CITATION: South v. OMVIC; 2021 ONSC 6686

COURT FILE NO.: CV-17-579038 RELEASED: 2021/10/07

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Mary Jane South v. Ontario Motor Vehicle Industry Council

BEFORE: Associate Justice Graham HEARD: October 5, 2021

COUNSEL: Jason Beeho for the plaintiff (moving party) Philip R. White for the defendant

ENDORSEMENT

(Re: plaintiff’s motion to compel answers to questions refused at defendant’s examination for discovery held March 20, 2019)

[1] The plaintiff Mary Jane South worked for the defendant Ontario Motor Vehicle Industry Council (“OMVIC”) commencing in January, 1997. OMVIC regulates the sale of motor vehicles in Ontario and is responsible for administering the Ontario Motor Vehicle Dealers Act, 2002 on behalf of the Ontario government. In this action, Ms. South alleges that on February 10, 2017, she was constructively dismissed from her position or positions as OMVIC’s Registrar and Director of Operations, effective February 17, 2017, her last day of work.

[2] The plaintiff now moves to compel OMVIC to answer undertakings and questions refused at the examination for discovery of their representative Chandar Bhan Singh, held on March 20, 2019. Mr. Singh was OMVIC’s interim executive director when Ms. South’s employment with OMVIC ended.

Preliminary submissions

[3] These submissions related to OMVIC’s counsel’s objections to various questions on the basis that they sought information that was “not within the plaintiff’s knowledge” at the time of her alleged constructive dismissal and/or that was protected by litigation privilege.

[4] With respect to the “not within the plaintiff’s knowledge” issue, the plaintiff claims that she was constructively dismissed based on OMVIC’s alleged course of conduct, both leading up to December 16, 2016, when her lawyer wrote to OMVIC raising various concerns, and between December 16, 2016 and her counsel’s letter of February 10, 2017 informing OMVIC that she was terminating her employment based on constructive dismissal. The plaintiff alleges that the substance of OMVIC’s response to the December 16, 2016 letter was to disregard her concerns.

[5] In their preliminary submissions, both counsel referred to the Supreme Court of Canada’s decision in Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10.

[6] To summarize the majority opinion in Potter, there are two possible branches to the test for constructive dismissal. Under the first branch, the plaintiff must demonstrate that the employer has made a unilateral change to the employment relationship constituting a breach of the contract, and that the breach substantially alters an essential term of the contract. To demonstrate constructive dismissal under the second branch of the test, the employer’s conduct, viewed in all the circumstances, must lead a reasonable person to conclude that the employer no longer intended to be bound by the terms of the contract.

[7] The plaintiff Ms. South acknowledges that her claim is based on the second branch of the constructive dismissal test. With respect to what information the court must consider in determining whether a reasonable person would conclude that the employer no longer intended to be bound by the terms of the contract, Wagner J. (as he then was), writing for the majority in Potter, stated (at para. 63):

63 . . . There is no requirement that the employer actually intend no longer to be bound by the contract. The question is whether, given the totality of the circumstances, a reasonable person in the employee’s situation would have concluded that the employer’s conduct evinced an intention no longer to be bound by it. However, with respect for Cromwell J.’s [minority] opinion, the perspective here cannot be stretched so far as to allow the employee to rely on grounds that, although real, were unknown to him or her at the relevant time. Such an approach would risk encouraging disgruntled employees who have quit their jobs to allege constructive dismissal and engage in fishing expeditions against their employees in the hope of identifying evidence in support of their claims. [emphasis added]

[8] Accordingly, OMVIC also relies on the decision of the majority in Potter to argue that because, under the second branch of the test, the relevant consideration is how a reasonable person would perceive the employer’s conduct, the plaintiff Ms. South cannot rely on information that was not within her knowledge at the time that she claimed the constructive dismissal occurred. For example, Ms. South cannot rely on what transpired at meetings that she did not attend and was not aware of.

[9] Plaintiff’s counsel submits that the plaintiff is entitled to rely on OMVIC’s pre-December 16, 2016 conduct, and the overall dysfunction that she alleges, to support her claim of constructive dismissal. Further, the plaintiff has pleaded bad faith on the part of OMVIC, so motive, intention and context are relevant. Plaintiff’s counsel submits that OMVIC, by pleading that its Board decided to address the plaintiff’s concerns “in a good faith attempt to resolve the dispute” (S/D para. 23), acknowledges that its alleged bad faith is in issue in the action. The plaintiff argues that Potter does not prevent questions relevant to the pleadings, including allegations supporting the claim of constructive dismissal and allegations of bad faith.

[10] Counsel for the parties appear to agree on the law with respect to litigation privilege. To be protected by litigation privilege, a document must have been created for the “dominant purpose” of litigation (Blank v. Canada (Department of Justice), 2006 SCC 39). Further, “privilege will come into play at some point between mere suspicion and a conclusion that litigation will result”, such as “when something arises to give reality to litigation” (Kavanaugh v. Peel Mutual Insurance Co., 2010 ONSC 4653 at para. 16, and General Accident Assurance Co. v. Chrusz, 1999 CanLII 7320 (ON CA), [1999] OJ No. 3291). However, even after there is sufficient likelihood of litigation to give rise to litigation privilege, “the party claiming the privilege must satisfy [the court] that each document thereafter was created for the dominant purpose of litigation” (Kavanaugh, para. 17).

[11] OMVIC’s counsel submits that plaintiff’s counsel’s letter of December 16, 2016 to OMVIC sets out certain demands which the defendant says were beyond the scope of the plaintiff’s role at OMVIC, for example reviewing the compensation packages for other OMVIC employees. On this basis, the defendant submits that litigation was imminent as of December 16, 2016, so OMVIC’s documents prepared subsequent to that date are privileged.

[12] OMVIC’s counsel also relies on an email dated February 7, 2017 from Chandar Singh of OMVIC following a meeting on February 6, 2017 with Ms. South, to which notes of that meeting were attached. In these notes, Mr. Singh indicates that Ms. South considered herself to have been constructively dismissed. On this basis, OMVIC submits, in the alternative, that litigation was sufficiently imminent as of February 6, 2017 to give rise to litigation privilege.

[13] In response, plaintiff’s counsel relies on a letter dated January 9, 2017 from OMVIC to Ms. South personally, stating that they were responding directly to her and that they did not intend to correspond with any lawyer purporting to represent her. Plaintiff’s counsel argues that if OMVIC had really thought that litigation was imminent at that time, they would not have communicated directly with Ms. South.

[14] Plaintiff’s counsel also submits that Ms. South’s evidence with respect to what happened at the February 6, 2017 meeting is different than what is contained in Mr. Singh’s notes. OMVIC’s counsel submits that there is no significant difference between Ms. South’s recollection and the content of Mr. Singh’s notes. Plaintiff’s counsel also refers to an email of February 8, 2017 from Mr. Singh to Ms. South advising her that OMVIC’s Board “will not comply with any of your demands.” The next communication was plaintiff’s counsel’s February 10, 2017 letter stating Ms. South’s position that she had been constructively dismissed.

[15] After considering the submissions of counsel, I conclude that litigation privilege arose no earlier than February 6, 2017 when Mr. Singh formed the understanding that Ms. South was taking the position that she had been constructively dismissed. Before then, Ms. South’s approach was that she wished to attempt to remediate the relationship, so OMVIC could not reasonably have been of the view that litigation was imminent. However, when raising the issue of litigation privilege with respect to individual documents, OMVIC must still establish that any documents created after plaintiff’s counsel’s February 10, 2017 letter were for the dominant purpose of litigation.

Rulings on the motion

[16] The charts used for the motion and referred to throughout this endorsement are those marked as Exhibit B to the supplementary affidavit of Michelle Plourde in the plaintiff’s supplementary motion record.

Chart no. 1

Plaintiff’s counsel advised that the clarifications sought with respect to the undertakings in Chart no. 1 have been provided.

Chart no. 2

With respect to the questions regarding the defendant’s counterclaim, the parties have now agreed that the counterclaim be withdrawn, with costs payable to the plaintiff. On consent, the defendant shall deliver a notice of discontinuance of the counterclaim and shall pay the costs of the counterclaim fixed at $2,500.00 plus HST, within four weeks, failing which the questions shall be answered.

Chart no. 3

[17] The first of the questions in dispute relate to Ms. Lambert, OMVIC’s executive director until she was terminated in September, 2016, who had previously recommended that Ms. South’s employment be terminated. Plaintiff’s counsel acknowledges that the dysfunction alleged by Ms. South constituting her wrongful dismissal does not include any known intention by OMVIC to terminate her employment. Accordingly, OMVIC’s counsel acknowledges that they do not need to rely on the fact that OMVIC did not terminate Ms. South’s employment when Ms. Lambert wanted them to. On this basis, the parties accept that there is no need for the plaintiff to pursue answers to Qs. 297-307.

[18] The remaining question from this chart is Q. 363, relating to a Stakeholder Relations Committee (SRC) meeting of November 29, 2016, at which Ms. South says that she faced “open hostility” from the OMVIC Board (S/C para. 8(a)) and that Mr. Marostica (Chair of the Board) and other Board members “openly contradicted, harangued, and attempted to undermine Ms. South in regard to a number of issues concerning on-line dealers” (para. 10(d)). Both counsel agree that the meeting is a “key meeting” in relation to the constructive dismissal claim.

[19] The document referred to is an email from the Executive Director Chandar Singh dated December 2, 2016 summarizing what transpired at the November 29, 2016 meeting. The question seeks documents that would have been exchanged by other attendees following the meeting.

[20] OMVIC’s counsel submits that the other emails referred to in the preamble to Mr. Singh’s email have been produced. However, plaintiff’s counsel now seeks “drafts and other documentation related to the preparation of Singh’s December 2, 2016 email. Defendant’s counsel submits that the all the documents from Board members have been produced, and drafts of any such documents are not probative.

[21] Defendant’s counsel submits that they have produced everything provided to Mr. Singh from Board members who were present at the November 29, 2016 SRC meeting. They have not produced documentation prepared by OMVIC staff who were not at the meeting. Based on this representation from counsel, Q. 363 has been answered.

[22] Plaintiff’s counsel acknowledges that Qs. 397 and 408 have been answered.

Issue 4: Qs. 472-489

[23] These questions relate to the response of the OMVIC Board to plaintiff’s counsel’s letter of December 16, 2016, specifically, an internal letter dated January 9, 2017 from Ron Marostica (Chair of OMVIC’s Board of Directors) to Mr. Singh, and a letter dated January 9, 2017 from Mr. Singh (as OMVIC’s Interim Executive Director) to Ms. South.

[24] The plaintiff has pleaded the contents of her counsel’s December 16, 2016 letter and her assertion that her concerns were not considered seriously. The plaintiff claims that OMVIC displayed bad faith in responding to her concerns and relies on the defendant’s pleading that they addressed the concerns “in a good faith attempt to resolve the dispute” (S/D para. 23).

[25] In response, OMVIC submits first, that the questions relate to matters “not within the plaintiff’s knowledge” at the time that she alleged constructive dismissal and are therefore precluded by Potter v. New Brunswick Legal Aid Services Commission, supra, and second, that they seek information protected by litigation privilege.

[26] With respect to the litigation privilege issue, all the questions relate to plaintiff’s counsel’s letter of December 16, 2016, Mr. Marostica’s internal letter of January 9, 2017, and Mr. Singh’s letter of January 9, 2017 to Ms. South. As indicated above in my analysis of this issue, I concluded that litigation privilege arose no earlier than the meeting of February 6, 2017 following which Mr. Singh understood that Ms. South considered herself to have been constructively dismissed. Litigation privilege would therefore not apply to questions related to correspondence of December 16, 2016 and January 9, 2017.

[27] Relying on Potter, OMVIC submits that these questions seek extrinsic evidence that is not relevant to a claim for constructive dismissal based on the allegation that the employer no longer intended to be bound by the employment contract. In Potter, the SCC held that an internal letter recommending that the plaintiff be terminated for cause, of which that plaintiff was not previously aware, was not relevant to that plaintiff’s claim for constructive dismissal. In this case, Ms. South was not aware of what the Board had been doing in the background at the point at which she terminated her own employment on the basis that she had been constructively dismissed. Based on Potter, questions seeking information that was not within Ms. South’s knowledge when she terminated her employment based on constructive dismissal are not relevant.

[28] Plaintiff’s counsel submits that based on the plaintiff’s pleading that the defendants have engaged in bad faith conduct, including a failure to address the plaintiff’s concerns, and OMVIC’s pleading that it exercised good faith in relation to those concerns, the plaintiff should be able to test OMVIC’s position, so the questions are proper.

Rulings:

Q. 472: The plaintiff seeks information as to what inquiries were undertaken with Mr. Marostica and other board members regarding the contents of plaintiff’s counsel’s letter of December 16, 2016 to OMVIC. This is not information that was within Ms. South’s knowledge when she terminated the employment relationship as of February 17, 2017. Based on Potter, the issue at trial with respect to the plaintiff’s claim for wrongful dismissal will be whether a reasonable person in Ms. South’s situation would have concluded that OMVIC’s conduct reflected an intention to no longer be bound by the employment contract. On this basis, Ms. South cannot rely on grounds unknown to her when she terminated the employment relationship based on an alleged constructive dismissal. The answer to the question can have no effect on the outcome of the trial and is therefore irrelevant.

The plaintiff relies on the pleaded claim of bad faith to support the relevance of this question. However, a claim that an employer’s conduct reflects an intention not to be bound by the employment contract is in substance an allegation of bad faith so a separate allegation of bad faith does not open the door to information precluded by Potter. To allow the plaintiff access to information not known to her at the time of termination, simply based on a separate allegation of bad faith, would be to allow her to gain access indirectly to what she cannot obtain directly.

The Supreme Court in Potter clearly stated that information not within the plaintiff employee’s knowledge at the time of an alleged constructive dismissal is not a consideration in determining whether a constructive dismissal occurred based on the employer’s apparent intention not to honour the employment contract. The question is therefore not relevant. Refusal upheld.

Q. 475: See Q. 472. Refusal upheld.

Qs. 480, 481, 483: Any possible involvement of individual OMVIC Board members in reviewing and responding to plaintiff’s counsel’s letter of December 16, 2016 on behalf of OMVIC is not relevant to whether OMVIC’s letter of January 9, 2017 to Ms. South could support a finding of constructive dismissal based on an apparent intention to no longer be bound by the employment contract. Further, any involvement of Board members in that regard was not known to Ms. South when she terminated her employment based on her allegation of constructive dismissal. Refusals upheld.

Q. 482: OMVIC’s letter of January 9, 2017 to Ms. South is signed by Mr. Singh. Mr. Singh shall answer whether he prepared the letter that he signed.

Q. 489: The question is in respect of the January 9, 2017 letter signed by the discovery witness Mr. Singh, containing the statement that “OMVIC disagrees with and does not accept the allegations made in the [December 16, 2016] letter from your lawyer and will not be complying with the demands that have been made.” The question is a reasonable enquiry of the letter’s author regarding the contents of the letter, and shall be answered.

Issue 5: Qs. 80, 86, 502 and 503

[29] The plaintiff pleads (para. 11 of the S/C) that she raised a concern about the Board’s attempts to interfere with her independent decision-making. Based on her allegation that the Board encroached on her role as Registrar of OMVIC, questions about the Board members’ understanding of their own function are relevant.

[30] The defendants submit that the duties and responsibilities of the Registrar are statutory, set out in the Motor Vehicle Dealers Act. They submit that what is relevant is what the OMVIC Board did in relation to Ms. South, not what they might have understood from an orientation manual.

Rulings:

Q. 80: The plaintiff has pleaded in paragraph 11(a) of the Statement of Claim that she raised a concern regarding the Board’s attempts “to interfere with her independent decision-making.” The guidelines provided to the individual Directors as to their functions in relation to any oversight of the plaintiff are therefore relevant. This question shall be answered.

Q. 82: Any evaluations of the Directors are of no probative value in relation to the issue of whether they unreasonably encroached on Ms. South’s autonomy in the exercise of her functions as OMVIC Registrar and Director of Operations. Refusal upheld.

Q. 502: When Ms. South received this information, she was entitled to review the lawyer’s account that it was contained in, so there was no breach of solicitor-client privilege. The pleadings raise issues of whether the OMVIC Board was encroaching on Ms. South’s authority as Director of Operations, and the claim of constructive dismissal is based on an apprehension that the employer no longer intended to be bound by the terms of the employment contract. In this context, the question about why the OMVIC Board Chairman would request a copy of Ms. South’s job descriptions is relevant and shall be answered.

Q. 503: Ms. South had not occupied the position of Deputy Registrar since 2015 and does not allege that she was constructively dismissed from that position. Refusal upheld.

Issue 5: Qs. 826 and 833

Rulings:

Q. 826: The answer given by the Board is that in February, 2017, they had no position but their practice was not to approve or refuse changes. With respect to whether such changes were within the purview of the Registrar’s independent statutory authority, the question has not been answered and the defendant shall provide an answer.

Q. 833: The plaintiff accepts that recalls are a matter of federal jurisdiction. However, there are issues of compliance on the part of motor vehicle dealers that fall within the scope of OMVIC’s function. If the answer to Q. 826 is different with respect to rules regarding recalls, the defendant shall advise to that effect.

Issue 6: Qs. 490, 591, 594-596 and 606

Rulings:

[31] Qs. 490-606: The plaintiff has pleaded in para. 15(a) that the OMVIC Board would not cooperate with her, or that it displayed hostility in addressing various concerns, including increases to staff compensation, which she acknowledges that she had no authority to grant. However, she submits that the defendant’s failure to respond to the staffing issues are part of the circumstances constituting her constructive dismissal.

The issue for the trial judge will be whether OMVIC’s failure to respond to the plaintiff’s concerns represented an intention on their part to no longer be bound by their employment contract with the plaintiff, thus constituting or contributing to the alleged constructive dismissal. Qs. 490, 591, and 594-596 all relate to steps that OMVIC may have taken to address compensation issues, and Q. 606 seeks production of exit interviews. However, the crucial fact is OMVIC’s refusal to address the concerns, not how OMVIC might have responded to the concerns raised after the fact. None of the questions are relevant to whether OMVIC’s conduct reflected an intention to no longer be bound by the employment contract with the plaintiff. The refusals are therefore upheld.

Adjournment of balance of motion: It was not possible to complete the motion in the full court day during which it was argued. The motion shall continue before me on Friday, April 1, 2022 at 10:00 a.m.. Counsel are reminded to confirm the motion for that date in the usual manner. If an earlier date becomes available in my calendar, I will inform counsel.

ASSOCIATE JUSTICE GRAHAM

October 7, 2021