Court's Obiter Takes New Twist on Temporary Layoffs

Ontario's Superior Court of Justice released a new decision, Trites v. Renin Corp., addressing the question of whether or not a temporary layoff, without an express or implied agreement contemplating temporary layoffs, constitutes a constructive dismissal.

Most employment lawyers would tell you that the answer is yes, and that this is well-established law.  I've made multiple entries to that effect before, in December 2011 and January 2012.  But don't take my word for it:  See these other articles by Professor David Doorey, Canadian Law Magazine (quoting employment lawyer Doug MacLeod), Siskinds' labour and employment law blog...the list goes on.

It's a bit of a confusing framework, because the Employment Standards Act, 2000, creates an infrastructure for temporary layoffs, saying that a 'termination' of employment occurs when a temporary layoff exceeds a certain length of time.  Many human resources professionals and non-employment lawyers have looked at these provisions and concluded that they are entitled to implement temporary layoffs as a cost-saving measure.

And the established wisdom is that they're wrong.

But Trites cuts the other way, with Justice Moore concluding that "there is no room remaining at law for a common law finding of constructive dismissal in circumstances where a temporary layoff has been rolled out in accordance with the terms of the ESA."

The Court notes the Court of Appeal's decision in Elsegood (see my January 2012 post linked above) as standing for the proposition that the common law is displaced by statute.  Therefore, because the legislature has created a framework for temporary layoffs, it doesn't make sense to suggest that employers are unable to do so.

Still, employers shouldn't celebrate just yet.  There are problems with the decision, which leads me to expect that the proposition will not be widely followed, or upheld by the Court of Appeal if it goes there.

Why Won't Trites Be Followed?

Firstly, the finding that an employer is entitled to lay off without an express or implied agreement is strictly obiter.  The Court went on to find that the layoff, in the circumstances, did not comply with the Employment Standards Act requirements (an interesting finding in and of itself), and accordingly the plaintiff was awarded damages in lieu of reasonable notice.

Secondly, there are some fairly clear misapprehensions of the state of the law.  It's acknowledged that, at common law, a temporary layoff without a contractual basis is a constructive dismissal.  Elsegood is relied upon as saying that the common law is displaced by the ESA, but that's a drastic oversimplification of the case, which cites the Supreme Court of Canada as noting that the notice provisions of the ESA do not displace the common law pertaining to reasonable notice, and do not affect the civil remedies an employee may have against the employer.

Thirdly, the opening line of the case is nothing less than alarming:  "This case involves circumstances that give rise to the novel and perplexing legal issue of whether a financially struggling employer can unilaterally and arbitrarily impose a temporary layoff upon an employee absent an express or implied term in the contract of employment to support the employer's action."  [Emphasis added.]

There is nothing novel about this question.  I can point to quite a few cases, over the last 17 years, addressing the question directly.  Some refer to the ESA provisions in question specifically, and some don't, but the layoff provisions in the ESA are nothing new.

Style v. Carlingview Airport Inn is a 1996 case decided by the Divisional Court concluding that the employer was not entitled to temporarily lay off an employee pursuant to the ESA.  The employer in that case relied on an earlier decision, Stolze, where an employee had unsuccessfully made an ESA claim following a temporary layoff, but the Divisional Court distinguished it, noted that the scheme of statutory entitlements under the ESA does not abrogate any entitlement arising outside the statute, and concluded that the temporary layoff constituted a constructive dismissal.

Martacelli v. CFC/INX Ltd. is a 1997 case from the Ontario Court of Justice.  The employer again tried to argue Stolze, that compliance with the ESA layoff provisions prevented the employee from seeking further recourse, but the Court again rejected the argument:  Whether or not the layoff fell within the ESA definition of a layoff was immaterial; the employee's common law rights and remedies were not displaced by the ESA.

Chen v. Sigpro Wireless Inc. is an Ontario Superior Court decision from 2004, reaching the same conclusion, that notwithstanding that the temporary layoff may be in the form contemplated by the ESA, it is nonetheless a constructive dismissal if there isn't an express or implied term in the employment contract authorizing it.  This decision was upheld by the Ontario Court of Appeal in 2005.

In all three of the above cases, the issue for the Court to decide was identical to that in Trites. And there are a number of other cases decided relatively recently (from 2003 to 2011, at least), without always considering the effect of the ESA directly, but concluding that a temporary layoff was a constructive dismissal, in contexts where the ESA in essentially its current form would clearly apply.

So for the Court to suggest that the question is "novel" is frankly bizarre.  The Court even refers to the Martacelli decision as being relied upon by the plaintiff, which case contains a full answer to the employer's submissions, but the Court here does not address the principles raised in that case.  Justice Moore appears not to have appreciated that the employer's position was directly opposite a long history of jurisprudence.

So Why Don't the ESA Layoff Provisions Work Like That?

There are a few key provisions in the Employment Standards Act which affect its interpretation.  s.5(1) of the ESA prevents the parties from contracting out of the terms of the ESA, but that's qualified by s.5(2), that where the provisions "in an employment contract or another Act that directly relate to the same subject matter as an employment standard provide a greater benefit to an employee than an employment standard, the provision or provisions in the contract or Act apply and the employment standard does not apply."

Also, s.8 of the ESA provides that, with certain exceptions, civil remedies of employees aren't affected by the Act.

These provisions inform the interpretation of the ESA greatly, making it - in almost every respect - a one-sided piece of legislation that benefits employees but not employers.  So the minimum notice under the ESA is just a minimum, providing a protection to employees.  You can't contract out of the minimum pursuant to s.5(1), but contracting for a greater amount is okay because of s.5(2).  And that's one of the key points for sustaining the entitlement to pay in lieu of reasonable notice at common law:  It is based on an implied contractual term at common law.  The implied contractual term still exists and is not displaced by the ESA, and because it invariably yields a greater benefit than the ESA, it is permissible under s.5(2).

The other key point, for pay in lieu of notice, is that the ESA uses "at least" language when setting out the minimum standards, which seems to reinforce the point in s.5(2).

So let's back away from the exceptionally well-established 'reasonable notice' issue, and ask why temporary layoff language has a similar effect.  What does the temporary layoff language actually do?

Here's the framework:  The ESA says that, when a person's employment is terminated or severed, they are owed termination and/or severance pay.  Then it proceeds to define termination and severance, to clearly establish what events trigger those obligations.

In the case of termination pay, a termination occurs if:

• the employer dismisses the employee or otherwise refuses or is unable to continue employing him or her;
• the employer constructively dismisses the employee and the employee resigns from his or her employment in response to that within a reasonable period; or
• the employer lays the employee off for a period longer than the period of a temporary lay-off.

The framework for the temporary layoff is then laid out in some detail.  The severance provisions are similar, except that there are a couple of additional circumstances to trigger severance obligations.

So the bottom line is this:  An employee's employment is terminated when any one of those three criteria are met - dismissed, constructively dismissed, or laid off beyond the applicable time period.

See the point?  The law of constructive dismissal, albeit a common law construction, is left intact and is in fact integrated into the ESA framework.  When there's a temporary layoff without a contractual basis, that is a constructive dismissal, which amounts to a termination under the ESA, without needing to inquire further into whether or not there has been a layoff for a period longer than that of a temporary layoff.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Independent Contractor Could Be Fired Without Notice

Here's a new and interesting one from the Ontario Superior Court of Justice:  McCready v. De Dwa Dehs Nyes.

The question, summed up by the judge at the very outset of the decision is this:  "What rights does a non-exclusive consultant retained on a six-month contract have, if he is terminated after the first week of work?"

The answer, according to Justice Morgan, is this:  He's only entitled to be paid for the work he did.

The Facts

McCready is a professional social worker, and a community advisor and research consultant.  He was hired on by the defendant for a six month consulting contract.  Or was going to be hired on.  As is notorious in employment law, they brought him in on the understanding that a contract would be signed.  The Court concluded that the defendant, through its executive director Chester Langille, had made a firm offer on the telephone with all the important terms agreed on, involving him working on a six month project with a budget of $55,000.

By the time McCready started, however, Langille was on sick leave, and some of the matters they had discussed didn't get passed along to the acting executive director, Dennis Compton.  For example, there were a number of periods of planned travel that McCready had told Langille about, including one week to work on another contract and a five-week period to teach in Africa.

McCready attended a six day training session with the defendant, and at the end they met with him to express concerns about his commitment.  Bottom line:  They told him at that point that he needed to work for them full time, every day through the 6 months, or not at all.  He insisted that he had a verbal agreement with Langille, and his other commitments could not be backed out of.  Shortly thereafter, they fired him.

The circumstances of the meetings were also less-than-ideal.  They called him into the ultimatum meeting fifteen minutes before he was to start a conference call for other clients, which had been pre-arranged to take place in a conference room of the defendant.  He was ten minutes late getting into the conference call, and then they interrupted the conference call to bring him in for the termination meeting.  I've dealt with enough terminations to know that you're hit and miss on the simplest of tasks immediately after a termination, but having to return partway through a professional conference call after being fired?  You'll be about as useful in the conversation as a babbling infant.  While he was finishing the conference call, the defendant cleared the premises early to prevent him from talking to anyone on his way out.

The way they treated McCready led to a claim for aggravated damages, though no evidence of injury was led, and punitive damages.

Decision

The Court's conclusion is full of surprises.

Firstly, the Court concluded that he was entitled to be paid for the time he had put in.  This isn't surprising.  But what is very surprising to me is that this was the entire award of compensatory damages.

In a consulting contract, there is no implied term of reasonable notice.  The presumption, in the absence of a term to the contrary, is that either party can terminate the arrangement at will.  The Court referred to a case where a 'termination at will' clause was spelled out in the contract, and where the Court of Appeal considered it to be a fair arrangement:  The contractor was able to pursue other work so long as it didn't put him into a conflict, could work at his own pace and hours, and could sever the contract at any time.  The Court concluded that the logic applied similarly here, that the terms, including an at-will provision, were fair to McCready.

My concern with the decision is that it doesn't appear to directly address the terms of this contract.  Indeed, the facts appear fairly straightforward, that it was an engagement for a fixed term, for a particular project, for particular compensation.  This differs from most consulting contracts, which consist of ongoing work on an 'as-needed' basis.

The difference is similar to that between indefinite term employment contracts and fixed-term employment contracts.  The fact of a fixed term is a rebuttal to the presumption that the contract can be terminated on reasonable notice.  Similarly, and perhaps more strongly, it would seem that a fixed term consulting agreement implicitly rebuts the implied 'at will' term.

If I offer to pay you x to perform task y over time period z, and you agree, and then I come back and repudiate the contract, then presumptively you are entitled to the money you would have made had the contract been completed.  It doesn't matter (except perhaps to mitigation) whether the contract is for exclusive services, for non-exclusive services, for provision of material goods, or anything else.  This is literally Contract Law 101.  To read into such a contract an implied term that I can terminate the contract at any time, even though task y isn't complete and time period z hasn't expired, is to ignore the intentions and reasonable expectations of the parties.

I would not be surprised, therefore, to see an appeal of that finding.

The other surprise is that the Court awarded punitive damages, surprising in part because it relies on decisions from employment contexts, and there are precious few successful claims for punitive damages in employment contexts.  The bar is set very high, but increasingly that seems to be changing.  Because of the very modest compensatory award ($5040), the punitive damages were limited to $15,000.  And then legal costs were awarded of $40,000.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Successor Employer Can Rely Upon Termination Clause Despite Ignoring Contract

There's a new case, Whittemore v. Open Text, which is somewhat unusual.  Its second sentence is "This is not a claim for constructive dismissal", and when the case is defined at the beginning by what it isn't, you know it will be different.

Whittemore started with a company called SoftArc in 1994, which was taken over by MC2 in 1999, which was in turn acquired by Open Text in 2002.

MC2 had Whittemore sign an employment contract which entailed, among other things, limited pay in lieu of notice of dismissal, and a month-long paid sabbatical every five years.

When Open Text took over, he signed a new non-solicitation and non-competition agreement, but no new contract, and it was understood at that point that he would no longer receive the sabbatical.

He was dismissed in 2011, on a not-for-cause basis, and provided with notice in accordance with the 1999 contract.

The Issue

Can Open Text rely upon the 1999 contract, despite having breached it?

The plaintiff's argument appears to be that the written contract ended at the time of the takeover when Open Text made it clear that it did not intend to be bound by its terms (i.e. by providing the sabbatical).  It is not open to a successor employer, the plaintiff argued, to pick and choose which contractual terms to keep.

The Decision

Open Text acquired MC2, but this didn't have any material change on Whittemore's employment relationship.  Indeed, Open Text stood in MC2's shoes in terms of the employment relationship, and had all of MC2's rights and responsibilities relating to Whittemore's employment.

Therefore, Open Text's failure to provide the sabbatical was probably a breach of contract, and if Whittemore wanted to seek a remedy for that, he should have.  It was not open to him to carry on with the employment relationship otherwise in accordance with the contract for 9 years, and then take the position that the employment contract was void.

My Thoughts

I can understand the plaintiff's argument, but I think the Court's decision was pretty much the only right answer, on the facts and issues as described.  The default presumption is that a successor employer is bound by employment agreements, and there's no need to affirm its commitment to them.  If my employer gets taken over and the new owner asks me to sign a contract saying I'll work double the hours for half the pay, I'm probably going to say no...if they fire me, they have to provide me with the notice to which I'm entitled; if not, I keep working my same hours for the same pay in accordance with my pre-existing employment contract.

Pretty simple, really.

So yes, if Whittemore wanted his sabbaticals, he should have demanded them, and possibly sued for compensation for the employer's breach of contract.  (He may or may not have been successful in that; there are nuances here.)

However, I can't help but wonder if there may have been nuances in the plaintiff's argument which were missed by the Court, given the overall framework described.

This fellow signed an employment agreement in 1999, after he'd already worked for a predecessor in the same role for 5 years.  In 1999, the law surrounding "fresh consideration" in employment contracts (i.e. that to bind an existing employee to a new contract, you have to give them something new) was not well-developed, and it was not something that most employers would necessarily have made a note of including.  If there was fresh consideration, it would have been accidental...

...such as, for example, an unusual term giving the employee a month-long paid sabbatical every five years.  If that were the only fresh consideration (NB: I don't know if this is the case; I'm simply speculating), then Open Text reneging on it three years later (i.e. before he received a sabbatical?) would deprive him of the whole benefit of the fresh consideration, perhaps or perhaps not constituting constructive dismissal, and making it an entirely different question as to whether or not there's fresh consideration at all.

To be clear, I'm not sure if the plaintiff made this argument, and I'm not sure if the argument would have been available on the facts.

But it would sure be a more interesting one.  Imagine my employer puts a contract in front of me limiting my notice, but promising me a generous new compensation rate for off-site work, of which I currently do a fair bit, so I sign.  The contract changes nothing else about my current employment.  The next day, the employer advises me that they're implementing new systems so that I will be able to perform all my work on-site, so I never get paid at the new generous off-site rate.  In most cases, that would not amount to a constructive dismissal, but it completely undermines the benefit I obtained through the 'fresh consideration', in effect meaning that there was no consideration.  I could get behind a different result in such a case.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Paul Magder Applies for Leave to Appeal to the Supreme Court of Canada

I've been following the Magder v. Ford case with some interest.  I looked at the issues of the case at the time of the initial hearing in September, explained Justice Hackland's decision on the Application in November, canvassed the issues in the Municipal Conflict of Interest Act that do need legislative intervention, and commented on the Divisional Court overturning Justice Hackland's decision.

Last month, Magder filed his application for leave to appeal to the Supreme Court.  And this is where things get interesting.

The SCC's staff has acknowledged receipt of an 'incomplete' application, apparently because of the absence of a formal Court of Appeal order.  Not only is there no formal Court of Appeal order, though - there was no Court of Appeal hearing.  Court staff are very competent, but they usually have rigid procedures set up for processing large volumes of materials, and so when a lawyer wants to do something out of the ordinary - even if it's technically proper - it can feel like we're trying to fit a square peg in a round hole, from an administrative point of view.

The Brief Summary

Rob Ford violated the City's Code of Conduct, and was ordered in 2010 to personally repay $3150 to donors collected improperly by his football charity.  He never paid, and the matter came back on for Council discussions in February 2012.  Rob Ford delivered a passionate speech explaining why he shouldn't have to personally repay the money, and proceeded to vote in favour of a successful motion to rescind the previous order and take no further action on the matter.

In March of last year, Paul Magder - represented by Clayton Ruby - filed an Application under the MCIA to have Ford removed from office for voting in favour of his own pecuniary interests.  Ford - represented by Alan Lenczner - defended on several grounds, which I explained in detail in my previous entries.  Hackland didn't accept the defences, and ordered Ford removed from office.  Ford appealed to the Divisional Court, and obtained a stay of Hackland's order, on consent.

The Divisional Court concluded that Council didn't have the right to order Ford to personally reimburse donors, and therefore his pecuniary interests weren't engaged by the vote, and accordingly there was no violation of the MCIA.  It's a technical decision, and a little confusing because they found that he actually did have a pecuniary interest when voting on the motion, but the financial sanction was a nullity.

More recently, the Divisional Court denied Ford's claim for over $115,000 in legal costs.  (It was a partial indemnity claim in the first place...one would expect that his actual legal fees were over $150,000.)  Because most of his arguments failed, the matter raised novel issues of public importance, and - importantly - the successful argument turned on the invalidity of a Council Order which had never been challenged prior to the bringing of the Application, Magder doesn't have to pay Ford's costs.

What Next?

The matter's just about moot.  It's been over a year since the Application was brought, and it's actually fairly incredible that we're already through an Application and Appeal.  In the legal system, that's fast.  But it will be some time before we know if the Supreme Court will hear it, several more months before a hearing, and probably more months beyond that before we get a decision.  If the Supreme Court overturns the Divisional Court's ruling, we'll be lucky if we aren't already into the 2014 election campaign.

But it's interesting nonetheless.  What's catching my attention now is the jurisdictional issue.  The Court of Appeal has consistently held that the MCIA does not give it jurisdiction to hear appeals from the Divisional Court, because the Divisional Court decision is "final".  I am 100% confident that there is a possible appeal to somebody from the Divisional Court, whether it's to the Court of Appeal or to the SCC.  (As a simple constitutional matter, the legislature cannot foreclose appellate review to the Supreme Court.)  I initially thought that the Court of Appeal might be wrong about its own jurisdiction, but I've been convinced that, whether or not an appeal to the Court of Appeal is possible, an appeal directly to the Supreme Court is probably the appropriate course.  s.38 of the Supreme Court Act gives the Court jurisdiction to hear appeals "per saltum" - by jumping.

Whether or not the Supreme Court will agree to hear the case is an entirely different question.

I've seen plenty of different opinions on that prospect.  Some think that the Supreme Court won't want to touch it with a ten-foot pole, because of the political aspects, or because of the 'finality' of the Divisional Court decision.  I don't really agree with that; in the last several years, I've found the present Supreme Court to be relatively fearless.  Paul Daly, a law professor in Montreal, argues that, because the Divisional Court's decision is on such a narrow technicality, it lacks the 'public importance' to make it suitable for Supreme Court consideration.  By contrast, Eugene Meehan, a leading expert on Supreme Court law, takes a broader view of the issues, thinking that the odds of them hearing it "approach 50/50".

If the Supreme Court agrees to hear it, there will be plenty of interesting issues to consider:  What is the impact of the 'finality' provision in the MCIA?  What is the appropriate appellate route?  (The Supreme Court would definitely address those, if it heard the appeal, to prevent every conflict of interest case leading to a per saltum appeal.)  And then, beyond that, the meat of the Application itself.

If the Supreme Court doesn't agree to hear it, don't expect much fanfare:  They never release reasons for refusing to hear an appeal.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Wrongfully Dismissed Employee Ordered to Pay Costs to Employer

In Court, it's generally presumed that a successful party is entitled to a contribution to costs.  However, there are a number of factors that can affect that - choice of venue, unreasonable conduct in the litigation, refusing to accept an offer to settle better than you achieved at trial, and others.

In a recent decision of the Ontario Superior Court of Justice in Goulding v. Street Motor Sales, the Court determined that a wrongful dismissal plaintiff, even though successful, should pay costs to the employer.

The Facts

This decision goes to costs only, and only briefly looks at some of the factors leading up to the judgment.  Mr. Goulding worked for Street Motor Sales for less than a year before he was dismissed, apparently earning approximately $60,000 per annum.

He brought a claim for wrongful dismissal against Street Motor Sales, and also against two other corporations (likely related companies), but those claims were dismissed at the outset of trial.  He claimed damages in the amount of $150,000, alleging inducement from secure employment, conspiracy, and spoliation.  The claim was brought in the Ottawa Superior Court, though all the defendants operated in Smiths Falls.

The Court found that the claims of inducement, conspiracy, and spoliation were baseless.  He was wrongfully dismissed, and was awarded pay in lieu of 3 months' notice ($15,000, less amounts already paid).

The Costs Question

Understand that, while it's common to overestimate the amount claimed for unliquidated damages, there are dangers of doing so at that level.  $15,000 is well within the jurisdiction of the Small Claims Court, and there's a provision in the Rules of Civil Procedure (Rule 57.05(1)) that a successful plaintiff can be denied costs where he should have, but didn't, bring the action in the Small Claims Court.

Had he brought the action in Small Claims Court, he would have had to have brought it in Perth, which would have been local for the defendants; instead, he made them suffer the inconvenience and expense of traveling to Ottawa for all stages of the litigation.

Moreover, what should have been a simple wrongful dismissal litigation was complicated excessively by these "vague" allegations of conspiracy and inducement.

However, it's important to note that neither party did better than their offers to settle - i.e. the employer never raised its offer up to 3 months.

The Plaintiff argued that the choice of venue was not unreasonable; that there was an argument for inducement, which could easily have pushed the damages above the jurisdiction of the Small Claims Court.  And there's something to that pitch, in the right case:  Rule 57.05(1) is seldom applied in wrongful dismissal cases.  I've seen quite a few scenarios in which such an analysis concludes that it wasn't unreasonable for an employee to make claims that would have led to additional damages - bad faith, etc. - justifying its choice in venue.

However, the judge wasn't so inclined to be so generous to the employee:

It should have evident to Plaintiff’s counsel that the claim for inducement was totally without merit and was fatally undermined by his client’s letter of resignation from his previous employer where he claimed to have been constructively dismissed. The Plaintiff then pursued his previous employer and recovered damages as a result of the termination from his previous employment. Those facts were known well before these proceedings were commenced.

Oops.  Yes, that would be a problem, claiming on the one hand that you were induced away from secure employment...and on the other hand that you were constructively dismissed from your prior job.

It helped the employer that they had made an offer which would have involved moving the proceeding into the Small Claims Court, and waiving costs incurred to that date.

The Court denied the employee recovery of his own costs, and went a step further to award over $11,000 in costs to the employer.

My Thoughts

This is an exceptional case, but worth noting.  There's a lot of uncertainty in wrongful dismissal litigation - particularly with short-service employees, the possible range of awards is often pretty significant, and the Courts usually recognize that when awarding costs.  But if you're going to make ancillary claims which put your claim above the Small Claims Court jurisdiction, you need to be able to justify that decision as being reasonable, even if the claims themselves don't succeed.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Stranger than Fiction: The Freeman on the Land...Again

On a couple of occasions before, I've posted about the "Sovereign Man" hoax, aka (or very similar to) the "Freeman on the Land."

In a nutshell, these are people who hold to a philosophy that they are not subject to governmental regulation. There's a bizarre pseudo-legal argument that they can somehow withdraw from jurisdiction of governmental authority.

So they don't feel beholden to the justice system.  But the justice system disagrees.  And, as a result, it is not unusual for freemen to end up in jail.

Not that they generally go out to commit particularly serious offences.  Regulatory offences, refusals to pay taxes, fines, and just debts, etc.  However, they fundamentally reject legal authority and the attempt to enforce obligations, and this gets them into deeper trouble.

So in one post, I discussed a few examples:  A person leasing a Mercedes then not making payments, then refusing to return the car...until he was jailed.  Another who registered a PPSA security against MBNA for $28 million, for no basis whatsoever, and refused to voluntarily delete it unless MBNA extended a significant line of credit to him.  Or the person who, in traffic court, refused to identify himself, then after the JP called a brief recess, purported to take control of the Court and dismiss the charges.  (It was a minor ticket for parking on his lawn, or some such trivial matter, and he was subsequently convicted in absentia and fined.)

In another post, I discussed another case involving the lawn-parker, who was charged criminally with trespass to property.  Apparently, the bank had taken possession of his house (one might theorize as to how that happened), and he allegedly broke back in, and was charged.  Bail was denied, and he was jailed until he entered a guilty plea to a lesser offence.

Part of the point of this blog is public education, and I want to put this in no uncertain terms:  The "Sovereign Man" and "Freeman" arguments are complete and utter nonsense.  They're routinely rejected by the Courts.

There's a new decision, which was covered in the National Post, recently released by Justice O'Donnell, in another typical freemen case.  Justice O'Donnell's writing is fantastic, structured as prose instead of traditional judicial writing, and I strongly suggest that anyone read the decision.

The Facts

Factually, the case was really simple, and a typical escalation of the freeman philosophy.  Mr. Duncan made a turn without signalling, and was pulled over.  The police asked him for his license, and he took the position that the police had 'no jurisdiction' over him.  The police disagreed, and the disagreement escalated to an arrest, which Mr. Duncan physically resisted.  So the failure to signal becomes an assault charge.

The Decision

Justice O'Donnell was not thrilled with the notion of having to actually respond to the freeman nonsense, so he felt very fortunate when, on September 18, 2012, Alberta's Justice Rooke released a behemoth decision comprehensively addressing the issues.

That being said, Mr. Duncan was acquitted anyways, albeit not because of anything he argued.

The trouble is that failing to signal is not, in and of itself, an offence.  It's only an offence where other traffic may be affected, and Justice O'Donnell found that there was no evidence of such an effect.  Given that the only authority relied upon for the stop was the failure to signal, which offence was not made out, the subsequent demand for documentation was not lawful, nor was the subsequent arrest, and therefore Mr. Duncan's resistance to the arrest could not have been unlawful.

I'll grant that this isn't my bailiwick, but I think there are challenges with the decision.  Firstly, the evidence is that the police officers were directly behind Mr. Duncan.  With a vehicle directly behind him, it becomes eminently reasonable to expect that that vehicle may have been affected by the manoeuver.

Secondly, I might question whether an acquittal on the reason for the stop automatically results in illegality of the demand for documents, or of the arrest.  The legality of an arrest is not determined by the question of whether the accused was innocent, but whether or not there were reasonable and probable grounds for the arrest.  I'm not entirely sure that it's the same question in this context.  As well, I know that the police don't need a reason to stop you and ask for your license and registration, though I'm not sure about the impact of having a reason for which the accused is ultimately acquitted.  Any comments from criminal lawyers in the gallery?

On a brief review of the case law, it looks to me like the facts of this case are pretty much on all fours with R. v. Clarke:  The defendant made a turn without signalling, with no other cars around, except for a police car half a block behind him.  The police attempted to pull him over, and he pulled into a parking garage, and the police followed.  They determined that he was intoxicated, and charged him with 'over 80'.

Clarke was convicted, with the trial judge accepting that the police cruiser 'may have been affected', then the Superior Court overturned the conviction on logic very similar to that used by Justice O'Donnell here.  Nobody was affected, therefore there was no basis to pull him over, therefore the police had no basis to detain him at the outset.

The Court of Appeal took a different view, finding that the trial judge's finding that the police car may have been affected was capable of being supported by the evidence and therefore entitled to deference, and that, even if the turn weren't an offence, for subtleties in legal definitions of which the police may not have been aware, the police were still empowered by the Highway Traffic Act to pull him over.

"I do not accept the respondent’s submission that we should approach this case on the basis that the police purported to arrest the appellant for an offence that does not exist in law.  There is an offence of failing to signal a turn and that is what the police, on reasonable grounds, thought he had done.  Even if the Crown was unable to establish that the police car was close enough to be a vehicle affected by the movement, to justify the actions of the police, the Crown only needs to prove the existence of reasonable grounds, not the actual commission of the offence"

I wonder if we'll see an appeal from Justice O'Donnell's decision.  Freemen are a little oblivious to legal nuance, and will see an acquittal as an endorsement of the freeman philosophy, despite the decision expressly rejecting that in no uncertain terms.

Other entertaining notes

CanLII provides 'key words' from each case in its search results, which are selected through an algorithm beyond my ken.  Justice O'Donnell's decision's key words include "monkeys with typewriters" and "gods".  The only other reported case of which I am aware, in which the 'monkeys with typewriters' image was invoked was a case which went to the Supreme Court in 1990 where Apple sued another company for copyright infringement relating to computer program code, and the probability of two programmers producing the same program was compared to the likelihood of monkeys with typewriters producing Shakespearean sonnets.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

BMO Suing Ex-Employees for Allegedly Unlawful Resignations

On November 8, 2011, three employees of BMO Nesbitt Burns in Collingwood resigned, and took positions with TD Waterhouse.

BMO is now suing all three employees, and TD Waterhouse too.  Allegedly, many of the accounts these employees managed promptly transferred over to TD Waterhouse.

The basis of the action is essentially rooted in the obligation of an employee to give notice of resignation.  At common law, the implied obligation to give "reasonable notice of termination" cuts both ways (though it can be amended by contract, too).  An employee, in general, cannot resign without giving notice.

There are exceptions, however, which I will come back to in a moment.

The case, as BMO appears to be framing it, bears shades of RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc., which went to the Supreme Court in 2008.  In that case, an RBC branch manager orchestrated a mass defection of nearly all his branch's account managers to Merrill Lynch, causing a massive loss of business to RBC.  The Supreme Court upheld most of a significant award of compensatory and punitive damages against the employees and Merrill Lynch.  (It was a landmark case for a few reasons.)

In this BMO case, however, the ex-employees tell a different story.  They allege that a new manager had come into the branch and created a poisoned work environment, and eventually demanded their resignations when he discovered that they were being courted by TD.

When a manager demands an employee's resignation, the effect is usually very similar to dismissing the employee.  If that allegation is proven, then there is no chance of success for the allegation that the resignations were unlawful - they wouldn't really be 'resignations' at all, in the strictest sense.  Thus, this factual dispute is probably fundamental to the outcome of the litigation.

The employees' defence makes significant allegations of misconduct against the manager, including mistreatment of employees and clients, nepotism, etc.  BMO brought a motion seeking to strike these allegations, along with other 'abuse of process' allegations that the action was brought for an improper purpose.

In a recent decision by Master Muir, the Court largely dismissed the motion.  The defence of abuse of process can be raised, and the historical relationship between the employees and the manager is clearly relevant to the fundamental factual dispute between the parties.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.