Court File and Parties

COURT FILE NO.: CV-20-230 (Brantford) DATE: 2021/09/20 SUPERIOR COURT OF JUSTICE-ONTARIO

RE: LORI DONAGHY, Plaintiff AND: SEASONS RETIREMENT COMMUNITIES, Defendant

BEFORE: M. R. Gibson. J.

COUNSEL: Derek Sinko, Counsel for the Plaintiff David Cassin, Counsel for the Defendant

HEARD: June 18, 2021

ENDORSEMENT

Overview

[1] The Plaintiff Lori Donaghy (“the Plaintiff”) sues her former employer the Defendant, Seasons Retirement Communities (Brantford) LP (“the Defendant”) for wrongful dismissal, amongst other claims.

[2] The Defendant raises the defences of just cause and, in the alternative, what it says is an enforceable termination provision that would limit the Plaintiff’s rights on termination to the minimums under the Employment Standards Act 2000 (“ESA”).

[3] This is a motion brought by the Plaintiff pursuant to Rule 21.01(1)(a) of the Rules of Civil Procedure (the "Rules"), seeking a determination that the termination provision in her employment agreement is unenforceable.

[4] The Defendant submits that the motion should be dismissed because it is an inappropriate use of Rule 21.01(1)(a) in that it seeks to interpret a question of mixed fact and law, which Rule 21.01(1)(a) is not designed to address. It will also, it submits, not dispose of all or part of the action, substantially shorten the trial or result in any substantial cost savings or, indeed, any meaningful cost savings at all.

Facts

[5] The Plaintiff commenced employment with the Defendant on a part-time basis in 2010.

[6] The Plaintiff transitioned to full-time employment with the Defendant in 2012 as a Resident and Guest Attendant Concierge, at which time the Plaintiff signed an employment agreement dated September 10, 2012 (the "Employment Agreement"). The Employment Agreement contains a termination provision limiting her entitlements upon termination without cause to the minimum statutory entitlements under the ESA.

[7] Subsequently, the Plaintiff was promoted to the position of Business Manager.

[8] In September of 2020, the Defendant terminated the Plaintiff's employment for what it says was just cause as that term is understood under the ESA. Given that the Plaintiff was terminated for what the Defendant says was just cause, the Defendant did not provide her with any notice of termination or pay in lieu thereof.

[9] On October 26, 2020, the Plaintiff commenced a claim against the Defendant under the simplified procedure for wrongful dismissal, seeking damages of approximately $61,333 for reasonable notice, plus certain additional relief.

[10] The Defendant filed a statement of defence on November 25, 2020, in which the Defendant denied that the Plaintiff was entitled to any damages due to the fact that her employment was properly terminated for just cause.

[11] The Defendant pled, in the alternative, that the Employment Agreement contained an enforceable termination provision which limited her damages for wrongful dismissal to the minimum entitlements under the ESA.

[12] On January 8, 2021, the Plaintiff served on the Defendant a notice of motion under the simplified procedure rules for this motion pursuant to Rule 21.01(1)(a), seeking a determination of a question of law prior to trial, specifically that the termination provision contained in the Employment Agreement is unenforceable.

[13] The Defendant opposes the motion, and requests that it be dismissed because it is an inappropriate use of Rule 21.01(1)(a) in that it seeks to interpret a question of mixed fact and law, which Rule 21.01(1)(a) is not designed to address. It also submits that it will also not dispose of all or part of the action, substantially shorten the trial or result in any significant costs savings or, indeed, any meaningful costs savings at all.

Issues

[14] The issues before the Court on this motion are thus:

(i) Is this an appropriate matter for determination on a Rule 21.01(1)(a) motion?; and

(ii) If so, should the Court declare that the termination provision is unenforceable?

Law

[15] A party to an action may move for a determination of a question of law under Rule 21.01(1)(a) of the Rules, which provides:

(1) A party may move before a judge,

(a) for the determination, before trial, of a question of law raised by a pleading in an action where the determination of the question may dispose of all or part of the action, substantially shorten the trial or result in a substantial saving of costs.

Analysis

[16] Rule 21 is not an appropriate mechanism for determining issues regarding the enforceability of a termination provision in an employment agreement, such as the termination provision at issue here, because this is fundamentally an issue of contractual interpretation, which is a question of mixed fact and law.

[17] In Sattva Capital v. Creston Moly Corp., 2014 SCC 53, at para. 50, the Supreme Court of Canada held that contractual interpretation is not a question of law, but a question of mixed fact and law:

"With respect for the contrary view, I am of the opinion that the historical approach should be abandoned. Contractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to words of a written contract, considered in light of the factual matrix."

[18] Rule 21 is generally not appropriate for issues involving contractual interpretation.

[19] The question of law in respect of which the Plaintiff seeks a determination on this motion is actually fundamentally a question of mixed fact and law, which depends on the interpretation of the termination provision in the Employment Agreement considered in light of the factual matrix.

[20] Relying on Wood v. Fred Deeley Imports, 2017 ONCA 158, the Plaintiff asserts that the termination provision in the Employment Agreement is unenforceable because it excludes the Plaintiff's entitlements to benefit continuation during the minimum statutory notice period prescribed under the ESA, and therefore provides less than the minimum standards under the ESA.

[21] As acknowledged by the Plaintiff in her factum on this motion, the termination provision in the Employment Agreement states that the Plaintiff will receive 'notice or pay in lieu of notice of termination'. However, I accept the Defendant’s submission that this does not explicitly exclude continuation of benefits, because if the Plaintiff receives notice of termination, it is implied that she would continue to receive all compensation and benefits during the notice period. Further, if the Plaintiff is given pay in lieu of notice, it can be implied that she would receive the equivalent of the premium payments for the group benefits the Defendant would have made on her behalf had she received notice of termination.

[22] Therefore, in order to assess whether the termination provision in the Employment Agreement violates the ESA, one must determine whether the termination provision in the Employment Agreement implies that the Defendant will receive benefits continuation as part of the provision of notice, or alternatively, whether the language implies that the Defendant would be paid the equivalent of the employer's portion of the benefit premiums in lieu of notice. As such, the issue of whether or not the termination provision is unenforceable necessarily depends on the interpretation of the Employment Agreement considered in light of the factual matrix.

[23] The case cited in the Plaintiff's factum in support of its proposition that Rule 21 motions are appropriate for determining whether a termination provision is enforceable, Howard v. Benson, 2015 ONSC 2638, was reversed by the Court of Appeal for Ontario in Howard v. Benson, 2016 ONCA 256. However, the issue of appropriateness of a Rule 21 motion for determining the enforceability of a termination provision was not addressed by the Court of Appeal, nor was there any indication that the issue was even raised at trial or on appeal. Rather, the parties in Howard agreed that there were no material facts in dispute, which is not the case here.

[24] In any event, I agree with the submission of the Defendant that this motion will not dispose of any part of the action, substantially shorten the trial or result in substantial cost savings. The issue of enforceability of the termination provision will not require any additional witness testimony or additional evidence beyond what would otherwise be adduced at trial, given that the Employment Agreement and evidence regarding the Plaintiff's compensation package at the time of termination will need to be tendered regardless of the Court's disposition of this motion, including for the purposes of assessing the damages to which the Plaintiff may be entitled, if any.

[25] The simplified procedure under which the Plaintiff commenced her action is specifically designed to provide a streamlined process with minimum delays and costs.

[26] Thus, one of the key objectives of the simplified procedure is to limit the extent of pre-trial motions and to bring the parties to an early trial conducted pursuant to tailored rules. In this case, the Plaintiff's Rule 21 motion runs counter to the key objectives of the simplified procedure under which she advances her claim.

[27] Further, the Plaintiff's motion also runs counter to the broader objective of the Rules, as set out in Rule 1.04(1), to determine disputes in the most expeditious and least expensive fashion on the merits.

[28] The main issue in this action is whether the Defendant had just cause to terminate the Plaintiff's employment. At trial, the bulk of the evidence will likely be focused on whether the Defendant did in fact have just cause to terminate the Plaintiff, and, if not, the quantum of damages to which the Plaintiff may be entitled arising from the termination of her employment.

[29] The issue regarding the enforceability of the termination provision is a relatively minor issue in the proceeding that can be dealt with at trial with little added cost or time. A determination of this issue before trial will do little to shorten the trial or reduce costs.

[30] In McLaughlin v. Canada (Attorney General), 2018 ONSC 475, the Court refused to grant a plaintiff's motion under Rule 21.01(1)(a) for a determination that the defendant owed the plaintiff a duty of care on the grounds that (i) relevant facts were in dispute, and (ii) even if the plaintiff's motion were successful, a Rule 21.01(1)(a) motion would not dispose of the litigation or a substantial part of it, or substantially shorten the trial or save costs.

[31] In his reasons, Stinson J. stated at para. 4:

"For the reasons that follow, I agree with the defendant's submission. In addition, I dismiss the motion because this is not a situation in which the determination of the question posed by the plaintiff would dispose of all or part of the action, substantially shorten the trial or result in substantial saving of costs. Rather, this motion is tantamount to "litigating in slices," a practice that runs counter to the established goals of determining disputes in the most expeditious and least expensive fashion."

[32] Similarly, this motion will not dispose of all or part of the action, substantially shorten the trial or result in substantial cost savings, and it is not an effective use of valuable court resources.

[33] I also agree with the further submission of the Defendant that not only will the determination of this issue not dispose of all or part of the action, substantially shorten the trial or result in substantial cost savings, it is also likely moot. If, in the cause, it is found that the Defendant did have just cause to terminate the Plaintiff, then she will not be entitled to any pay in lieu of notice and the issue of the enforceability of the termination provision will have no relevance. Alternatively, if it is found that the Defendant did not have just cause to terminate the Plaintiff, the Defendant would in all likelihood be considered to have breached the Employment Agreement when it terminated the Plaintiff without cause and without notice or any pay in lieu thereof.

[34] Where an employer repudiates a fundamental term of employment, they can generally no longer enforce any part of that agreement against the employee. Wrongful dismissal typically amounts to a repudiation of an employment agreement.

[35] In Ebert v. Atoma International Inc., [1997] O.J. No. 1823 (Ont.C.J.(Gen.Div.)), Brockenshire J. considered whether the company could take advantage of a favorable termination provision in the employment contract after the employee brought a wrongful termination claim and it was found that the employee was constructively dismissed. The Court found that the employer had unilaterally breached the employment contract by constructively dismissing the employee and, in doing so, repudiated the contract. As a result, the Court found that the employer could not rely on the termination provision in the employment agreement.

[36] Therefore, even if the without cause termination provision in the Plaintiff's Employment Agreement is enforceable, the fact that the Defendant did not provide the Plaintiff with any notice or pay in lieu will in all likelihood render the issue of its enforceability moot.

[37] In summary, given that this is a case in which material facts are still in dispute, this is not an appropriate case for a Rule 21 motion. It is therefore not necessary to consider the second issue.

Order

[38] The Plaintiff’s motion is dismissed.

Costs

[39] In accordance with the submissions of counsel at the time of the hearing of the motion, the Plaintiff will pay the Defendant costs on the motion fixed at $1,500 all inclusive.

M. R. Gibson, J.

Date: September 20, 2021