SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: SR 3774-11
DATE: 2012-10-09

RE: DEBORAH STEVENS (Plaintiff)

• and-

SIFTON PROPERTIES LIMITED (Defendant)

BEFORE: JUSTICE I. F. LEACH

COUNSEL:
Anne Marie Frauts, for the Plaintiff
Casey Dockendorff, for the Defendant

HEARD: September 28, 2012

ENDORSEMENT

[ 1 ] The motion before me in this employment litigation is brought pursuant to Rule 20, and requests summary judgment in part. In particular, I am asked to determine whether certain provisions of an employment contract, indicating rights and obligations on termination, are enforceable as a matter of law.

[ 2 ] Although the motion formally was brought by the plaintiff, the defendant agrees that resolution of this particular issue by way of summary judgment would be appropriate and beneficial, in terms of advancing the litigation one way or other.

[ 3 ] At the hearing before me, counsel for both parties also agreed that the focus on this motion should be restricted to whether the relevant provisions on their face are enforceable as a matter of law, (i.e., leaving aside, for the time being, other possible arguments regarding enforceability based on other considerations, such as whether independent legal advice might have been required in the particular factual circumstances of this case).

Background - Facts

[ 4 ] Certain basic facts and matters are not in dispute, and include the following:

• From approximately 1981 to 2007, the plaintiff held various positions of employment with numerous golf clubs in Ontario and one in Quebec.

• In or around May of 2007, the plaintiff commenced employment as an “Associate Golf Professional” at the Riverbend Golf Community (“Riverbend”), which is operated by the defendant in the city of London. Her contract of employment was governed by an Employment letter dated May 25, 2007.

• In December of 2007, the Head Golf Professional at Riverbend left, and the plaintiff was asked by the defendant to assume the role of Acting Head Golf Professional on an interim basis.

• In or about January of 2007, the plaintiff formally assumed the position of Head Golf Professional at Riverbend. Her new employment position was governed by another Employment letter dated January 7, 2008. The letter outlines the terms and conditions of employment for an indefinite period, and includes, inter alia , provision for a base annual salary, additional commissions, and various benefits, (including vacations, employee health benefits and pension plan contributions and benefits). As far as termination is concerned, paragraph 13 of the letter reads as follows:

13. With respect to termination of employment, the following terms and conditions will apply:

(a) The Corporation may terminate your employment for what it considers to be just cause without notice or payment in lieu of notice;

(b) The Corporation may terminate your employment without cause at any time by providing you with notice or payment in lieu of notice, and/or severance pay, in accordance with the Employment Standards Act of Ontario .

(c) You agree to accept the notice or payment in lieu of notice and/or severance pay referenced in paragraph 13(b) herein, in satisfaction of all claims and demands against the Corporation which may arise out of statute or common law with respect to the termination of your employment with the Corporation.

• The parties agree that paragraph 13 these are the only provisions of the 2008 Employment letter relating to termination, and that they should be read together “as a whole”.

• It is not disputed that the 2008 Employment letter was prepared by the defendant employer, with the assistance of its legal counsel. In that regard, the parties also agree that, if there is any ambiguity in the contract represented by the 2008 Employment letter, the doctrine of contra proferentum applies so as to resolve those ambiguities in favour of the plaintiff employee. (It nevertheless should be emphasized that the defendant denies the plaintiff’s assertion that the contract is in any way ambiguous, especially insofar as the relevant termination provisions are concerned.)

• On October 19, 2010, the defendant terminated the plaintiff’s employment without cause, effective immediately. At the time of termination, the defendant indicated that it would pay the plaintiff a sum representing three weeks’ pay in lieu of notice, and indicated in a confirming letter that it was doing so “in accordance with Article 13(b) of [the] employment of January 7, 2008”. The defendant also indicated that it would continue the plaintiff’s group benefits for a period of three weeks, pay her outstanding vacation pay and statutory holiday pay, and a discretionary bonus for the partial year of 2010. There is no dispute that the defendant then followed through on its stated intentions; i.e., that all of these things were done.

General Principles – Termination Notice Requirements

[ 5 ] Both parties acknowledge that the general law governing notice requirements upon employment termination was confirmed by the Supreme Court of Canada’s decision in Machtinger v. HOJ Industries Ltd., 1992 102 (SCC) , [1992] 1 S.C.R. 986, (“ Machtinger ”).

[ 6 ] The principles outlined and emphasized therein include the following:

• In Canada, it has been established common law since at least 1936 that employment contracts for an indefinite period require the employer, absent express contractual language to the contrary, to give reasonable notice of an intention to terminate the contract if the dismissal is without cause. ( Machtinger , at para.19.)

• The common law principle of termination only on reasonable notice is a presumption, rebuttable if the contract of employment clearly specifies some other period of notice, whether expressly or impliedly. ( Machtinger , at para.20.)

• If applicable employment standards legislation sets minimum requirements, but also provides that contracts specifying greater “benefits” to an employee prevail over the minimum standards in the legislation, the common law presumption of reasonable notice is such a “benefit”, (if the period of notice required by the presumption is greater than that required by the legislation), and the minimum notice periods set out in such legislation therefore do not by themselves operate to displace the presumption at common law of reasonable notice. ( Machtinger , at para.25.)

• While that presumption may be displaced by sufficiently clear contract language specifying notice periods shorter than that required by common law, applicable employment standards legislation prohibiting any attempt to contract out of the minimum standards required by the legislation renders any contract provisions providing for lesser benefits than the minimum standards “null and void”. ( Machtinger , at paragraphs 23-26 .)

• If a clause in an employment contract is rendered “null and void” by operation of employment standards legislation, then it is null and void for all purposes, and cannot be used as evidence of the parties’ intention to displace the common law presumption of reasonable notice. “If the intention of the parties is to make an unlawful contract, no lawful contractual term can be derived from their intention.” ( Machtinger , at paragraphs 27-29 .)

• Work is fundamental to an individual’s identity, and the manner in which employment can be terminated is equally important. The “harm” targeted by remedial employment standards legislation is that individual employees, and in particular non-unionized employees, are often in an unequal bargaining position in relation to their employers. Courts therefore should adopt a purposive approach to such legislation, favouring interpretations that encourage employers to comply with minimum requirements of the legislation, and so extend its protections to as many employees as possible. ( Machtinger , at paragraphs 30-32 .)

• Consistent with such goals, if an employment contract fails to comply with the minimum requirements of employment standards legislation, the appropriate sanction or disposition is a finding that the presumption of reasonable notice has not been rebutted, (i.e., rather than an order that an employer minimally comply with the Act). This gives employers an incentive to ensure that all aspects of employment contracts comply with the legislation, (to avoid the potentially longer notice periods required by common law), and in consequence more employees are likely to receive the benefit of the minimum notice requirements. ( Machtinger , at paragraphs 33-34 .)

• Absent considerations of unconscionability, an employer can readily make contracts with his, her or its employees which referentially incorporate the minimum notice periods set out in employment standards legislation, or otherwise take into account later changes to such legislation or to the employees’ notice entitlement under the legislation. Such contractual provisions are sufficient to displace the presumption that the contract is terminable without cause only on reasonable notice.

Dispute

[ 7 ] The parties before me disagree on whether the termination provisions of the employment contract in this case, (as contained in paragraph 13 of the 2008 employment letter), are sufficient and enforceable so as to displace the common law presumption of reasonable notice.

[ 8 ] In that regard, the plaintiff advances three principal arguments, all of which are disputed by the defendant:

i. The plaintiff submits that the contract’s termination provisions are meaningless and therefore a nullity, insofar as they allegedly reference specific employment standards legislation no longer in existence at the time of the employment contract in January of 2008.

ii. In the alternative, even if the termination provisions sufficiently reference current employment standards legislation, the plaintiff argues they still lack the clarity required to displace the common law presumption of reasonable notice. In particular, the plaintiff says it is not enough to incorporate (by reference) the legislated minimum period of notice without further specification that this also is the maximum notice required.

iii. In the further alternative, the plaintiff argues that the contract’s termination provisions violate the applicable employment standards legislation insofar as they effectively purport to deny the plaintiff entitlement to benefits required during the notice period, thereby rendering the provisions a nullity for all purposes, including evidence of intention to displace the common law presumption of notice.

[ 9 ] These alternative arguments are addressed below, after brief consideration of whether it is appropriate to resolve such issues by way of summary judgment.

Availability of Summary Judgment Procedure

[ 10 ] The summary judgment motion in this case formally has been brought by the plaintiff, but as noted above, the responding defendant agrees that the issues raised therein are amenable to resolution by summary judgment. In the circumstances, the relevant provisions of Rule 20.01 and 20.04 of the Rules of Civil Procedure read as follows:

20.01 (1) A plaintiff may, after the defendant has delivered a statement of defence or served a notice of motion, move with supporting affidavit material or other evidence for summary judgment on all or part of the claim in the statement of claim.

20.04 (2) The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim ... ; or

(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.

[Emphasis added.]

[ 11 ] In this case, I note that the plaintiff’s statement of claim expressly includes the following allegations in paragraphs 9 and 12, which read in part as follows:

9. ... The Plaintiff further states that Paragraph 13 of the Contract is unenforceable, and therefore does not rebut the presumption of reasonable notice at common law, for the following reasons: the language is ambiguous and unclear by failing to create a ceiling for payment(s) in lieu of notice; the language offends the Employment Standards Act, 2000 , S.O. 2000, c.41, as amended, which uses the phrase “at least”, thereby permitting common law reasonable notice; ...

10. As the Plaintiff’s termination was without cause, she is entitled to reasonable notice in accordance with common law principles. ...

[ 12 ] Having regard to the parties’ agreement regarding application of Rule 20 to address the particular issues raised by the motion, the matter is amenable to summary judgment subject to the court’s residual ability to determine whether or not the test for granting summary judgment has been met.

[ 13 ] In that regard, I note in particular the comments of our Court of Appeal in Combined Air Mechanical Services Inc. v. Flesch (2011), 2011 ONCA 764 , 108 O.R. (3d) 1 (C.A.), at paragraphs 40-41 :

Speaking generally, and without attempting to be exhaustive, there are three types of cases that are amenable to summary judgment. The first two types of cases also existed under the former Rule 20, while the third class of case was added by the amended rule.

The first type of case is where the parties agree that it is appropriate to determine an action by way of a motion for summary judgment. Rule 20.04(2)(b) permits the parties to jointly move for summary judgment where they agree “to have all or part of the claim determined by summary judgment and the court is satisfied that it is appropriate to grant summary judgment”. We note, however, that the latter wording – “the court is satisfied” – affirms that the court maintains its discretion to refuse summary judgment where the test for summary judgment is not met, notwithstanding the agreement of the parties .

[Emphasis added.]

[ 14 ] In this case, I am satisfied that the particular issues raised by the motion are amenable to summary judgment. They require what are essentially determinations of law, as applied to the wording of a particular employment contract, without regard to much if any extrinsic evidence. Disposition of the issues does not and should not require a trial.

Argument based on ESA reference

[ 15 ] As noted above, the 2008 employment letter permits termination of employment without cause at any time by the employer providing “notice or payment in lieu of notice, and/or severance pay, in accordance with the Employment Standards Act of Ontario ”.

[ 16 ] Relying on the doctrine of contra proferentum , the plaintiff argues:

a. that the above words should be read as a reference to the Employment Standards Act , R.S.O. 1990, c.E.14, which was repealed on September 4, 2001, (rather than the Employment Standards Act, 2000 , S.O. 2000, c.41, as amended, which was in force when the parties entered into the contract before me, and currently governs employment standards in Ontario);

b. that the contract reference to that repealed legislation did not contain language dealing with amendments to the statute, or any successor statute;

c. that the provision accordingly is meaningless, insofar as it incorporates, by reference, a benchmark for determining notice and termination/severance pay which did not exist at the time; and

d. that the resulting absence of any effective incorporation of legislated notice requirements by reference means there is nothing to displace the presumption that the plaintiff is entitled to notice as required by common law.

[ 17 ] I reject this argument.

[ 18 ] As emphasized by the Supreme Court of Canada in Consolidated-Bathurst Export v. Mutual Boiler Ins. (1979), 1979 10 (SCC) , 112 D.L.R. (3d) 49 (S.C.C.), at pp.57-58, “step one in the interpretative process” requires that effect be given to the intention of the parties, to be gathered from the words they have used, with application of the contra proferentum doctrine being “step two” only in cases of real doubt, once a real ambiguity has been established:

Step two is the application, when ambiguity is found , of the contra proferentum doctrine. This doctrine finds much expression in our law, and one example which may be referred to is found in Cheshire and Fifoot’s Law of Contract , 9 th ed. (1976), at pp. 152-153:

If there is any doubt as to the meaning and scope of the excluding or limiting term, the ambiguity will be resolved against the party who has inserted it and who is now relying on it. ...

As has already been stated, this is, of course, the second phase of interpretation of such a contract. Cartwright J., as he then was, stated in Stevenson v. Reliance Petroleum Ltd . ... (1956), 5. D.L.R. (2d) 673 (S.C.C.) ... :

The rule expressed in the maxim, verba fortius accipiuntur contra proferentum , was pressed upon us in argument, but resort is to be had to this rule only when all other rules of construction fail to enable the Court of construction to ascertain the meaning of the document .

Lindley L.J. put it this way:

In a case on the line , in a case of real doubt , the policy ought to be construed most strongly against the insurers; they frame the policy and insert the exceptions. But this principle ought only to be applied for the purpose of removing a doubt, not for the purpose of creating a doubt, or magnifying an ambiguity, when the circumstances of the case raise no real difficulty .

Cornish v. Accident Ins. Co. (1889), 23 Q.B. 453 (C.A.) at p.456.

Even apart from the doctrine of contra proferentum as it may be applied in the construction of contracts, the normal rules of construction lead a Court to search for an interpretation which, from the whole of the contract, would appear to promote or advance the true intent of the parties at the time of entry into the contract .

[Emphasis added.]

[ 19 ] In my opinion, there is no “real doubt” or ambiguity, in the sense required for application of the contra proferentum doctrine, as to what was intended in this case by reference in the 2008 letter of employment to “the Employment Standards Act of Ontario ”.

[ 20 ] In particular, I do not think it seriously or sensibly can be suggested that either of the parties, entering into a contract of employment in 2008, of indefinite duration, really intended by the omission of a comma and “2000” to make reference to legislation that had been repealed and replaced over six years earlier.

[ 21 ] Applying the “normal rules of construction” and looking at the “whole of the contract” to advance the true intent of the parties “at the time of entry into the contract”, (as per the Supreme Court of Canada’s admonition in Consolidated-Bathhurst ), it is clear to me that the parties, in January of 2008, were not looking to the past. Rather, they quite obviously were looking to the future, and intending to outline their prospective rights and obligations.

[ 22 ] In addition to the consistent use of future tense verbiage throughout the letter, (e.g., specifying how salary “ will be reviewed annually”, how the plaintiff “ will receive ” commissions, the benefits for which the plaintiff “ will be eligible”, what the plaintiff’s duties and responsibilities “ will be ”, etc.), the contract repeatedly makes reference to matters that will become relevant only after passage of time, (e.g., entitlement to vacations after specified years of service, entitlement to health benefits after passage of a waiting period, obligations to contribute to a pension plan following completion of one year’s service, etc.), and the contract actually concludes with an express reference (albeit a cliched reference) to the employer looking forward.

[ 23 ] In my opinion, the only sensible interpretation is that the reference to “the Employment Standards Act of Ontario ” in paragraph 13 of the 2008 letter of employment was an intended reference to the province’s employment standards legislation that would be applicable into the future, during the parties’ contractual relationship, however long that lasted. In that regard, the relevant wording accordingly was a descriptive reference, rather than an attempt at specific citation of particular legislation.

[ 24 ] That conclusion is reinforced by a review of authorities in this area, which do not seem to require great exactitude in references to employment standards legislation sufficient to displace the presumption of notice requirements afforded by common law, and ensure legality.

[ 25 ] For example, in MacDonald v. ADGA Systems International Ltd., 1999 3044 (ON CA) , [1999] O.J. No. 146 (C.A.), leave to appeal to the Supreme Court of Canada refused, [1999] S.C.C.A. No. 147, the Court of Appeal was presented with a situation where the relevant contract of employment permitted the employer to terminate employment “at any time by giving not less than one (1) month’s prior written notice”. In upholding the legality of the termination provisions, and finding that the provisions justified the employer’s giving of notice in accordance with employment standards legislation rather than the common law presumption, Abella J.A., (as she then was), speaking for the unanimous panel, said this at paragraph 23:

It would no doubt have been linguistically preferable had the termination provisions in MacDonald’s contract contained words after the term of notice such as “in accordance with the relevant provisions of the Employment Standards Act ”. But while this layer of specificity might have enhanced the clarity of the parties’ intentions, its absence does not detract from the provision’s legality’.

[Emphasis added.]

[ 26 ] The Court of Appeal therefore clearly did not require use of a specific and precisely accurate legislative citation for sufficient demonstration of the parties’ intention to displace the requirement of termination notice in accordance with the common law presumption.

[ 27 ] More recently, in King v. Weber Manufacturing Technology Inc., 2008 53124 (ON SC) , [2008] O.J. No. 4033 (S.C.J.), the relevant contract of employment, embodied in a letter of employment dated April 19, 2007, contained termination provisions referring to “The Employment Standards Act of Ontario”, and the court had no difficulty finding that the employer was entitled to terminate employment by giving at least the notice to which the employee was entitled under the Employment Standards Act, 2000 .

[ 28 ] In relation to the letter of employment now before me, I similarly have no difficulty finding that the reference to “the Employment Standards Act of Ontario ” was intended to be, at the very least, a reference to the Employment Standards Act, 2000 , supra , in force at the time of the parties’ agreement.

[ 29 ] Consideration of the plaintiff’s further arguments therefore is required.

Argument based on failure to specify notice “ceiling”

[ 30 ] As noted above, the Supreme Court of Canada indicated in Machtinger that the presumption of notice required by common law can be rebutted only if the employment contract “clearly specifies some other period of notice”; see Machtinger at para.20.

[ 31 ] Our Court of Appeal subsequently has emphasized the “high level of clarity” required in that regard. See Ceccol v. Ontario Gymnastic Federation, 2001 8589 (ON CA) , at para.45.

[ 32 ] The plaintiff argues that this exacting standard of clarity is not met if an employment contract fails to specify precisely what notice or pay in lieu of notice is required. In particular, the plaintiff argues that an employment contract’s mere indication of minimum notice to be provided, (either expressly or by reference to legislation that speaks only to minimum required notice), is not necessarily inconsistent with an intention to provide more generous notice in accordance with the common law, and therefore should not be regarded as sufficient to rebut the presumption.

[ 33 ] In essence, the plaintiff argues that employment contract clarity sufficient to rebut the common law presumption requires not just the express or implicit adoption of a specified notice “floor”, but an indication that the floor also represents a “ceiling”.

[ 34 ] The plaintiff’s argument finds support in decisions rendered elsewhere in Canada, such as McLennan v. Apollo Forest Products Ltd. , 1993 2093 (B.C.S.C.), at paragraphs 9-11 .

[ 35 ] Although McLellan was decided in 1993, its reasoning was endorsed and followed more recently in Cybulski v. Adecco Employment Services Ltd. , [2011] N.B.J. No. 266 (Q.B.) .

[ 36 ] The McLellan and Cybulski decisions therefore do suggest that, where an employment contract incorporates provisions of employment standards legislation by reference, that will not suffice to provide the clarity of intention required to displace the presumption that reasonable notice in accordance with common law is required, if the legislation in question merely establishes minimum notice requirements without going further to specify precisely what notice is required; e.g., by indicating that the legislative requirements are not only a floor but a ceiling.

[ 37 ] Standing alone, the decisions might favour adoption of a similar approach here in Ontario, and in this case in particular.

[ 38 ] However, they do not stand alone.

[ 39 ] In that regard, the plaintiff fairly acknowledges that the approach in McLellan was expressly considered and rejected in Wood v. Industrial Accident Prevention Association , [2000] O.J. No. 2711 (S.C.J.) , which found a provision requiring termination “in accordance with the Employment Standards Act of Ontario ” sufficient to displace the presumption of notice in accordance with common law requirements.

[ 40 ] However, the plaintiff submits that the rejection of McLellan in Wood logically and properly flowed from a material difference then existing between the British Columbia and Ontario legislation.

[ 41 ] On its face, the decision in Wood offers some support for the distinction now being suggested by the plaintiff.

[ 42 ] The plaintiff therefore argues that, consistent with the intervening legislative changes in Ontario, the approach in Wood now should be discarded in favour of that applied in McLellan and Cybulski .

[ 43 ] The problem with the plaintiff’s argument is that Justice Leitch did not base her decision in Wood (and her rejection of McLellan ) solely on the difference then existing between the British Columbia and Ontario legislation.

[ 44 ] In the result, Justice Leitch found in Wood , as do I, that our Court of Appeal has held that language in an employment contract merely specifying a minimum notice period will suffice to displace the common law presumption, provided the specified minimum does not conflict with the legislative requirements.

[ 45 ] Even without Wood , it seems to me that the plaintiff is still confronted with the Court of Appeal’s approach and decision in MacDonald .

[ 46 ] In that regard, I see no logical or meaningful distinction between the MacDonald case and the case before me.

[ 47 ] Despite the submissions of the plaintiff, I do not regard the Court of Appeal’s subsequent decision in Ceccol v. The Ontario Gymnastics Federation , supra , (generally emphasizing the “high level of clarity” required of employment contracts rebutting the presumption of reasonable notice at common law), as providing carte blanche sufficient to disregard the Court’s earlier ruling in MacDonald .

[ 48 ] I also note the Court of Appeal’s more recent decision in Clarke v. Insight Components (Canada) Inc., 2008 ONCA 837 , which upheld the enforceability of employment contract provisions permitting termination without cause for any reason “upon the provision of reasonable notice equal to the requirements of the applicable employment or labour standards legislation”.

[ 49 ] In the result, I therefore reject the plaintiff’s argument that contract termination provisions regarding notice will not suffice to displace the common law presumption if they ensure only minimum notice in accordance with legislative requirements, without also specifying that the specified notice “floor” is also the contemplated notice “ceiling”.

[ 50 ] While that conclusion seems mandated by the authorities, it also seems consistent with the policy considerations emphasized by the Supreme Court of Canada in Machtinger .

Argument based on contract denial of benefits

[ 51 ] I therefore turn to the plaintiff’s third and final argument, based on alleged violation of the legislative requirements concerning provision of benefits upon termination.

[ 52 ] In that regard, the relevant provisions of the Employment Standards Act, 2000 , supra , read in part as follows:

5. (1) Subject to subsection (2), no employer or agent of an employer and no employee or agent of an employee shall contract out of or waive an employment standard and any such contracting out or waiver is void . ...

6. No employer shall terminate the employment of an employee who has been continuously employed for three months or more unless the employer,

(a) has given to the employee written notice of termination in accordance with section 57 or 58 and the notice has expired; or

(b) has complied with section 61. ...

57. The notice of termination under section 54 shall be given, ...

(c) at least three weeks before the termination, if the employee’s period of employment is three years or more and fewer than four years; ...

60. (1) During a notice period under section 57 or 58, the employer,

(a) shall not reduce the employee’s wage rate or alter any other term or condition of employment;

(b) shall in each week pay the employee the wages the employee is entitled to receive, which in no case shall be less than his or her regular wages for a regular work week; and

(c) shall continue to make whatever benefit plan contributions would be required to be made in order to maintain the employee’s benefits under the plan until the end of the notice period .

61. (1) An employer may terminate the employment of an employee without notice or with less notice than is required under section 57 or 58 if the employer ,

(a) pays to the employee termination pay in a lump sum equal to the amount the employee would have been entitled to receive under section 60 had notice been given in accordance with that section; and

(b) continues to make whatever benefit plan contributions would be required to be made in order to maintain the benefits to which the employee would have been entitled had he or she continued to be employed during the period of notice that he or she would otherwise have been entitled to received .

[Emphasis added.]

[ 53 ] In this case, as far as the provision of benefits is concerned, the plaintiff essentially argues as follows:

• As noted above, the employment contract included provisions for various benefits, (including vacations, employee health benefits, and pension plan contributions and benefits).

• The termination provisions of the employment contract are contained in paragraph 13 of the relevant letter of employment. As acknowledged by both parties, they are to be read as a unified whole.

• On their face, the termination provisions in paragraph 13 purport to give the employer the right to terminate the plaintiff’s employment without cause at any time “by providing ... notice or payment in lieu of notice, and/or severance pay , in accordance with the Employment Standards Act of Ontario ”, and further specifies that such “notice or payment in lieu of notice and/or severance pay ” must be accepted by the plaintiff “in satisfaction of all claims and demands against the [employer] which may arise out of statute or common law with respect to the termination of [the plaintiff’s] employment”. [Emphasis added.]

• Paragraph 13 therefore contemplates termination of the plaintiff’s employment and complete preclusion of any further claims or entitlements by mere payment in lieu of notice and/or severance pay; i.e., without any continuation of benefits until the end of the relevant notice period, and without the plaintiff being able to advance any possible claims in that regard.

• Paragraph 13 therefore violates s.61(1) of the Employments Standards Act, 2000 , supra , which in turn renders the entire paragraph null and void pursuant to s.5(1) of the Act.

• Pursuant to the Supreme Court of Canada’s directive in Machtinger , if the paragraph is null and void, “then it is null and void for all purposes, and cannot be used as evidence of the parties’ intention”. In particular, if paragraph 13 falls away, the employment contract’s failure to comply with the minimum statutory requirements means the presumption of reasonable notice at common law will not have been rebutted, such that the plaintiff is entitled to reasonable notice in accordance with the requirements of common law. (See Machtinger , at paragraphs 28-29, and 32-34 .)

[ 54 ] I think this last argument of the plaintiff has merit.

[ 55 ] The court was confronted with a similar situation in Wright v. The Young and Rubicam Group of Companies (Wunderman), 2011 ONSC 4720 .

[ 56 ] Notwithstanding the defendant employer’s voluntary provision of benefits, Justice Low held that the contract termination provisions in the Wright case violated the provisions of the legislation, thereby rendering them null and void, such that the plaintiff was entitled to the provision of reasonable notice required by common law:

(The quoted passage from Wright appears here verbatim in the original decision.)

[ 57 ] I see no meaningful basis on which to differentiate the circumstances in Wright from those in the case before me, and agree with the reasoning in Wright .

[ 58 ] Counsel for the defendant employer sought to distinguish Wright by suggesting that contracts of employment cannot reasonably be expected to address all matters explicitly, and that the particular termination provisions in paragraph 13 should be read as an intention to address only the provision of notice or pay in lieu of notice, leaving benefit continuation in accordance with the legislative requirements unaffected.

[ 59 ] I do not think that is a reasonable reading of the paragraph 13 provisions.

[ 60 ] Even if I accepted the defendant’s submission that an alternate reasonable reading of paragraph 13 was possible, at best that would give rise to an ambiguity requiring resolution in favour of the plaintiff, pursuant to application of the contra proferentum doctrine.

[ 61 ] Although the defendant sought to draw favourable comparisons between paragraph 13 and termination provisions upheld in other cases, I note that the wording of provisions in those other cases often differs in material ways.

[ 62 ] For example, while paragraph 13 purports to permit satisfaction of all possible claims and demands in exchange for the specified quid pro quo of pay in lieu of notice and/or severance pay, termination provisions in other cases purport to preclude further claims against the employer upon the receipt of what is described more broadly as “ entitlements in accordance with [the] legislation”; see Clarke v. Insight Components (Canada) Inc. , supra , at para.1.

[ 63 ] In other cases, the termination provisions requiring notice in accordance with the legislation are not coupled with additional provisions purporting to make the provision of such notice (or pay in lieu thereof) the sole remedy or entitlement that an employee will have upon termination; see Lloyd v. Oracle Corp., Canada , [2004] O.J. No. 1806 (S.C.J.) , at para.4.

[ 64 ] The failing of the particular termination provisions in the case before me is that they attempt to “draw the circle” of employee rights and entitlements on termination with an all-encompassing specificity that results in the effective and impermissible exclusion and denial of the benefit continuation rights mandated by the legislation.

[ 65 ] In particular, employers should be provided with incentive to ensure that their employment contracts comply with all aspects of the employment standards legislation, including provision of adequate notice (or pay in lieu thereof) and mandated benefit continuation.

[ 66 ] I appreciate that the provisions of paragraph 13 more closely resemble the termination provisions upheld in King v. Weber Manufacturing Technology Inc. , supra , but note that the issue of benefit continuation apparently was never raised or considered in that case.

[ 67 ] The last argument of the plaintiff therefore should be accepted. The provisions of paragraph 13 are contrary to law, (insofar as they purport to deny the plaintiff her additional rights to continuation of benefits), and accordingly must be regarded as null and void for all purposes. In the result, there is nothing to rebut the presumption that the plaintiff is entitled to reasonable notice in accordance with the requirements of common law.

Conclusion

[ 68 ] For the reasons set out above, an order therefore should go directing summary judgment in part, in relation to:

a. paragraph 9 of the plaintiff’s statement of claim, insofar as it alleges that paragraph 13 of the employment contract is unenforceable, and therefore does not rebut the presumption of reasonable notice at common law; and

b. paragraph 12 of the plaintiff’s statement of claim, insofar as it alleges that, as the plaintiff’s termination was without cause, she is entitled to reasonable notice in accordance with common law principles.

Costs

[ 69 ] Because my decision was reserved, the parties were unable to make any submissions regarding costs of the plaintiff’s motion. If the parties are unable to reach an agreement on costs in that regard:

a. The plaintiff may serve and file written cost submissions, not to exceed four pages in length, (not including any bill of costs), within two weeks of the release of this decision, failing which there shall be no costs awarded in relation to her motion.

b. Within two weeks of receiving any cost submissions delivered by the plaintiff, the defendant then may serve and file written cost submissions, also not to exceed four pages in length.

c. Within one week of receiving the defendant’s written cost submissions, if any, the plaintiff then may serve and file cost submissions in reply, not exceeding two pages in length.

“ Justice I. F. Leach”

Justice I. F. Leach

Date: October 9, 2012