COURT FILE NO.: CV-13-495082
DATE: 2019-07-30
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
VINAY NAGPAL
Plaintiff
– and –
IBM CANADA LTD.
Defendant
Michael N. Freeman and Andrew Chudnovsky, for the Plaintiff
Jennifer Dolman and Aislinn E. Reid, for the Defendant
HEARD: June 10, 2019
SCHABAS J.
REASONS FOR JUDGMENT
Introduction
[1] This is a motion for summary judgment brought by the defendant, IBM Canada Ltd., in an action for wrongful dismissal. In 2013, the plaintiff, who had been employed by IBM for over two decades, became ill and took a leave of absence, during which he received short term disability (STD) benefits under a company policy. After a few months, the administrator of the disability plan denied the plaintiff further benefits. Although the plaintiff disagreed with the decision, he did not appeal it for reasons which will be explained below, but also did not return to work. IBM took the position that he must return to work or, pursuant to its STD policy, he would be deemed to have resigned. The plaintiff refused to return to work and retained a lawyer who stated, emphatically, that the plaintiff did not wish to resign and intended to return to work when he was able to do so. Nevertheless, IBM followed its policy, the plaintiff’s employment was terminated, and he sued for wrongful dismissal.
[2] IBM now seeks summary judgment dismissing the action, arguing that the plaintiff resigned or abandoned his employment or, in the alternative, that the plaintiff’s illness and refusal or inability to return to work frustrated the contract of employment.
[3] For the reasons that follow, I find that the plaintiff did not resign or abandon his employment, that the contract was not frustrated, and I dismiss the defendant’s motion. Instead, I grant judgment for the plaintiff and find that he was wrongfully dismissed. Subject to the Court’s scheduling needs, I remain seized of the matter to address next steps regarding damages and costs, if necessary.
Facts
[4] Vinay Nagpal joined IBM in the United Kingdom following his graduation from the London School of Economics in 1988. About a year later he moved to Canada and joined IBM Canada, where he worked for over 23 years, until 2013. He started at a “Band 6” level and rose through the ranks to a senior management “Band 9” level. He spent over 15 years in leadership/management positions. In 2011, his income was $127,311.89.
[5] In late 2011, Mr. Nagpal responded to an internal job posting for a leadership position regarding two new software projects. He was highly recommended for it and received the position, which began in January 2012. Over the course of the next year, Mr. Nagpal experienced difficulties in leading the team, which he attributed to one challenging employee, and he sought support from his supervisor, Rick Simpson. Mr. Nagpal did not feel he was adequately supported by Mr. Simpson. In January 2013, Mr. Nagpal received a poor performance evaluation from Mr. Simpson. Mr. Nagpal had, until then, received positive performance evaluations.
[6] Mr. Nagpal’s evidence is that he had a number of discussions with Mr. Simpson about the challenges he was facing with a particular employee, and that when Simpson provided the poor performance evaluation in January Nagpal discussed some of the stress and mental health problems that he had begun experiencing. Simpson was aware as early as March 2012, that Nagpal was having difficulties with the challenging employee on his team, but aside from a very brief email, Simpson did not follow up. Simpson denies that he was made aware of Nagpal’s stress and mental health challenges. However, unbeknownst to Nagpal, Simpson began to track when Nagpal was away from the office commencing in November 2012, as Simpson was aware of Nagpal’s increasing absences but did nothing to address them. In the circumstances, it is difficult to accept that Nagpal’s subsequent need for a leave of absence, and the reasons for it, came as a surprise to Simpson or IBM.
[7] Mr. Nagpal called in sick on March 14, 2013. On March 18, his absence was referred to IBM’s Integrated Health Services department (IHS). On March 19, Mr. Nagpal told IBM that his doctor recommended he take 6 weeks off. Ms. Cathy Runnalls in IHS wrote to Mr. Nagpal that day advising that he would be referred to Manulife, which administers IBM’s short-term disability benefits plan.
[8] IBM’s STD plan provides that employees with more than five years of service are eligible to be compensated at 100% of salary for the first 26 weeks of disability leave. To qualify for STD benefits, an employee must establish a restriction or lack of ability due to illness or injury that prevents the employee from performing the essential duties of his or her occupation. If STD benefits are denied, an employee has the option to either return to work or appeal the decision and remain on an administrative unpaid leave of absence until the appeal is adjudicated. The plan also provides that if an employee does not appeal the denial of an STD benefits claim within one month of the commencement of the unpaid leave, that employee is considered to have abandoned the appeal and is expected to return to work immediately, failing which the employee is presumed to have voluntarily resigned from employment with IBM. IHS told Mr. Nagpal that it was his responsibility to provide documentation to Manulife.
[9] Manulife requested medical information to support Mr. Nagpal’s absence by May 23, 2013. In early June Dr Singh, Mr. Nagpal’s psychiatrist, completed a short questionnaire identifying that Mr. Nagpal was being treated for depression and anxiety, among other things. This was provided to Manulife and on June 7 the Manulife case manager, Sarah Mackler, advised Mr. Nagpal that his absence would be supported only until June 23. This date was extended; in fact, on June 24 Manulife wrote Mr. Nagpal informing him of the process to apply for long-term disability (LTD) given that he had been on STD for 16 weeks and it would only continue for 26 weeks.
[10] Following a request by Ms. Mackler to Mr. Nagpal, Mr. Nagpal’s psychologist, Dr. Orme, also responded to a short questionnaire on July 2, 2013. She noted that Mr. Nagpal had “poor stress coping, cognitive impairment, limited energy and tolerance” and that the duration of this was “unknown”. She also stated, among other things, that “return to work is premature” and would “likely exacerbate symptoms and stall recovery” and was “not recommended”.
[11] On July 4, Ms. Mackler emailed Mr. Nagpal stating: “Thank you for the quick response. I received the medical information this morning. As the information is reviewed, we will follow-up with you.” Mr. Nagpal did not receive copies of the medical information sent to Manulife. The responses to the Manulife questionnaires were short, handwritten comments from Dr. Singh and Dr. Orme. Although the questionnaires requested copies of notes and reports, none were attached, and Manulife did not follow up.
[12] These two brief responses to questionnaires – from Dr. Singh and Dr. Orme – were the basis for the decision of Manulife’s medical consultant, Dr. Hines, who stated, in a very short handwritten note, dated July 16, that there was “some improvement” although he acknowledged that Mr. Nagpal was on medication for depression and that there were “workplace issues”. Nevertheless, Dr. Hines’ “impression” was that “the documentation does not support a severity of a psychiatric condition that would prevent [Mr. Nagpal] from performing cognitively in his position.” He said that Mr. Nagpal “should be able to receive treatment while working. Treatment is appropriate and appears optimized.” Dr. Hines did not contact Dr. Singh or Dr. Orme, and it is difficult to reconcile his conclusion with the views of those who were actually treating Mr. Nagpal.
[13] On July 19, 2013, Ms. Mackler spoke to Mr. Nagpal and told him that his STD benefits were being terminated. Mr. Nagpal disagreed with the decision. Ms. Mackler followed up with a letter the same day which stated that the decision was based on the questionnaires completed by Dr. Singh and Dr. Orme and a medical consultant review (by Dr. Hines). The letter stated that Mr. Nagpal had a right to appeal in which he would be required to submit medical information “that has not already been reviewed.” In conversation, Ms. Mackler told Mr. Nagpal that if he did not have new or additional medical information there was no point in appealing; however, she did not attach the responses to the questionnaires or tell Mr. Nagpal how limited the information was that had formed the basis for the Manulife decision.
[14] On July 22, Rick Simpson at IBM wrote to the plaintiff advising him that he had the option of either returning to work or appealing the decision. Mr. Nagpal was told that if he appealed the decision and did not return to work he would be on an unpaid leave of absence effective July 30, 2013. Mr. Simpson went on to advise Mr. Nagpal that he had until August 22, 2013 to provide “the appropriate documentation required to support your appeal”, otherwise IBM would consider the appeal abandoned and “at this point you will be required to return to work or will be considered to have voluntarily resigned your employment with IBM.”
[15] Following the receipt of these letters, Mr. Nagpal contacted his doctors who confirmed that there had been no request for additional information beyond the questionnaires they had sent to Manulife, and they were not able to offer anything “new” to Manulife.
[16] Mr. Nagpal deposed that he felt that IBM was putting him “between a rock and a hard place” which affected his recovery. He did not see anything to be gained by appealing as “Ms. Mackler had told me as much on several occasions.”
[17] Mr. Nagpal sought legal advice and on July 29, 2013 his counsel, Mr. Freeman, wrote back to Mr. Simpson saying that the two options were “not tenable” as Mr. Nagpal “cannot return to work.” The plaintiff’s counsel also stated that they were not aware of the appeal process and that “there is no new information that would be brought forward in support of an appeal other than what was provided by Mr. Nagpal’s doctors on June 2, 2013 and July 2, 2013.” His counsel stated that the doctors “would be pleased to provide updated information if required.”
[18] Mr. Freeman went on to say that if IBM carried out “the plan as set forward” in Mr. Simpson’s letter Mr. Nagpal “will essentially have been wrongfully dismissed.” Further, the letter stated that “Mr. Nagpal has no intention of resigning, nor will he be cajoled into doing so. He is, however, prepared to enter into negotiations that might lead to the development of an “exit package” whereby he would agree to leave IBM provided that he is reasonably compensated for doing so and this would take into consideration both past services rendered and the very poor prospect of Mr. Nagpal finding comparable employment in the foreseeable future.” Counsel requested that IBM maintain the STD benefits “while negotiations are ongoing as a gesture of good faith.” The letter concluded by looking forward to “the courtesy of your prompt reply.”
[19] Mr. Simpson did not respond to Mr. Freeman’s letter, nor did anyone else at IBM. Instead, the STD benefits were terminated on July 30. Although no information was submitted to pursue an appeal, Manulife followed up with the plaintiff on August 26, and on August 29 Mr. Nagpal confirmed to Ms. Mackler that he had consulted with his lawyer and was not appealing the decision, and that this decision had been communicated to IBM by his lawyer and they were awaiting a response from IBM. Mr. Freeman had also told an IBM human resources case worker earlier in August that they would not be submitting further documentation.
[20] On September 6, 2013, Manulife closed its file. On September 10, Cathy Runnalls at IBM wrote to the plaintiff offering him three options: (1) attend a return to work meeting with his manager and Manulife “to discuss your barriers to returning to work”; (2) communicate directly with Mr. Simpson or HR people at IBM “to address any workplace concerns”; and/or (3)contact the confidential employee assistance provider for information about “services such as Professional Counselling, Family Support, Nutrition and Health Coaching.” Ms. Runnalls stated that if Mr. Nagpal did not “engage any of these processes by September 27, 2013 we will consider you to have voluntarily resigned on September 27, 2013.”
[21] Also, on September 10, and of note, Mr. Simpson raised with Human Resources the possibility of making the people who had been replacing Mr. Nagpal permanent, stating that he was “assuming if Vinay returns to IBM he will be assigned to another role.”
[22] On September 19, Mr. Freeman wrote to Ms. Runnalls advising that “[n]otwithstanding what Manulife might think, it is the firm and consistent opinion of Mr. Nagpal’s healthcare providers that he is not capable of returning to work, even with some form of accommodation. Indeed, Mr. Nagpal’s situation has worsened, due in no small part, to the stress accompanied by IBM’s unfortunate decision to cut off his salary and benefits.”
[23] Mr. Freeman went on to say:
None of the options suggested in your letter are satisfactory. In our view, the only satisfactory resolution is that if Mr. Nagpal’s disability cannot be reinstated, his salary should continue to be paid to him. It appears that the intent is to either starve Mr. Nagpal into settlement or force him to resign from his employment. Please rest assured that neither of these will happen. If this matter is not rectified in a satisfactory manner within the next seven to ten days, we will notify IBM that Mr. Nagpal’s employment has been wrongfully terminated without just cause. We will recommend the commencement of an action in the Ontario Superior Court of Justice.
Mr. Nagpal has been a loyal and highly respected employee of IBM for almost twenty-five years. Surely, he deserves better treatment that which he appears to be receiving at the present time. Kindly forward this letter to legal counsel for reply.
[24] Again, Mr. Freeman received no response from IBM. On October 9, 2013, Mr. Simpson wrote Mr. Nagpal advising that IBM considered him to “have abandoned your employment with IBM Canada Limited.”
[25] Mr. Freeman wrote again to IBM on October 22, 2013 apparently demanding reinstatement (that letter is not in the Record). He finally received a response from Irene Christie, a senior counsel in the IBM law department, on November 22, 2013 which stated that “IBM is not prepared to provide Mr. Nagpal with an “exit package” as suggested in your letter of July 29, 2013 or reinstatement as suggested in your October 22, 2013 letter.”
[26] In December 2013, the plaintiff commenced this action. Later, in May 2014, he sued Manulife in an action which was subsequently settled by payment of a lump sum of an undisclosed amount.
[27] The plaintiff’s depression and mental health challenges continued for several years. His evidence is that he is now recovered to the point where he is actively pursuing a return to full-time employment.
[28] There appears to be no dispute that during the events in 2013, Mr. Nagpal was indeed unwell and that his mental health challenges continued for several years thereafter. In the litigation, additional medical information, in the form of notes and reports have been produced which provide much more detail as to Mr. Nagpal’s condition which may well have supported continuing STD, and providing LTD, benefits. IBM asserts that these notes and other documents were in Mr. Nagpal’s possession in the summer of 2013. Having reviewed the cross-examination references in support of this assertion, I do not accept that to be the case. Mr. Nagpal’s treating medical professionals would have had these documents and notes, but he did not.
Issues
[29] IBM moves for summary judgment, raising two issues:
(1) Did the plaintiff resign from and/or abandon his position?
(2) In the alternative, was the employment contract frustrated by the plaintiff’s illness and absence?
[30] IBM also, in its factum, raises the issue of whether the plaintiff is entitled to an award of punitive damages. This arises from an understanding between the parties that should IBM not be successful then it follows that Mr. Nagpal has in fact been wrongfully dismissed, and as his statement of claim seeks punitive damages this would need to be determined. However, the parties did not did not make argument respecting damages, other than IBM addressing punitive damages in its factum. At the conclusion of argument counsel agreed that if IBM’s motion is unsuccessful, then the only issue remaining will be damages. Implicit in the parties’ understanding is that this is an appropriate matter to address by way of a summary judgment motion, either way, and I agree.
1. Did Mr. Nagpal resign or abandon his employment?
[31] It is common ground that a resignation must be clear and unequivocal. The evidence must objectively reflect an intention to resign, through words or conduct. Context is important. The totality of the circumstances must be considered. Similarly, the test for abandonment of employment is whether the statements or actions of the employee, viewed objectively by a reasonable person, clearly and unequivocally indicate an intention to no longer be bound by the employment contract: Kieran v. Ingram Micro Inc., 2004 CanLII 4852 (ON CA), 2004 CarswellOnt 3117, [2004] O.J. No. 3118 (Ont. C.A.) at para. 27; Betts v. IBM Canada Ltd., 2015 ONSC 5298 at para.57; Gebreselassie v. VCR Active Media Ltd., 2007 CarswellOnt 6929, [2007] O.J. No. 4165, at paras. 42-44.
[32] IBM relies on two objective factors in support of its position that Mr. Nagpal abandoned or resigned from his employment: (a) a failure to report to work and fulfil his employment obligations for over two months (including a failure to heed the warnings in absence letters); and (b) a failure to follow the policies and procedures set forth in the STD plan regarding applications for short-term disability benefits and appeals therefrom.
[33] IBM submits that the failure to follow the policies and procedures in the STD plan amounts to a breach of the employment contract. The STD plan provides benefits to employees when they are disabled in return for which the employee must comply with those policies. IBM submits that a failure to follow the requirements under the plan are “akin to disobedience, which would normally justify dismissal.” IBM’s position is perhaps best summed up in its factum as follows:
The Plaintiff placed IBM between a rock and a hard place by essentially demanding that he be permitted to remain on a medically unsupported leave indefinitely, despite the fact that Manulife had concluded that he was not unable to perform the essential duties of his occupation. Although the Plaintiff was wholly responsible for creating this untenable situation, IBM provided the Plaintiff with numerous opportunities to either provide additional medical information or to accommodate him by providing options to facilitate a return to work (despite being under no legal obligation to do so), and warned him that if he did not cooperate, he would be considered to have resigned. For reasons unknown, the Plaintiff declined to provide any additional information to Manulife, and also refused to return to work or participate in return to work planning.
[34] IBM submits that this case is indistinguishable from Betts v. IBM Canada Ltd. in which an employee suffering from depression and anxiety refused to comply with the terms of the same STD plan. In Betts, the employee had failed to report to work for over eight months, ignored warnings in five different option letters, and had failed to pursue appeals open to him. In addition, Mr. Betts had relocated from New Brunswick, where he had been employed by IBM, to Ontario, which demonstrated a lack of intention to return to his former employment.
[35] As to Mr. Nagpal’s statements that he was not abandoning or resigning employment, made by Mr. Freeman in his letters to IBM, IBM submits that actions speak louder than words and that objectively Mr. Nagpal was indeed abandoning his employment since IBM had given him options and he would not respond to them. As counsel for IBM put it rhetorically in argument, “what more should IBM have done?”
[36] According to Mr. Freeman, IBM should have done quite a bit more. He argues that IBM knew that Mr. Nagpal was ill but wished to return when he was able, and yet IBM made no effort to discuss his situation, relying solely on Manulife’s application of the STD policy and insisting on a return to work. Communication was not solely with Manulife. IBM was also involved, Mr. Freeman notes, and more steps should have been taken to determine why a long-time senior employee had not followed the STD appeal process, and why he continued to say he was not able to return to work at that time. Mr. Freeman points out that Mr. Nagpal had never been on sick leave before, that he believed he had provided sufficient medical evidence, and unlike Mr. Betts he repeatedly indicated his desire to return to work. Further, also unlike Betts, Mr. Nagpal had not relocated; indeed, he had retained a lawyer to open communications between himself and the employer. It is simply not enough, Mr. Freeman submits, to fall back on the policy.
[37] In my view, IBM has not established a clear and unequivocal resignation or abandonment by Mr. Nagpal. To the contrary, Mr. Nagpal had no intention of resigning or abandoning his employment, and said so, through his lawyer, to IBM. IBM may say that “actions speak louder than words”, but the words cannot be ignored, and the context must include reviewing IBM’s actions, and inaction. IBM ignored Mr. Freeman’s letters, and simply relied on the process set out in its STD policy, the application of which it had delegated to Manulife. When that ran its course, IBM, not Manulife, simply presented options that all contemplated a return to work. IBM made no attempt to engage with Mr. Freeman, or obtain any further information about Mr. Nagpal’s condition, despite the fact that IBM knew he was under medical care and could easily have discussed the matter with Mr Freeman and sought further medical information.
[38] In my view, IBM’s responsibility to engage with Mr. Nagpal did not end with Manulife’s application of the STD policy. IBM should have done more when Mr. Nagpal clearly expressed an intention to return to work when he was able to do so and said he could not do so because of his continuing illness, on the advice of his doctors. Instead, on September 10, rather than reaching out to Mr. Freeman and inquiring into why Mr. Nagpal, a senior, a long-time employee was not able to return to work, Ms. Runnalls gave him an ultimatum and Mr. Simpson initiated steps to permanently replace Mr. Nagpal.
[39] Each case turns on its own facts. Mr. Nagpal’s situation has similarities to the facts in Johal v. Simmons da Silva LLP, 2016 ONSC 7835 at paras. 98-109, in which the employer was content to “let sleeping dogs lie” and claim that the employee had resigned to avoid an expensive severance package. It also bears similarities to Lippa v. Can-Cell Industries Inc., 2009 ABQB 684, at paras. 63-70, in which the Court found that poor communication about the employee’s condition could not be relied upon to support a deemed resignation or abandonment. See also: Rancourt-Cairns v. Saint Croix Printing and Publishing Company Ltd., 2018 NBQB 19, at paras. 39-42; Smith v. Mistras Canada Inc., 2015 ABQB 673 at paras. 42-43.
[40] On the other hand, this case is quite different from Betts. Mr. Nagpal was a long-time, senior employee with no history of prior illness, who indicated an intention to return to work when able to do so. He did provide medical evidence to Manulife and more could have been obtained with minimal effort by IBM or Manulife. Mr. Nagpal also did not move away from his place of employment or take any other steps that would suggest abandonment.
[41] As to IBM’s complaint that Mr. Nagpal ought to have pursued an appeal with Manulife, or provided more medical information at the time, one must take into account that he was in a vulnerable position and appears to have been under a misapprehension as to what medical information had been provided. I acknowledge that Mr. Freeman did not help matters by also failing to identify the gap in information or pursue an appeal which might have disclosed more about Mr. Nagpal’s condition to IBM; however, Mr. Freeman’s failings do not mean that Mr. Nagpal resigned or abandoned his employment as Mr. Freeman strongly asserted Mr. Nagpal’s position and created an avenue for communication to which IBM did not respond.
[42] Further, I am not satisfied that the STD Policy formed part of the employment contract which could be relied on by IBM to conclude that Mr. Nagpal’s failure to appeal Manulife’s decision and his subsequent failure to return to work amounted to a resignation. In Leeming v. IBM Canada Ltd., 2015 ONSC 1447 at paras. 48-51, Perell J. stated that there must be “clear, express and unambiguous language in the employment contract that rebuts the common law presumption that an employee can only be terminated on reasonable notice.” He continued: “Further, in order for a termination provision in an employment contract to be binding, there must be evidence that the provision was accepted by both the employer and the employee as terms of the employment contract, and the onus rests on the person seeking to enforce the provision that it was part of the employment contract.” See also: Rahemtulla v. Vanfed Credit Union, 1984 CanLII 689 (BC SC), [1984] 3 WWR 296 (BCSC) at paras. 10-23, and Cheong v. Grand Pacific Travel & Trade (Canada) Corp., 2016 BCSC 1321 for decisions that have addressed this point in the context of benefits policies.
[43] I find that IBM has not met its onus that Mr. Nagpal accepted the terms of the policy as part of his contract of employment. These are benefits offered by the employer and can be changed by the employer at any time. Further, accepting STD benefits for a short period does not constitute acceptance of all terms of a policy, and does not support a conclusion that Mr. Nagpal gave up his right to only resign clearly and unambiguously.
[44] Mr. Freeman also submitted that IBM owed a duty of good faith towards Mr. Nagpal, relying on the Supreme Court decisions in Bhasin v. Hrynew, 2014 SCC 71 and Honda Canada v. Keays, 2008 SCC 39. Citing Avalon Ford Sales (1996) Ltd. v. Evans, 2017 NLCA 9, Mr Freeman argued that IBM had been “unduly insensitive” and was required to consider Mr Nagpal’s state of mind. In somewhat similar circumstances, in Avalon Ford Harrington J.A. stated at para. 26:
Moreover, this is precisely the type of situation where the overarching duty of good faith takes effect and influences the interpretation of the established doctrines of “resignation” and “reasonableness”. Particularly where there has been a lengthy employment relationship and the employer is aware that the employee has a sensitive disposition and may be emotionally and financially vulnerable, the employer cannot, without clarification, reasonably conclude that the employee’s intention is to resign solely on the basis of the employee’s statement “I quit”.
[45] Counsel for IBM argued that these issues – whether the STD Policy is part of the employment contract, and whether IBM owed Mr. Nagpal a duty of good faith – should not be considered here as they were not pleaded. I disagree. IBM asserted that its policy has the force of a contract, but it bore an onus to establish that fact, and Mr Nagpal was entitled to dispute it through his denial of having resigned. I also do not accept that I could not consider the duty of good faith here since, as Harrington J.A. stated in Avalon Ford at para. 22, “[s]ince Bhasin, good faith is an underlying principle in all contracts.” In any event, neither point is necessary for my decision, as I have concluded, having regard to the entire factual context, that there was no clear and unequivocal resignation by Mr. Nagpal. Nor can it be said that Mr. Nagpal’s actions, viewed objectively by a reasonable person, clearly and unequivocally indicated an intention to no longer be bound by his employment contract with IBM.
2. Was the Employment Contract Frustrated?
[46] In the alternative, IBM submits that the employment contract with Mr. Nagpal was frustrated because there was no likelihood of Mr. Nagpal returning to work within a reasonable period of time due to his illness: Duong v. Linamar Corp., 2010 ONSC 3159 at paras. 35-37; Lemesani v. Lowery’s Inc., 2017 CarswellOnt 5767 at paras. 179-183. IBM cites both the evidence available at the time of Mr. Nagpal’s termination in 2013, and after-the-fact evidence that Mr. Nagpal in fact was not able to return to full employment until relatively recently: Roskaft v. RONA Inc., 2018 ONSC 2934 at paras. 22 and 26.
[47] Mr. Nagpal responds by pointing out that IBM neither had, nor sought, evidence that Mr. Nagpal could not return to work within a reasonable period of time, nor should IBM be entitled to rely on the fact that Mr. Nagpal’s inability to work lasted several years as an ex post facto justification. Further, IBM suffered no significant business hardship as a result of Mr. Nagpal’s absence.
[48] In my view, the contract of employment was not frustrated as of September or October 2013. Illness on its own is not a frustrating event, and one must have regard for the length of the illness in relation to the duration of the employment contract: Antonacci v. Great Atlantic & Pacific Co. of Canada Ltd., 1998 CanLII 14734 (ON SC), 1998 CarswellOnt 834, [1998] O.J. No. 876 (Ont. Ct. Gen. Div.), affd. in part [2000] O.J. No. 280 (Ont. C.A.) at para. 37. As Sachs J. stated in Skopitz v. Intercorp Excelle Foods Inc., 1999 CanLII 14852 (ON SC), 1999 CarswellOnt 2015, [1999] O.J. No. 1543 (Ont. Ct. Gen. Div.) at para. 21:
Whether a contract of employment has been frustrated by an employee’s illness or incapacity depends on whether or not the illness or incapacity was of such a nature or likely to continue for such a period of time that either the employee would never be able to perform the duties contemplated by the original employment contract or that it would be unreasonable for the employee to wait any longer for the employee to recover. To determine if a contract has been frustrated, regard must be had to the relationship of the term of the incapacity or absence from work to the duration of the contract, and to the nature of the services to be performed (Lafrenière v. Leduc (1990), 1990 CanLII 6832 (ON SC), 66 D.L.R. (4th) 577 (Ont. H.C.); Yeager v. R.J. Hastings Agencies Ltd. (1984), 1984 CanLII 533 (BC SC), 5 C.C.E.L. 266 (B.C. S.C.)).
[49] In Dragone v. Riva Plumbing Ltd., 2007 CanLII 40543 (ON SC), 2007 CarswellOnt 6177, [2007] O.J. No. 3710 (ONSC), Perell J. referred to Skopitz noting, at paras. 20 and 21, that “the determination of whether a temporary incapacity to work is a frustrating event is contextual”, and must consider the extent to which an absence can be tolerated by the employer. Perell J. also pointed to the existence of long term disability plans as demonstrating a tolerance for long absences due to illness, stating:
The presence of long-term sick leave and disability benefits indicates a greater tolerance for the duration of an employee’s absence before frustration occurs. Indeed, it has been suggested that contracting for these benefits may postpone the time of frustration because it may be inferred that the contracting parties anticipated that the employee might take leave for illness. See: Antonacci v. Great Atlantic & Pacific Co. of Canada, 1998 CanLII 14734 (ON SC), [1998] O.J. No. 876 (Gen. Div.), affd. in part [2000] O.J. No. 280 (C.A.); E.E. Mole and M.J. Stendon, Wrongful Dismissal Handbook (3rd ed.) (Markham: LexisNexis Canada Ltd., 2004), chapter B-4.
[50] Although such long-term benefits were not pursued here, they are made available by IBM to its employees. Further, there is no evidence that Mr. Nagpal’s absence, which was not nearly as long as the one under consideration in Dragone, was causing harm to IBM. In Naccarato v. Costco Wholesale Canada Ltd., 2010 ONSC 2651 at paras. 13 – 19, Pollak J., in dismissing the argument that the employment contract was frustrated, noted the absence of any evidence from the employer of hardship or disruption to it by maintaining the employee’s status. In that case the employer could have followed up and made inquiries to gather more information about the employee’s illness and its potential length. So too, as I have noted, could IBM have taken the time to pick up the phone and engage in a dialogue with Mr. Freeman to discuss what was going on with Mr. Nagpal. It failed to do so.
[51] As to what evidence can be relied on to establish frustration, in Ciszkowski v. Canac Kitchens, 2015 ONSC 73, Archibald J. stated at para. 156:
Frustration of an employee’s contract is always established with reference to the time of dismissal. In pleading frustration, an employer is entitled to rely on post-termination evidence not in its possession at the time of dismissal so long as it relates to the nature and extent of an employee’s disability at the time of dismissal. The “evidence subsequently disclosed” should shed light on the nature and extent of the employee’s disability at the time of an employee’s dismissal. An employer is not entitled to rely on evidence that relates to the post-termination nature and extent of an employee’s disability if that evidence is not relevant to the dismissal date. To allow an employer to succeed in pleading frustration on the basis of such evidence would be neither fair nor reasonable.
[52] As of late September 2013, when Mr. Nagpal’s employment was terminated, IBM had very limited evidence of Mr. Nagpal’s condition, and no basis to find that his illness was permanent, or even long-term. It made no further inquiries either. To the extent that evidence subsequently disclosed demonstrated that he had a longer-term illness, this was something that could easily be tolerated by a large company like IBM. An ability to tolerate long-term absences is indicated by the availability of long-term disability benefits and by the fact that had Mr. Nagpal appealed Manulife’s decision his employment status would have continued, albeit without pay. Further, Mr. Nagpal’s evidence is that IBM’s termination of his employment had a serious detrimental impact on his recovery and was at least a partial cause of his extended illness.
[53] Accordingly, IBM cannot rely on the doctrine of frustration.
Conclusion
[54] In light of my findings that Mr. Nagpal did not resign or abandon his employment, and that the employment contract was not frustrated, IBM’s motion for summary judgment is dismissed. It follows, then, that Mr. Nagpal was wrongfully dismissed, and I grant summary judgment in favour of the plaintiff accordingly. Although Mr. Nagpal brought no motion for summary judgment, the Court can grant judgment in such circumstances when all of the relevant evidence is before the Court, as here, and where, as here, the parties’ agreed that the only remaining issue if IBM failed on it motion is to determine damages: see Meridian Credit Union Limited v. Baig, 2016 ONCA 150 at para. 17; King Lofts Toronto I Ltd. v. Emmons, 2014 ONCA 215, 40 R.P.R. (5th) 26, at paras. 14-15; and Kassburg v. Sun Life Assurance Company of Canada, 2014 ONCA 922, 124 O.R. (3d) 171, at paras. 50-52.
[55] As to next steps, Rule 20.04 provides that where quantification of damages is the only remaining issue the Court “may order a trial of that issue or grant judgment with a reference to determine the amount.” As no submissions were made on specifically how damages should be determined, I will remain seized of this matter, subject to the scheduling needs of the Court, to address damages and costs, if necessary.
Schabas J.
Released: July 30, 2019