COURT FILE NO.: CV-19-133

DATE: 20220518

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Shelley Nicholas, Plaintiff

AND:

Dr. Edyta Witulska Dentistry Professional Corporation, Defendant

BEFORE: Justice D.A. Broad

COUNSEL: Derek Sinko, for the Plaintiff

Michael R. White, for the Defendant

HEARD: April 11, 2022

Reasons for Decision

Background

(a) The parties and the dispute

[1] The plaintiff is a registered dental hygienist who was employed on a part-time basis by the defendant until she resigned her employment on July 23, 2018. The principal of the defendant corporation is Dr. Edyta Witulska.

[2] The plaintiff was employed by Dr. Michael Veer (Dr. Veer”) from in or about 1991 to September 2011 under an unwritten employment contract.

[3] The defendant purchased the dental practice of Dr. Veer on September 2, 2011. The plaintiff’s employment did not change in any material respect following the transfer of ownership and she continued to be employed by the defendant at its Brantford location which operated as “Brant Smiles Family Dentistry.” The employment contract between the parties remained unwritten until they entered into a written employment contract on July 17, 2018.

[4] The plaintiff was employed in the practice for 28 years, inclusive of her tenure with Dr. Veer and was 54 years of age at the time of her resignation. In the fall of 2018, the plaintiff became employed by a competing dental practice Lyndon Park Mall Dental, located less than one-half kilometre from the defendant’s Brantford location.

[5] The plaintiff says that she was constructively dismissed by the defendant and sues for wrongful dismissal. The defendant denies that the plaintiff was constructively dismissed and counterclaims for breach of the non-competition and non-solicitation covenants in the written employment contract. The parties have brought cross motions for summary judgment – the plaintiff to dismiss the counterclaim and to declare the termination provision in the employment contract between the parties unenforceable; the defendant to dismiss the plaintiff’s action based on constructive dismissal.

(b) Written employment agreement

[6] On the advice of a consultant, Dr. Witulska decided to implement written employment contracts for all of the defendant’s employees, including the plaintiff.

[7] In early July 2016 the plaintiff met with the defendant’s consultant and its office manager who provided her with a proposed form of written employment agreement. They informed her that she had until August 10 2018 to consider and return the signed agreement, failing which her employment would end on September 10, 2018. Dr. Witulska’s covering letter to the plaintiff which accompanied the draft employment agreement stated, among other things:

(i) “upon your signing the attached Agreement, the terms of your current employment agreement with us (which is largely unwritten) will come to an end;”

(ii) “please read your Employment Agreement thoroughly and feel free to consult with an employment lawyer about it;” and

(iii) “if you have any questions or comments at all, we would be happy to discuss them with you.”

(c) Material terms of the Employment Agreement

[8] The draft written employment agreement included the following provisions which are material to the issues in the proceeding:

(i) “5. Hours of Work

It is understood that the number of days and hours worked per week are in the Employer’s sole discretion, which hours may include evening hours. Without limiting the foregoing, the number of days and hours worked will vary based on the doctor’s schedule. On days where you work more than five (5) consecutive hours, you shall receive a one (1) hour eating period which will be unpaid.”

(ii) “6. Termination

(a) Termination with Cause

Your employment may be terminated immediately by the Employer without notice or pay in lieu of notice should cause for termination exist under the common law of the courts of Ontario.

(b) Termination without Cause

The Employer may terminate your employment at its sole discretion, for any reason whatsoever that does not amount to cause, upon giving you the appropriate advance notice in writing, or paying you the equivalent termination pay in lieu of notice based on the greater of the following or pursuant to the Employment Standards Act, 2000, S.O. 2000 c. 41 (or its successor), which payment is inclusive of all entitlements under statute, common law, contract or otherwise:

[a table of various lengths of service and listed periods of notice was set out. The period of notice for a length of service of eight years or more was stated to be eight weeks]”

The above-noted entitlement is set out in the Employment Standards Act, 2000.

(iii) “9. Non-Solicitation

“You agree that you will not, at any time during your employment by the Employer and for a period of twelve (12) months following the termination of such employment for any reason, directly or indirectly for yourself or any other person, enterprise or entity:

(a) solicit business from any patient of the Employer, if such business is of the same general character as that of the Employer during such period: or

(b) induce or attempt to persuade any person who at any time during such period is an employee of the Employer, to terminate his (her) employment with the Employer.

Further, during the said twelve (12) month period, you shall not intentionally act in any manner that is detrimental to the relations between the Employer, patients, employees or others and specifically, without limiting the generality of the foregoing, agree to refrain from any derogatory remarks about the Employer.

You confirm that the provisions in paragraphs (8) [re confidentiality] and (9) shall survive and remain in force and effect notwithstanding any termination of this agreement.”

(iv) “15. Restrictive Covenant

Subject to the terms and conditions of this Agreement, the employee covenants and agrees as follows:

A. Upon termination, the hygienist hereby covenants and agrees not to perform hygiene services, in any other location within a radius of three (3) kilometres from the Premises, for a period beginning the Effective Date until two (2) years from the date hygienist discontinues practising at Brant Smiles Family Dentistry.

B. The hygienist freely enters into this Restrictive Covenant and expressly agrees that the duration, geographical limitations and description of the prohibited conduct as set herein are reasonable.”

(v) “16. Severability

“The parties hereby agree that in the event that any provision, cause, article or attachment herein, or part thereof, which form part of the agreement are deemed void, invalid or unenforceable by a court of competent jurisdiction, the remaining provisions, clauses, articles, attachments or parts thereof, shall be and remain in full force and effect.”

(d) Plaintiff’s performance review and execution of the Employment Agreement

[9] The plaintiff met with Dr. Witulska’s husband Ryszard Witulska and Kristen Pagett, both office managers for the defendant, on July 17 2018 for her annual performance review. After some negotiation, the plaintiff executed the written Employment Agreement substantially on the terms set forth in draft written employment agreement provided to the plaintiff in July 2016. Ms. Pagett deposed that she did not initiate the discussion of the Employment Agreement but rather the plaintiff did, and she did not pressure the plaintiff to sign it. The Employment Agreement included all of the provisions referred to above without alteration.

[10] The plaintiff deposed that after she signed the Employment Agreement Ms. Pagett produced a sheet listing 25 days that she had been absent over the previous fiscal year. She was also presented with the performance evaluation form completed by Ms. Pagett which identified “attendance” and “dependability” as “growth areas” for the plaintiff.

[11] In addition, Ms. Pagett produced a Performance Evaluation Summary stating, in part, that the plaintiff’s 25 missed days “have impacted the business greatly” and have an effect not only on the plaintiff’s team members but “on the financial side of the business as well.”

[12] The plaintiff deposed that Mr. Witulska stated that the practice had experienced a $400,000 loss in revenue due to absences in the hygiene department and that the loss was largely due to her absences and those of another hygienist. He also informed her that, due to the loss in revenues, no one would be receiving a raise or bonus that year.

[13] The plaintiff stated that she informed Mr. Witulska that her absences had resulted from a communicable infection (MSRA) that she experienced and from the need to recover from foot surgery from June 12 to June 22, 2018.

[14] She also stated that, at the end of the meeting, Ms. Pagett advised her that Dr. Witulska felt that she was no longer able to handle working three days a week (Tuesday, Thursday and Friday) and presented her with a new schedule calling for her to work on Thursdays and Fridays only.

[15] In response, Ms. Pagett deposed that the plaintiff welcomed the reduction in her hours from three days to two, stating “you are doing me a favour because that was my intent” and that she had been suffering from an on-going tendinitis condition for several years.

[16] The plaintiff acknowledged having indicated to Ms. Pagett that she was “considering giving her arm a break anyways” however she deposed that, in saying this, she was being “flippant” as a “defence mechanism.” She maintained that this statement was not true and that she had not experienced issues with tendinitis or otherwise with her arm for several years. She was very upset that the hours and income that she had come to rely upon since 2016 were being reduced by 33%. She also deposed that she was upset with Ms. Pagett’s and Mr. Witulska’s stated reason for the reduction in her hours being her health-related absences and for being unfairly blamed for a $400,000 loss in revenue in the hygiene department and that as a result of this no employees would be receiving a bonus or raise.

[17] Ms. Pagett deposed that the decision to eliminate the plaintiff’s Tuesday shift was part of a broader revision of the hygiene schedule resulting from a considerable drop in hygiene hours and patients. She also explained that a new dentist was arriving September 2018 which necessitated a further revision of the schedule. She stated that the schedule revision affected multiple employees of the practice including another hygienist, an assistant and a dentist who also had their hours changed. The plaintiff was not the only employee affected by the revision of the schedule.

[18] Dr. Witulska deposed that the plaintiff’s normal work schedule from 2008 to February 2016 comprised two shifts per week. On the latter date the plaintiff was assigned a third shift on a temporary basis during the maternity leave of another hygienist. She stated that this change was discussed with the plaintiff and “clearly understood to be a temporary arrangement only.”

(e) Plaintiff’s resignation

[19] On the day following the performance review meeting, the plaintiff wrote to the defendant stating that the guilt about how much money the practice lost due to her unavoidable days off had upset her and that it proved to her that “you care more about money than you do about your employees” and that she felt that she was being punished for missing 25 unavoidable days during the past year.

[20] On July 23 2018 the plaintiff submitted a letter of resignation to the defendant stating, among other things, that she was resigning her position as of August 6, 2018 and that

“the fact that you chose to deduct my hours because you thought it was too much for me to handle without even discussing this with me is the main reason that I am choosing to leave. I have worked Tuesdays and Thursdays in this practice for over 28 years and you chose to deduct one of those days and keep me in on Fridays which is the extra day I picked up 1 ½ years ago… I can no longer work in an environment that is money-driven and not patient care oriented.”

(f) Alleged breaches by the plaintiff of the non-competition and non-solicitation covenants in the Employment Agreement and the plaintiff’s response

[21] Dr. Witulska deposed that in late September 2018 she learned that the plaintiff had become employed by Lynden Park Dental, located less than half a kilometre from the defendant’s premises in Brantford.

[22] Dr. Witulska deposed that the practice had received complaints from patients regarding the plaintiff’s attempts to solicit them to her new office. She cited information received from an associate dentist Dr. Kathy Huynh that a patient, Mary Wells, had told her that both she and her daughter Lisa Wells had been contacted by the plaintiff to advise that she had left Witulska Dentistry and was working at Lynden Park Mall Practice. She appended as an exhibit to her affidavit an email from Dr. Huynh to Mr. Witulska reporting on this. It is noteworthy that none of Mary Wells, Lisa Wells, Dr. Huynh or Mr. Witulska provided an affidavit in the proceeding.

[23] Dr. Witulska deposed further to the following:

(a) since the plaintiff left Witulska Dentistry, at least 24 patients had left to patronize the Lynden Park Mall Practice. Witulska Dentistry received requests to send these patients’ dental records to Lynden Park Mall Practice after the plaintiff commenced working there. Each of these patients had regularly received hygiene service from the plaintiff;

(b) she believes that these patients were motivated to follow the plaintiff to the Lynden Park Mall Practice due to the loyalty and affinity they had developed with her to in the course of her employment. Fostering these relationships was a fundamental aspect of the plaintiff’s obligation as an employee and her role as a dental hygienist. When she purchased the practice in 2011, she secured a proprietary interest in the goodwill that the previous ownership has cultivated with its patients, and the loyalty and affinity that the patients had for the plaintiff was an integral part of that goodwill;

(c) each typical patient spends an average of approximately $2000 per year for dental and hygiene services. A conservative estimate of loss due to the plaintiff’s solicitation of the 24 patients is at least $48,000 per year; and

(d) she believes that the patients who left Witulska Dentistry would testify that they were solicited to leave and attend the London Park Mall Practice by the plaintiff and that it would be unfair to grant summary judgment on the counterclaim without hearing the testimony of these potential witnesses at trial.

[24] In response, the plaintiff deposed that she did contact Lisa Wells in September or October, 2018. Lisa Wells is the daughter of Mary Wells whom she had treated at Brant Smiles every three months for 28 years. She was concerned that Mary would be upset if she was not there when she attended for her next appointment. She asked Lisa to tell Mary that she would not be at Brant Smiles and that as of November she would be working at Lynden Park Mall Dental. She did not suggest that Mary should move to Lynden Park Mall Dental.

[25] The plaintiff also deposed that she ran into six other Brant Smiles patients while she was out in the community and that when she encountered them, they told her that they had been advised by employees at Brant Smiles that she had retired. She informed these individuals that she had not retired but did not volunteer that she was working at Lynden Park Mall Dental. If they asked her where she was working, she simply told them that she was working at Lynden Park Mall Dental. At no time did she solicit or invite them to become patients of that practice.

Pleadings

(a) Statement of Claim

[26] By Statement of Claim issued under the Simplified Procedure provided in rule 76 of the Rules of Civil Procedure the plaintiff brought action against the defendant for the following relief:

(a) a declaration that she was constructively dismissed from her employment with the defendant;

(b) damages for constructive dismissal in the amount of 24 months’ pay in lieu of notice; and

(c) damages for breach of her human rights in the amount of $30,000.

[27] The plaintiff pleaded that she was constructively dismissed on or about July 23 2018 when she submitted her letter of resignation and accepted the defendant’s repudiation of the employment contract by 1) reducing her regularly scheduled hours and her pay by 33% and 2) by alleging that her excessive absences over the past year had caused the defendant to lose hundreds of thousands of dollars in revenue.

[28] The plaintiff also pleaded that, at all material times, the defendant knew that she had contracted MRSA and had undergone foot surgery and knew that her absences were a direct result of her illness and need to recover from surgery.

[29] The plaintiff claimed that she is entitled to 24 months’ reasonable notice of her dismissal, inclusive of her statutory entitlements under the Employment Standards Act, 2000.

[30] The plaintiff also claimed that her absences, caused by her disability, were a factor in the defendant’s decision to reduce her hours and earnings and claimed general damages for infringement of her human rights, including compensation for injury to dignity, feelings and self-respect.

(b) Statement of Defence and Counterclaim

[31] By Statement of Defence and Counterclaim the defendant defended the plaintiff’s action. The defendant pleaded that the Employment Agreement included a clause providing that the number of days and hours per week worked by the plaintiff were in the defendant’s sole discretion.

[32] The defendant also pleaded that no changes were made to the schedule as a consequence of the plaintiff’s absences. The defendant stated that it repeatedly reworked its schedule to accommodate the plaintiff’s absences without comment or complaint and without ever requesting medical evidence of her condition, and that it took all reasonable steps to accommodate the plaintiff.

[33] The defendant counterclaimed for damages for breach of contract in the amount of $200,000 and for an interim and permanent injunction restraining the plaintiff from providing hygiene services at any location within a 3 km radius of the defendant’s Brantford office for a period of two years, soliciting patients or employees of the defendant for a period of 12 months, and making any derogatory remarks about the defendant for a period of 12 months.

(c) Reply and Defence to Counterclaim

[34] In her Reply and Defence to Counterclaim the plaintiff stated that the non-solicitation and non-competition provisions in the Employment Agreement are unenforceable, and denied that, in the event that the nine-solicitation clause is enforceable, she breached it or unlawfully solicited any of the defendant’s patients.

Motions for Summary Judgment

[35] By Notice of Motion the plaintiff seeks:

(a) summary judgment dismissing the counterclaim; and

(b) a declaration that the termination provision in the employment contract is void and unenforceable

[36] by Notice of Motion the defendant seeks an order granting summary judgment dismissing the plaintiff’s action.

Determination

[37] For the reasons set forth below, the plaintiff’s motion for summary judgment seeking dismissal of the defendant’s counterclaim and the defendant’s motion for summary judgment seeking dismissal of the plaintiff’s action are each granted as I find that there are no genuine issues requiring a trial in respect of both the action and the counterclaim. The action and the counterclaim are each dismissed.

Guiding Principles respecting Summary Judgment

[38] The basic principles governing motions for summary judgment, as laid out in rule 20 of the Rules of Civil Procedure and explained in the case of Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, are well known and there is no controversy between the parties on those basic principles.

[39] Rule 20.04(2)(a) of the Rules of Civil Procedure provides that the Court shall grant summary judgment if it is satisfied that there is no genuine issue requiring a trial. This will be the case where the summary judgment motion process provides the court with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportional procedure.

[40] If the court finds that there are genuine issues requiring a trial and the record on the motion is insufficient to permit their determination, it must consider whether the issues can be decided using the fact-finding resources available under rule 20.04(2.1) and (2.2). These resources include weighing the evidence, evaluating the credibility of a deponent and drawing any reasonable inference from the evidence.

[41] The party responding to a motion for summary judgment is required to put its “best foot forward” and the court is entitled to assume that the evidence led on the motion for summary judgment will be the evidence at trial.

Issues raised by the plaintiff’s motion

[42] The plaintiff takes the position that the enforceability of (i) the termination provision of the Employment Agreement (ii) the non-competition provision and (iii) the non-solicitation provision are discrete issues, amenable to summary judgment, which can be separated from the other issues arising from the plaintiff’s claim, namely whether the defendant constructively dismissed the plaintiff, the period of reasonable notice of termination, mitigation and the plaintiff’s human rights claim.

[43] In the event that the non-solicitation provision is found to be enforceable the questions of whether there are genuine issues requiring a trial respecting whether the plaintiff breached the provision and if so, whether the defendant suffered damages as a result would need to be determined. The latter issue may also apply if the non-competition provision is found to be enforceable.

Issues raised by the defendant’s motion

[44] The defendant takes the position that there is no genuine issue for trial on the plaintiff’s action for constructive dismissal and breach of her human rights. The parties are agreed that if the plaintiff’s claim for constructive dismissal is dismissed, her human rights claim must also be dismissed, as it cannot be maintained as a stand-alone remedy by virtue of s.46.1(2) of the Human Rights Code.

Issue 1 – Is the termination provision in the Employment Agreement enforceable against the plaintiff?

[45] The plaintiff takes the position that the termination provision at para. 6 of the Employment Agreement is unenforceable. Para. 6(b) purports to limit the defendant’s obligation to pay the plaintiff in lieu of notice in the event of a termination without cause to eight weeks pay, inclusive of all entitlements under statute, common law, contract or otherwise.

[46] Although, as indicated above, the plaintiff’s action is to be dismissed, it is useful to consider the enforceability of the termination provision in the Employment Agreement in the event that I am wrong in that respect.

[47] The plaintiff argues that the termination provision is unenforceable on two bases:

(a) The “without cause” provision at para. 6(b) does not comply with the Employment Standards Act, 2000 S.O. 2000, c. 41 (the “ESA”) as it excludes the continuation of payment of benefit contributions during the notice period, contrary to sections 60 and 61. Para. 60(1)(c) provides that, during a notice period under section 57 or 58, the employer 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. Para. 61(1)(b) provides that, where an employer terminates the employment of an employee without notice or with less notice than required under section 57 or 58, the employer must continue to make benefit plan contributions in order to maintain the benefits which the employee would have been entitled had he or she continued to be employed during the notice period; and

(b) the “for cause” provision at para. 6(a) does not comply with the ESA as it provides that the employer may terminate the employee if “cause for termination exist under the common law of the courts of Ontario.” The ESA imposes a higher standard for termination for cause than does the common law, that of “wilful misconduct, disobedience or willful neglect of duty” as provided by s. 55 of the ESA and para. 2(1)3 of Ont. Reg. 288/01. Ss. 5(1) of the ESA prohibits any contracting out of or waiver of an employment standard and provides that any such contracting out or waiver is void.

[48] I propose to deal with the second basis proposed by the plaintiff for invalidity of the contractual termination provision first.

[49] The principles governing the interpretation of termination clauses in employment contracts was summarized by the Court of Appeal in Waksdale v Swegon North America Inc. 2020 ONCA 391 at para. 7, drawing on Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158 at para. 28. The Court noted the following points in particular:

• The ESA is remedial legislation, intended to protect the interests of employees. Courts should thus favour an interpretation of the ESA that "encourages employers to comply with the minimum requirements of the Act" and "extends its protections to as many employees as possible", over an interpretation that does not do so.

• Termination clauses should be interpreted in a way that encourages employers to draft agreements that comply with the ESA. If the only consequence employers suffer for drafting a termination clause that fails to comply with the ESA is an order that they comply, then they will have little or no incentive to draft a lawful termination clause at the beginning of the employment relationship.

[50] In Waksdale there was no question that the employer would not be permitted to rely on the termination for cause provision in the contract between the parties as it breached the provisions of the ESA. The question was whether the termination for cause provision in the termination with notice provision should be considered separately or whether the illegality of the termination for cause provision impacts the enforceability of the termination with notice provision (see para. 9).

[51] The court held that the termination provisions were to be read as a whole and the correct analytical approach is to determine whether the termination provisions so read violate the ESA. While courts will permit an employer to enforce the rights-restricting contract, they will not enforce termination provisions that are in whole or in part illegal and it is irrelevant whether the termination provisions are found in one place in the agreement were separated, or whether the provisions are by their terms otherwise linked (see para. 10).

[52] Thus, the question for determination in the case at bar is whether the Termination with Cause provision of the Employment Agreement breaches the ESA. If it does, the Termination without Cause provision is unenforceable, notwithstanding that when considered alone it does not infringe the ESA. For the reasons that follow, I find that Termination with Cause provision does breach the ESA and therefore the Termination without Cause provision, which limits the period of notice to eight weeks is unenforceable.

[53] The Termination with Cause provision of the Employment Agreement provides that the defendant could terminate the plaintiff’s without notice or pay in lieu of notice “should cause for termination exist under the common law of the courts of Ontario.” I accept the plaintiff’s submission that the ESA imposes a higher standard for termination for cause than does the common law, that of “wilful misconduct, disobedience or willful neglect of duty” and prohibits any contracting out of or waiver of an employment standard and provides that any such contracting out or waiver is void.

[54] In Khashaba v Procom Consultants Group Ltd. 2018 ONSC 7617 Carole J. Brown, J., citing Plester v. PolyOne Canada Inc., 2011 ONSC 6068 (Ont. S.C.J.), aff'd 2013 ONCA 47 (Ont. C.A.) confirmed at para. 53 that wilful misconduct is a higher standard than just cause at common law, as it involves an assessment of subjective intent, whereas just cause is a more objective standard. Careless, thoughtless, heedless, or inadvertent conduct, no matter how serious, does not meet the ESA wilful misconduct standard. By contrast, common law just cause for dismissal may be found on the basis of prolonged incompetence, without any intentional misconduct.

[55] Insofar as the Termination with Cause provision purports to permit immediate termination without notice or pay in lieu of notice based upon the existence of cause for termination under the common law, it is void by virtue of ss. 5(1) of the ESA which prohibits any contracting out of or waiver of an employment standard.

[56] The defendant does not dispute that the Termination with Cause provision breaches the ESA, but argues that the Severability provision applies to deem the Termination without Cause provision to remain in full force and effect.

[57] Counsel for the defendant cited the case of Oudin v. Centre Francophone de Toronto, Inc. 2016 ONCA 514 in support of this submission.

[58] I am unable to accept that the severability provision may be applied to save the Termination without Cause provision. The issue in Oudin centred around the accuracy of the translation by the motion judge of a provision in the employment agreement in that case from French to English. At para. 4 the Court noted that the original agreement provided that the employer could terminate the employee’s employment with ESA minimum notice and made no mention of severance.

[59] The Court in Waksdale specifically declined to apply the severability clause in that case, stating at para. 14 “we decline to apply this clause to termination provisions that purport to contract out of the provisions of the ESA. A severability clause cannot have any effect on clauses of the contract that have been made void by statute… Having concluded that the Termination for Cause provision in the Termination of Employment with Notice provision are to be understood together, the severability clause cannot apply to sever the offending portion of the termination provisions.”

[60] The case at bar is indistinguishable from Waksdale. I find that there is no genuine issue requiring a trial respecting the enforceability of the Termination without Cause provision of the Employment Agreement, as it is a question of law and would not depend upon a finding of credibility at trial. The Termination without Cause provision of the Employment Agreement must therefore be found to be void and unenforceable.

[61] In light of this finding, it is not necessary to rule on the first basis relied upon by the plaintiff for a finding that the termination provision of the Employment Agreement is unenforceable, namely that it does not comply with Para. 61(1)(b) of the ESA which requires the employer to continue to make benefit plan contributions for the notice period. Parenthetically it is not clear from the evidence that the plaintiff was entitled to participate in a benefit plan as part of her compensation.

Issue 2 – Is the non-competition/restrictive covenant provision in the Employment Agreement enforceable against the plaintiff?

[62] The Court of Appeal observed in H.L. Staebler Co. v. Allan (2008), 2008 ONCA 576, 92 O.R. (3d) 107 (Ont. C.A.) at para. 33, that the legal principles that apply when determining whether a restrictive covenant in an employment contract is enforceable have long been settled - in short, such a covenant is enforceable only if it is reasonable between the parties and with reference to the public interest. At para. 34 the court stated that this test reflects the competing principles that must be balanced, namely the important public interest in discouraging restraints on trade and maintaining free and open competition on the one hand, and that the disinclination to restrict the right to contract, particularly when that right has been exercised by knowledgeable persons of equal bargaining power.

[63] At para. 36 of Staebler the Court set forth a framework for assessing whether a restrictive covenant is overly broad or is only that which is reasonably required for the employer's protection. The Court indicated that the starting point is an overall assessment of the clause, the agreement within which it is found, and all of the surrounding circumstances. Thereafter, the three factors must be considered are:

(i) did the employer have a proprietary interest entitled to protection?

(ii) are the temporal or spatial features of the covenant too broad?

(iii) Is the covenant enforceable as being against competition generally, and not limited to proscribing solicitation of clients of the former employer?

[64] At para. 40 the Court cited the Supreme Court of Canada case of J.G. Collins Insurance Agencies v. Elsley, 1978 CanLII 7 (SCC), [1978] 2 S.C.R. 916 (S.C.C.) as making it clear that a non-solicitation clause is normally sufficient to protect an employer's proprietary interest and that a non-competition clause is warranted only in exceptional circumstances. The Court quoted Dickson, J. at pp. 925-926 of Elsley as stating "the next and crucial question is whether the covenant is unenforceable as being against competition generally, and not limited to proscribing solicitation of clients of the former employer. In the conventional employer/employee situation the clause might well be held invalid for that reason."

(see Donaldson Travel Inc. v Murphy, 2016 ONSC 740 at paras. 20-22, affirmed by Donaldson Travel Inc. v Murphy, 2016 ONCA 649)

[65] The defendant points to Elsley at para. 20 where Dickson, J. cited various cases which upheld the validity of a covenant prohibiting an employee from engaging in a particular type of work within a specified area, and for an acceptable period of time after the termination of her/his employment where the employee was in a position where she/he acquired a close personal acquaintance with the clients or customers of the business.

[66] It is noted however, that Dickson J. added that, on the facts in Elsley, when the clause was drafted it was known that the employee had, or would acquire, a special and intimate knowledge of the customers of his prospective employer and the means of influence over them.

[67] In the case at bar Dr. Witulska’s evidence respecting the purpose of the non-competition provision was limited to the following:

• Fostering relationships of loyalty and affinity with patients of the dental practice was a fundamental aspect of the plaintiff’s obligation as an employee and her role as a dental hygienist.

• When she purchased the practice from Dr. Veer in 2011, she secured a proprietary interest in the goodwill that the previous ownership has cultivated with its patients; and

• the loyalty and affinity that the patients had for the plaintiff was an integral part of that goodwill.

[68] The Employment Agreement was silent with respect to the purpose of the non-competition covenant. Specifically, it made no mention that fostering relationships of loyalty and affinity with patients was a fundamental aspect of the plaintiff’s obligation. The defendant led no evidence that the plaintiff had any understanding, or that it was ever explained to her that, in purchasing the practice from Dr. Veer, Dr. Witulska secured a proprietary interest in previously cultivated goodwill with patients in which she played an integral part.

[69] While Dr. Witulska may have subjectively believed that the plaintiff played an integral part in cultivating the goodwill of the practice which she purchased, there is no evidence, in contrast to Elsley, that when the non-competition provision was drafted, both parties knew that the plaintiff “had, or would acquire, a special and intimate knowledge of the customers of [her]…employer and the means of influence over them.”

[70] As noted above, the defendant has an obligation to but its best foot forward and the court is entitled to assume that the evidence led on the motion for summary judgment will be the evidence at trial.

[71] I find that the evidence led by the defendant, taken at its highest, does not support the existence of exceptional circumstances warranting a non-competition covenant to protect the defendant’s proprietary interest and that a non-solicitation clause would not be sufficient to afford that protection.

[72] In Shafron v KRG Insurance Brokers (Western) Inc. 2009 SCC 6 the Court held at paras. 22-23 that

(a) although an employee may build up a relationship with customers of the employer, unlike on the sale of a business, there is normally no payment for goodwill upon the employee leaving the employment of the employer;

(b) it is accepted that there is generally an imbalance in power between employee and employer.

(c) the absence of payment for goodwill as well as the generally accepted imbalance in power between employee and employer justifies a more rigorous scrutiny of restrictive covenants in employment contracts compared to those in contracts for the sale of a business.

[73] A rigorous scrutiny of the non-competition provision in the Employment Agreement in the case at bar does not support a finding that it is reasonable in respect of the interests of the parties and the public interest in discouraging restraints of trade.

[74] Moreover, the non-competition covenant suffers from ambiguities which preclude the defendant from being able to demonstrate that it is reasonable.

[75] The covenant purports to prohibit the plaintiff from performing “hygiene services” within a defined radius from “the Premises” for a period beginning the “Effective Date” until 2 years from the date the plaintiff “discontinues practicing at “Brant Smiles Family Dentistry.” Although the term “Premises” is capitalized, it is not defined. The evidence showed that, in addition to the Brantford location, the defendant carried on a dentistry practice at a separate location in the City of Cambridge on the date that the plaintiff resigned. The Employment Agreement does not make it clear to the plaintiff whether the geographical restriction is referable to both locations or to only one. Similarly, although the term “Effective Date” is capitalized, it is not defined. The Agreement therefore does not make it clear when the restriction period commences. Moreover, the phrase “hygiene services” is not defined, leaving the scope of prohibited activity unclear.

[76] In Shafron Rothstein J, writing for the Court, stated at para. 27 that, for a determination of reasonableness to be made, the terms of the restrictive covenant must be unambiguous, and the reasonableness of a covenant cannot be determined without first establishing the meaning of the covenant. The party seeking to enforce the restrictive covenant bears the onus of showing the reasonableness of its terms. An ambiguous restrictive covenant will be prima facie unenforceable because the party seeking enforcement will be unable to demonstrate reasonableness in the face of an ambiguity.

[77] There is no genuine issue requiring a trial with respect to the enforceability of the non-competition covenant. The summary judgment motion process provides the court with the evidence required to fairly and justly adjudicate the issue and is a timely, affordable and proportional procedure.

Issue 3 – Is the non-solicitation covenant provision in the Employment Agreement enforceable against the plaintiff?

[78] The principles discussed previously respecting the determination of whether a non-competition covenant in an employment contract is reasonable as between the parties and in terms of the public interest and therefore enforceable also apply to non-solicitation covenants. The principles were usefully summarized by Aitken, J. in IT/Net Ottawa Inc. v. Berthiaume, 2002 [2002] O.J. No. 4256 (reversed in part on other grounds [2006] O.J. No. 283) at para. 48, citing Elsley, as follows:

• A restrictive covenant in an employment agreement is prima facie void and unenforceable as being in restraint of trade.

• Nevertheless, if it is shown that the employer had a legitimate business interest to protect and that the restraint was reasonably necessary to protect that interest, both as between the parties and with reference to the public interest, the restrictive covenant will be enforced.

• The onus is on the party seeking to uphold the restrictive covenant to prove that it is reasonable as between the parties. In this regard, the reasonableness of the restrictive covenant can be determined only upon an overall assessment of the clause, the agreement within which it is found and all of the surrounding circumstances.

• Once the party seeking to rely on the covenant establishes its reasonableness as between the parties, the onus of proving that it is unreasonable in terms of the public interest and therefore should be unenforceable shifts to the party attacking the covenant.

[79] On the assumption that the defendant had a legitimate business interest to protect by means of a reasonable non-solicitation provision, I find that the defendant has failed to prove that the particular non-solicitation covenant at issue is reasonable as between the parties.

[80] The covenant prevents the plaintiff from soliciting business from “any patient” of the defendant for the specified period. No limitation was placed on the term “patient” which on its face includes any patient of the defendant at either of its practice locations in Brantford and Cambridge (where the plaintiff was never employed), regardless of whether the plaintiff treated the patient or had any other contact with them, and regardless of whether they were a patient during the time that the plaintiff was employed by the defendant. I find that the broad restriction on solicitation to include patients of the defendant with whom the plaintiff had no contact is unreasonable as between the parties.

[81] Based on this finding, is not necessary to consider whether the covenant is reasonable in terms of the public interest.

Issue 4 – if the non-solicitation covenant provision in the Employment Agreement enforceable against the plaintiff, did she breach it?

[82] In the event that I am wrong on the question of the enforceability of the non-solicitation covenant in the Employment Agreement, I find that there is no genuine issue requiring a trial with respect to whether the plaintiff did “solicit business” from “any patient” of the defendant.

[83] The evidence that the defendant relies upon in support of its allegation of solicitation by the plaintiff consists of triple or quadruple hearsay. Dr. Witulska appended to her affidavit a copy of an email from an associate dentist Dr. Kathy Huynh to her husband Ryszard Witulska reporting that a patient Mary Wells told her that she and her daughter Lisa Wells had been contacted by the plaintiff by telephone to advise that she had left the defendant’s practice and moved to the Lynden Park Mall dental office.

[84] None of Mary Wells, Lisa Wells, Dr. Kathy Huynh or Ryszard Witulska provided their own evidence either by affidavit or through cross examination pursuant to rule 39.03. The only admissible evidence of contact between the plaintiff and Mary or Lisa Wells following her departure from the practice is that of the plaintiff herself. Although she advised Lisa Wells that she had left the practice and would be joining the Lynden Park Mall dentistry office, she did not suggest that Mary Wells should patronize her new employer.

[85] Moreover, the plaintiff deposed that, when asked in conversation, she informed six patients that she was working at Lynden Park Mall Dental but did not solicit or invite them to become patients of that practice.

[86] In my view, the question of what type of conduct on the plaintiff’s part would infringe the non-solicitation provision, if enforceable, is informed by the nature of the relationship between the plaintiff and the defendant. The plaintiff was not a director, officer or key management person for the defendant and was therefore not a fiduciary. A finding of solicitation would require her to have affirmatively approached a patient with a view of enticing the customer to cease doing business with the defendant (see DiFlorio v. Con Structural Steel Ltd., [2000] O.J. No. 340 (S.C.J.) at paras. 204-205 and the authorities therein referred to).

[87] There is no evidence of any such approach or enticement on the record before the court.

[88] Dr. Witulska’s assertion that she believes that patients who left the practice will testify at trial that they were solicited to leave and attend the Lynden Park Mall Practice is not sufficient to respond to the defendant’s motion for summary judgment. The defendant’s obligation is to put its best foot forward in response to the motion.

[89] There is no genuine issue requiring a trial with respect to the enforceability of the non-solicitation covenant in the Employment Agreement, or if enforceable, that it was breached by the plaintiff. The summary judgment motion process provides the court with the evidence required to fairly and justly adjudicate these issues and is a timely, affordable and proportional procedure.

Issue 5 –Is there a genuine issue for trial respecting whether the plaintiff was constructively dismissed by the defendant?

[90] The guiding principles respecting what a plaintiff must show to establish constructive dismissal were set out in Potter v. New Brunswick (Legal Aid Services Commission), 2015 SCC 10, [2015] 1 S.C.R. 500 (S.C.C.). These principles were more recently summarized by Millar, J.A. in Chapman v. GPM Investment Management, 2017 ONCA 227 at paras. 13-17 as follows:

• There are two routes that a plaintiff can follow to establish constructive dismissal.

• The first branch is apt where an employer has, by a single unilateral act, breached an essential term of the contract of employment. The second branch allows for constructive dismissal to be made out where there has been a series of acts that, taken together, show that the employer no longer intended to be bound by the contract. On both branches, it is the employer's perceived intention no longer to be bound by the contract that gives rise to the constructive dismissal.

• The first branch — for a single unilateral act — has two steps: (1) the employer's conduct must be found to constitute a breach of the employment contract, and (2) the conduct must be found to substantially alter an essential term of the contract.

• In contrast, the focus of enquiry on the second branch is not on a single act of the employer, but on the cumulative effect of past acts by the employer that establish that the employer no longer intends to be bound by the contract.

• The perspective shifts during the analysis. In ascertaining whether an employer's conduct has amounted to a breach of contract (the first step of the first branch), the test is objective. Thereafter, on both the second step of the first branch and on the second branch, the perspective shifts to that of a reasonable person in the same circumstances as the employee. 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 to no longer be bound by the contract. In these parts of the analysis, the trial judge must conduct the enquiry from the perspective of the reasonable employee. This perspective excludes, for example, reliance on information that the employee did not know about or could not be expected to have foreseen. Furthermore, the employee is not required to establish that the employer actually intended to no longer be bound by the contract, but only that a reasonable person in the employee's situation would have concluded that this was the employer's intention.

[91] The plaintiff takes the position that she was constructively dismissed under both branches of the test laid out in Potter and Chapman. She says that, on the first branch, the unilateral reduction in her hours and remuneration by 33%% constituted a breach of the employment contract on the part of the defendant which substantially altered an essential term of the contract. On the second branch, by punishing her for her unavoidable medical absences, the defendant demonstrated an intention to no longer be bound by the terms of the employment contract and made her continued employment intolerable.

[92] The plaintiff argues that, based upon the uncontradicted evidence respecting the events of July 17, 2018, the court may summarily determine the constructive dismissal claim and find that she was constructively dismissed. Citing Sproule v Tony Graham Lexus Toyota, 2018 ONSC 3955 at para. 38, the plaintiff submits that, on a motion for summary judgment, the court may grant summary judgment to the responding party and a cross-motion is not required.

[93] For the reasons discussed below, I find that there is no genuine issue requiring a trial that the plaintiff was constructively dismissed on either branch of the test for constructive dismissal and that summary judgment should be granted dismissing the plaintiff’s action.

[94] On the first branch of the Potter test, there is no dispute in the evidence that until February 2016 the plaintiff’s normal work schedule comprised two shifts per week and that on the that date the plaintiff was assigned a third shift on a temporary basis during the maternity leave of another hygienist. The plaintiff did not dispute Dr. Witulska’s evidence the change was discussed and clearly understood to be a temporary arrangement only. The plaintiff led no evidence that in the approximately one and a half years that followed the parties reached any agreement or understanding that the temporary arrangement for a third shift had become permanent and therefore represented an essential term of her contract of employment.

[95] The Employment Agreement entered into on July 17 2018 clearly provided that the number of days and hours worked per week were in the defendant’s sole discretion and was subject to variation, based upon the doctor’s schedule. It is not necessary to make a finding on whether this was a term of the prior unwritten employment agreement, as the written Employment Agreement came into effect immediately upon its execution.

[96] I find that there is no genuine issue requiring a trial respecting whether the elimination of one shift per week in the plaintiff’s schedule constituted a constructive dismissal on the first branch of the test. In eliminating the temporary third shift and reverting to the plaintiff’s previous weekly complement of two shifts the defendant did not breach an essential term of the contract of employment.

[97] It is clear from the authorities that the second branch of the test is only engaged by a series of acts by the employer which, taken together, show that the employer no longer intended to be bound by the contract. A single act will not suffice.

[98] In the recent case of Tonkin v Paris Kitchens, 2022 ONSC 749 Gibson, J., after citing Chapman, emphasized this principle as follows at para. 18:

The second branch allows for constructive dismissal to be made out where there has been a series of acts that, taken together, show that the employer no longer intended to be bound by the contract. The focus of enquiry is not on a single act of the employer, but, assessed from the perspective of a reasonable employee, on the cumulative effect of past acts by the employer that establish that the employer no longer intended to be found by the contract. This requires that a reasonable person in the employee's situation would have concluded that this was the employer's intention.

(underlining added)

[99] The plaintiff relies on a single act of the defendant in support of its claim under the second branch – allegedly punishing her during her performance review for unavoidable absences. A single act is not sufficient to satisfy the requirement that there be a series of acts the cumulative effect of which establish that the defendant no longer intended to be bound by the contract. There is therefore no genuine issue requiring a trial that the defendant constructively dismissed the plaintiff on the second branch of the test in Potter. As noted previously, the parties agreed that the plaintiff’s human rights claim cannot stand as a claim independent of her claim based on constructive dismissal.

Disposition

[100] In accordance with the foregoing, it is ordered as follows:

(a) The defendant’s motion for summary judgment is granted and the plaintiff’s action is dismissed;

(b) The plaintiff’s motion for summary judgment is granted and the defendant’s counterclaim is dismissed.

Costs

[101] Given the outcome and without having the benefit of submissions of counsel, it would appear that the appropriate disposition on costs is that each party bear their own costs. However, if either party intends to seek an order for costs, that party may deliver written submission on costs within 14 days of the release of these Reasons. The party from whom costs are sought may deliver responding submissions within 10 days thereafter. The written submissions shall not exceed four (4) double-spaced typewritten pages, exclusive of Costs Outlines, Bills of Costs and Offers to Settle and shall be delivered to me in care of the Trial Coordinator at Brantford utilizing the email address used for release of these Reasons.

[102] In the event that the parties are able resolve the issue of costs, counsel shall advise the court accordingly.

[103] In the event that no submissions are received within the timeframe set forth above, the parties shall be deemed to have settled the issue of costs.

D.A. Broad, J.

Date: May 18, 2022