the deposit. Section 98 of The Courts of Justice Act provides “[a] court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise are considered just”.[3] The court has exercised this discretion in circumstances where the amount of the deposit is disproportionately larger than the harm suffered as a result of the transaction failing, or in instances of unconscionability (where the agreement is the result of substantial unfairness and inequality of bargaining power).[4] For example, in Lucas et al v 1858793 ON the court ruled that the buyer did not have to forfeit its $90,000 deposit on the purchase of a condo unit because that amount was “grossly disproportionate to the harm if any, that the [seller] suffered”.[5] Further, the Application judge felt the seller had only used the breach of the contract (allowing a friend to live in the unit for free – which the seller claimed was leasing the unit without their consent, contrary to their agreement) as an excuse to terminate the agreement before closing and keep the deposit. Determining which party is “at fault” depends on the facts of each transaction and the steps taken by the parties leading up to closing. If you’re having a dispute over a deposit on a purchase, or if you were involved in a failed real estate transaction, please contact Graeme Oddy at (416) 446-5810 or Graeme.Oddy@devrylaw.ca for more information. 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 Chloe Carr* [1] Azzarello v Shawqi, 2019 ONCA 820 at para 45. [2] Kalis v Pepper, 2015 ONSC 453 at paras 13-14. [3] Courts of Justice Act, RSO 1990, c C 43, s98. [4] Uber v Heller, 2020 SCC 16. [5] Lucas et al v 1858793 Ontario Inc. o/a Howard Park et al, 2020 ONSC 964 at para 55. By Justin DominicBlog, Commercial Litigation, Real EstateJune 23, 2022July 19, 2022
The Police Are At Your Door – Now What? When faced with this scenario, do you allow the police to enter your home? Knowing Your Rights Your rights against unreasonable exercises by the police are enshrined in the Charter of Rights and Freedoms[1]. Many cases have explored these rights. Very recently, in R v. Stairs[2], the Supreme Court of Canada further reiterated that when a home is being entered without a warrant (for the purposes of arrest), the surrounding area of the person being arrested is free for the police to not only search but to seize property. The three-part test permits the police to search the person and the surrounding area when: (1) the arrest is lawful; (2) the search is incidental to the arrest, such that there is some reasonable basis for the search connected to the arrest and the search is for a valid law enforcement purpose, including safety, evidence preservation, or evidence discovery; and (3) the nature and extent of the search are reasonable. When a search is conducted at the time of an arrest (search incident to arrest), the search must be (1) conducted when reasonable grounds exist and (2) justified on the premise that the arrest itself was lawful. The Supreme Court of Canada stated: “where the area searched incident to arrest in a home is outside the arrested person’s physical control at the time of the arrest, the common law standard for a search incident to arrest must be modified in two ways that make the standard stricter. First, the police must have reason to suspect that there is a safety risk to the police, the arrested person, or the public which would be addressed by a search”. It is important to understand when a search violates your rights and when it can be justified. This distinction is not easily assessed and you could benefit from legal advice if you are faced with this situation. Many times, a lawyer is not readily available – but consulting one as soon as possible following the fact is imperative! At what point does a search violate your Charter rights? There needs to be a connection between: location – purpose – grounds for arrest. If this connection does not exist, there is potential for a violation of a s. 8 Charter right. In order to enter a dwelling, the police should obtain a warrant – however, sometimes this doesn’t happen. There are valid exceptions that apply to entering a dwelling without a warrant. What do I do when the Police are at my door? It is important to know that the Police do have a right to approach your door and knock – this is where the rights end! Without a warrant – you are not required to open your door, answer any questions, or to allow entry. With a warrant – you are required to allow them entrance. You do not, however, have to assist them or answer any questions. Contact a lawyer at this stage! Exceptions to entry with no warrant A home is viewed as a sanctum of one’s ultimate model of privacy. While this regard is held to a high standard, so too are the expectations of protecting the police and public safety. Evidence obtained in one’s home, without a warrant (outside these exceptions), can be excluded at trial. Exceptions: In order for the Police to enter without a warrant, the “exigent circumstances” exception was articulated in the Court of Appeal decision, R v Rao[3]: “Exigent” indicates in dictionary usage, the “requiring of immediate action or aid; pressing, urgent” or “[a] state of pressing need; a time of extreme necessity; a critical occasion, or one that requires immediate action or remedy; an emergency, extremity, strait”. If the police have entered your home on the pretense of “exigent circumstances” and have obtained any evidence of an offence while in your home, you will want to contact a lawyer! A lawyer will determine if the search was truly “exigent circumstances”. A court may find that the situation did not warrant “exigent circumstances”; if so, any evidence found by the police may be ruled inadmissible. This can result in the charges being dropped. A lawyer can assess the merits of this entry exception! In R v Van Puyenbroek[4]: “[i]f there are no exigent circumstances, it is difficult to imagine why an officer could not proceed to obtain the warrant, outside of a “classic” situation of hot pursuit, in which the officer is literally on the heels of a suspect at the moment the suspect enters a dwelling-house”. Another exception to not having a warrant is the “hot pursuit” doctrine. In this case, the Police are actively pursuing a suspect and follow them into a dwelling. This exception is premised on the ability of the police to continue pursuing a fleeing suspect, even inside a dwelling, in order to arrest them. In R v Macooh[5] the Supreme Court defined “hot pursuit” as: “continuous pursuit conducted with reasonable diligence, so that pursuit and capture along with the commission of the offence may be considered as forming part of a single transaction.” In Feeney[6], the Supreme Court recognized that: “in cases of hot pursuit, the privacy interest [of the citizen] must give way to the interest of society in ensuring adequate police protection.” The Test for “Hot Pursuit” is: there are reasonable and probable grounds to believe the indictable offence has been committed and that the person sought is within the premises and a proper announcement is made prior to entry. If the Police are claiming they entered while in “hot pursuit”, contact a lawyer to ensure the test has been met! While the common perception is that one should cooperate with the Police – this may not always be a good idea! If you have concerns regarding allowing police entry into your home – call our Criminal Law lawyer to weigh in on your particular situation! If you have more questions related to Criminal Law, please visit our website or contact David Schell at Devry Smith Frank LLP to discuss any questions regarding allowing entry into your home and your options at 416 446-5096 or david.schell@devrylaw.ca. This blog was co-authored by Summer Law Student, Kathleen Judd. “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] https://www.justice.gc.ca/eng/csj-sjc/rfc-dlc/ccrf-ccdl/ [2] R. v. Stairs, 2022 SCC 11 (CanLII) [3] R. v. Rao (1984), 1984 CanLII 2184 (ON CA), 46 O.R. (2d) 80 (C.A.) at 102. [4] R. v. Puyenbroek, 2007 ONCA 824 (CanLII) [5] R. v. Macooh, 1993 CanLII 107 (SCC), [1993] 2 SCR 802 [6] R. v. Feeney, 1997 CanLII 342 (SCC), [1997] 2 SCR 13 By Justin DominicBlog, Criminal LawJune 22, 2022June 22, 2022
Parental Mobility Rights – When does Relocation become Parental Child Abduction? RELOCATION When a parent with primary decision-making responsibility for a child decides to relocate after a separation due to a new job, proximity to family, or a relationship, the move will certainly affect the access parent. RECENT AMENDMENTS TO THE DIVORCE ACT The law pertaining to the relocation of a child is found under section 16.9 of the Divorce Act. The new section 16.92(1) requires the court to consider additional factors when deciding whether a relocation should be permitted: The reason for the relocation The impact of the relocation on the child The parenting time and involvement that each person has with the child Whether the person planning the relocation has given the proper notice Whether there is a court order or agreement that says a child is supposed to live in a certain place Whether the proposal to change the parenting arrangement is reasonable, and Whether the people involved have been following their court order or agreement.[1] The exceptions to providing notice prior to moving are 1) if you have permission from the court not to give notice if there is family violence, or 2) if you have a court order saying you do not have to give notice of a move.[2] PARENTAL CHILD ABDUCTION WITHIN CANADA In Canada, the most common form of child abduction is by a parent or guardian. The term parental child abduction refers to when a parent/guardian takes, detains, or conceals a child from the other parent/guardian. It is not uncommon for other family members to assist the abducting parent/guardian with removing or concealing the child[3]. If the child is believed to have been abducted locally, it is important to contact local law enforcement immediately. The matter can often be resolved through the civil courts. As a parent/guardian, you can apply to the family court to have the child returned to you. In Ontario, you will need a parenting order under the Children’s Law Reform Act (“CLRA”). Sections 36 and 37 of the CLRA allow the courts to grant a parental order where the child is unlawfully withheld and to prevent unlawful removal of the child respectfully.[4] If the child has been abducted to a different province, a parenting order or agreement is necessary to have any decision-making responsibility and parenting time arrangements enforced.[5] If you do not have a parenting order or parenting agreement in place, you may need to apply for a parenting order in family court.[6] The order should be obtained in the jurisdiction where the child resided, often referred to as the “habitual residence.” If you are divorced or getting a divorce, but a parenting order has not yet been made, the parenting order needs to be sought under the Divorce Act.[7] If you already have a parenting order, you may be able to have it enforced in another Canadian province or territory. According to section 20(3) of the Divorce Act, the court can make a parenting order have legal effect throughout Canada.[8] If you have an informal agreement in place, it may not be enforceable by the courts and therefore it is recommended that you apply for a parenting order pursuant to section 16.1(1) of the Divorce Act.[9] If you are not getting a divorce, then provincial laws will apply. RELOCATION OR PARENTAL ABDUCTION? – CASES TO CONSIDER Parental Abduction In R v Finck, OJ No 2692, the mother died almost one year after the birth of child and left instructions that her brother should have decision-making responsibility and assume parental responsibilities. The father commenced proceedings to alter the parenting order. Ultimately, parental responsibility was awarded to the mother’s brother, with generous rights of access granted to the father. The father took the child to Nova Scotia and kept the child there until he was apprehended. The child was returned to the mother’s brother and the father was charged with abduction in contravention of the parenting order with intention of depriving the legal guardian of possession of the child. Relocation In Buckner v Card, 2007 ONCJ 51, the parties were the parents of a 22-month-old child. Since the child’s birth, the mother had been his primary caregiver while the father exercised access on a casual basis. Without notice to the father, the mother had moved to Alberta with the child. The court granted the mother sole decision-making responsibility as she had been the child’s primary caregiver. While the mother should not have moved unilaterally, the court found that she wished to move for legitimate reasons and not to frustrate the father’s access. The father’s proposed plan was to continue working full-time and he would delegate his childcare responsibilities to others during his work absence, which was considerable. The mother was better off in Alberta financially and the father’s present accommodations and plans were “sketchy”. It was not in the best interest of the child for the mother to be forced to return to Red Lake, Ontario. The distance (22-hour drive) was deemed not insurmountable for the father to exercise access. The court held it was in the child’s best interests that he remains in his mother’s care in Alberta. In the recent case of Fawcett v Slyfield, 2021 ONCJ 459, the mother moved the children from Woodstock, Ontario to Manitoba following the parties’ separation, over the objections of the father, without a written agreement or court order, and without making arrangements for any meaningful parenting time for him. While the father contested mobility and also decision-making and primary residence, the court ultimately allowed the mother to relocate with the children to Manitoba, pending trial. PENALTIES FOR PARENTAL ABDUCTION Parental abduction is a serious criminal offence and is governed by sections 281 and 282 of the Criminal Code. A parent or guardian convicted of abducting a child can face up to 10 years in prison.[10] However, abduction does not automatically revoke the offender’s right to access. Parental abduction will be considered in determining whether sole decision-making responsibility is appropriate. Canadian courts take a holistic approach in assessing what is in the “best interests of the child”.[11] For more information regarding parenting arrangements, divorce, property division, marriage contracts, or any other family law-related topic, please contact Sanaz Golestani at Devry Smith Frank LLP at (289) 638-3173 or Sanaz.Golestani@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.” *This blog was co-authored by Owais Hashmi* [1] Ibid at s 16.92(1). [2] Ibid. [3] [4] Children’s Law Reform Act, RSO 1990, c C.12, s 36-37. [5] “Child abduction by a family member” (26 October 2021), online: Ontario. [6] Ibid. [7] Ibid. [8] Divorce Act, RSC 1995, c 3 (2nd Supp.), s 20(3). [9] Ibid at s 16.1(1). [10] Criminal Code, RSC 1985, c C-46, s 281(a). [11] “Defining the Best Interests of the Child” (07 January 2015), online: Department of Justice. By Justin DominicBlog, Family LawJune 14, 2022
Court of Appeal Declines to Decide whether IDEL Constitutes Common Law Constructive Dismissal Following the introduction of Infectious Disease Emergency Leave (“IDEL”) in Regulation 228/20 (the “Regulation”) passed May 29, 2020, pursuant to the Employment Standards Act, 2000 (“ESA”), the common law of constructive dismissal has been uncertain as a result of conflicting Ontario court decisions. Background The Regulation states that non-unionized employees who had their hours reduced or eliminated due to COVID-19 are deemed retroactively to be on IDEL. As reflected in section 50.1 of the ESA, a temporary reduction or elimination of an employee’s work hours and/or wages due to COVID-19 does not constitute constructive dismissal during the “COVID-19 period”, which began (retroactively) on March 3, 2020, and is currently set to expire on July 30, 2022. The Regulation has resulted in some confusion, since it prevents employees on IDEL from advancing a claim for constructive dismissal under the ESA, contrary to the well-established principle that an employer does not have an inherent common law right to temporarily lay off an employee – even if the employer complied with the layoff provisions of the ESA (the employer would need to include a lay-off provision in the employment contract). Normally, in order for the common law to be altered by statute, there would need to be express language in the statute to that effect. As stated expressly at section 8(1) of the ESA, “no civil remedy of an employee against his or her employer is affected by this Act”. The Regulation does not contain any language which would modify this section of the ESA, leaving many to wonder how the courts would interpret and apply the Regulation. In earlier blog posts, which can be found here and here, we too at DSF contemplated this uncertainty. Coutinho v Ocular Health Centre Ltd., 2021 ONSC 3076 (CanLII) (“Coutinho”) The question of whether the Regulation prevented an employee from advancing a claim for constructive dismissal at common law was first put before the court in Coutinho. The court ruled that while the Regulation prevented the employee from pursuing damages under the ESA, it did not prevent them from pursuing a claim for constructive dismissal at common law. Thus the court determined that the Regulation did not impact an employee’s common law right to assert that a reduction in hours of work and/or wages constitutes a constructive dismissal, which would entitle the employee to wrongful dismissal damages. For a more thorough discussion of this decision, please see our previous blog post here. Taylor v Hanley Hospitality Inc., 2021 ONSC 3135 (“Taylor”) The “certainty” provided by the court in Coutinho did not last long, however, following the conflicting decision of the Ontario Superior Court in Taylor. In contrast to the decision in Coutinho, the Court determined that an employee on IDEL under the Regulation had no right to claim constructive dismissal claim at common law. Please see our previous blog post here for more details on this decision, and our blog post here to see our first analysis of the conflicting judgments. Taylor v Hanley Hospitality Inc., 2022 ONCA 376 As anticipated, the Superior Court’s decision was appealed due to the inconsistencies between the rulings in Coutinho and Taylor. The Court of Appeal decision was expected to clarify the law in this regard, however, the decision released on May 12, 2022, ultimately did not do so. The Court of Appeal overturned the trial judge’s decision on other, unrelated grounds related to an erroneous granting of a Rule 21 motion under the Rules of Civil Procedure. Thus no determination was made on whether section 50.1 of the ESA overrides an employee’s common law right to assert constructive dismissal. The case and this question of law were sent back to the Superior Court to be re-adjudicated. Current State of the Law: Employers Beware For the time being, Coutinho and Fogelman v IFG, 2021 ONSC 4042 are the governing authorities. In both decisions, the Superior Court has found that section 50.1 and the Regulation do not displace an employee’s common law right to assert constructive dismissal. Although the law is by no means certain, employers should be aware that according to these decisions, many temporary layoffs due to COVID-19 could be considered unlawful and may entitle employees to wrongful dismissal damages. Our employment law team at Devry Smith Frank LLP will continue to monitor the state of the law closely. If you have any questions regarding the IDEL, or any other labour or employment law issues, we would be happy to assist you. “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 Chloe Carr* By Justin DominicBlog, COVID-19, Employment LawJune 14, 2022
