Friday, January 31, 2014

Chinese Workers Claim Restaurant Chain Paid Them Less Than Minimum Wage

With all the discussion about the minimum wage - I'll comment about that shortly - a news story in the Star caught my eye about a group of 48 Chinese immigrants, employed by a GTA restaurant chain, making claims against the employer, in the aggregate amount of about $300,000.

Two of them claim that they haven't been paid since August at all, and most of them say that they worked at or below the minimum wage, often for more than 50 hours per week without overtime pay.

This is sadly common, particularly (though not exclusively) in certain immigrant communities.  Quite often, the employers themselves are less-than-familiar with Ontario's employment standards regime, and recent immigrant employees are very often unaware of their rights.  Even if they're aware of the minimum wage, they may not know how to pursue their rights.  They may not even realize that they're entitled to such protection.

Let's be clear on one thing:  While there are certain exemptions, and different treatments for different types of employees, basically all employees in Ontario are entitled to some sort of employment standards protections (minimum wage, overtime, hours of work, breaks, vacation pay, holiday pay...not everybody is entitled to all of it, but especially among low-wage employees, many of these protections are nearly universal).  So do not assume that you have no rights.

Fortunately, there are resources available for employees.  Some low-income employees may be eligible for assistance from a Legal Aid Clinic.  For a full listing of Community Legal Clinics in Ontario, click here.  As well, there are specialty clinics, including various clinics directed to assisting specific cultural groups.  (It appears that these employees are represented by one such specialty clinic.)

As well, the Ministry of Labour makes a lot of information, and even the complaint mechanisms, available on their web site.

Beyond that, I would encourage anyone - employers or employees - who needs help understanding their rights to contact me.

Here are a few of the oft-ignored elements of the ESA - rights which employees cannot waive:

(1)  Minimum Wage

This is the simplest one, though still not all that simple.  Right now (though it's changing), the 'general' minimum wage is $10.25 per hour.  There are certain exemptions, and certain conditions under which employees get a different minimum wage.

The exemptions to the minimum wage are, by and large, people who would reasonably expect more than minimum wage anyways.  Most professionals (such as lawyers and medical practitioners) are exempt, and the exemptions other than that are very few.

However, there are people with a different minimum wage.  For part-time students under 18 years old, it's currently $9.60.  For servers (who serve alcohol), it's $8.90.  And there are a couple of other different treatments as well, and an accounting for when 'room and board' may be included in minimum wage, how much can be assessed for room and board, and the requirements in order to be able to do so.

For the vast majority of employees, the minimum wage is $10.25.  If you're getting paid less than $10.25 (before deductions) for each hour worked, I'd generally suggest making inquiries about your rights.

NB:  Unpaid Internships:  While there are some circumstances in which unpaid internships are legal, those are very restricted.  I would go so far to say that a significant majority of unpaid internships in Ontario are unlawful, and that the interns are, in fact, employees entitled to be paid at least minimum wage.  If you are an unpaid intern, or are an employer concerned about whether or not your unpaid internships are ESA compliant, contact me.

(2)  Overtime

Again, there are exemptions, but the general rule is that if you're working more than 44 hours in a week (or, in some circumstances, more than 88 hours in two weeks), you're entitled to be paid at "time and a half".  It is also possible, under some circumstances, for an employee to get 'time off in lieu' instead of overtime pay.  But the key principle is that, over 44 hours in a week, each hour is worth an hour and a half.

Many small employers ignore this, and pay overtime at 'straight time'.

As well, it should be noted that "We didn't approve the overtime" is not an excuse to not pay the overtime pay.  If the employee works the time, he or she is entitled to be paid fully for it, approved or not.  If you have a policy prohibiting unapproved overtime, then the right answer is to pay out the unapproved overtime, and to properly discipline the employee for violating the policy.  If you don't have such a policy, get one.  I can assist with that.

(3)  Hours of Work

There are a few nuances to hours of work.  The first thing to know is that, with non-exempt employees, if you want to be able to ask an employee to stay late periodically, you need a written contract permitting you to do so.  Without a written agreement contemplating the employee putting in additional hours of work, it is unlawful to require or permit an employee to work more than the greater of 8 hours in a day or the 'regular work day'.

In addition, in order to have a non-exempt employee work more than 48 hours in a week, you need both a written agreement and Ministry approval.

So it isn't always illegal to have an employee work 50+ hours per week, but unless there's an agreement and the employer has jumped through the appropriate hoops, it usually will be.

In addition, an employee must get at least 11 consecutive hours of free time each day, and at least 8 hours free between shifts - unless the combined shifts total less than 13 hours.  (It's complicated.  See why we need lawyers?)  And also at least a full 24 hours off once a week, or a full 48 hours off once every two weeks.

(4)  Break Times

In general, it is illegal for an employee to work more than 5 consecutive hours without a half hour break.  The break may be unpaid, and under certain circumstances may be broken into two 15 minute breaks.

This one is often ignored by small businesses - it is not uncommon to see a business with a single employee staffing the desk for the whole business day, without a break, expected to eat lunch at the desk and still take customers while doing so.  This is generally unlawful.

It is also not uncommon for an employee to say, "Can I skip my lunch and go home early instead?"  Again, it's unlawful, even if it's at the employee's request.  Break time policies should make it very clear that this is not permissible.

(5)  Public Holiday Pay

There are a number of nuanced treatments of public holiday pay, and a few different ways of handling it.

But the biggest compliance problems I've seen relate to employers ignoring it altogether.  Public holidays basically mean, under most circumstances, either paid time off or extra cash in your pocket.  That perhaps oversimplifies the point too much, but it should be enough for employees to realize if they may have rights that are being ignored, in which case they should inquire into their rights.  Likewise, I would encourage employers to contact me for additional details in how to comply with your obligations.

Side Notes:

I can't emphasize enough that there are exemptions to all these rules.  However, the best way to understand how the employment standards regime applies to your situation specifically is to make inquiries of a qualified professional.

I should note that Federally-regulated employees have a different employment standards regime, but that's a relatively small class of employers, most of them being larger employers with established policies (not to say that all of them are necessarily legally compliant, as the bank overtime actions illustrate).

It also bears noting that these are minimum standards, which cannot be waived, but greater benefits can be contracted for:  In other words, if your contract says you get time and a half after 40 hours, then that's what's required - the ESA doesn't override that language.

The Bottom Line For Employees

If you aren't sure if you're getting your due from your employer, contact a lawyer about it.

The Bottom Line for Employers

ESA compliance is a bigger deal than you might realize.  It can end up leading you through expensive legal processes, hefty orders to pay, with additional administrative fees to the Ministry, etc.  It is important for all employers to ensure that they understand their obligations under the ESA, and to implement policies and practices to comply with their legal obligations.

There's a cost to it, of course, but the cost of failing to do so can be much more substantial.


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.

Human Rights, Defamation on the Internet, and Free Speech

The hosts of have been successfully sued for defamation.

This isn't the Baglow action I posted about a year and a half ago, but a different one entirely involving a very different controversial character, crossing a different controversy I discussed in this October 2011 entry in terms of the human rights regime.

You may have heard the name "Richard Warman" before.  He is an Ottawa lawyer who has been very active in the Human Rights arena, including working for the Canadian Human Rights Commission for a time, and bringing a number of complaints under the now-defunct s.13(1) of the Canadian Human Rights Act - known as the 'hate speech' provision.  As I expressed in the October 2011 entry linked above, I was somewhat ambivalent about the hate speech provisions:  I understand the underlying policy rationale, but - as much as I disagree with most of what Ezra Levant has to say about human rights - Levant's opposition to s.13(1) made a certain amount of sense.

Richard Warman became a central figure for s.13(1), and many commenters - such as Levant - took to criticizing him when they criticized the law.  His conduct represented the human rights activism that Levant et al. so despise, and much of the rhetoric out there about Warman is conservatively described as 'inflammatory'.  (I don't need to replicate what's still being said about him.  You can find your own way to Google.)  He has been subject to many public criticisms and accusations (some of them quite serious), and has apparently even received death threats, and had an American neo-Nazi group call for his death.

Warman took the view that some of what was being said about him crossed the line into defamation (perhaps putting it mildly), and he has commenced a number of defamation actions, including against the National Post, the Canadian Association for Free Expression, Ezra Levant, and - the hosts of the conservative forum freedominion - Connie and Mark Fournier.

Some have settled, some are ongoing, some have been successful, and the action against the Fourniers has recently been decided.

The Trial

The Fournier action was tried before a jury, the result being that there will not be conventional 'reasons for decisions' published.  So I have to infer a little bit from the other documents that are published, but my sense of the facts is as follows:  The Fourniers have long operated the conservative website 'freedominion', which included a forum for public comments.  A number of individuals (apparently including the Fourniers themselves) made comments disparaging Warman.

It appears that Warman's allegations of defamatory statements included the following (among others):
  1. A statement in reference to him that "that a****** is so obnoxious that even his fellow fanatics at the "Human "Right" Commission couldn't stand him" [sanitation added];
  2. An allegation that he threatens "anyone who tried to publicly expose [his] activities"; and
  3. Allegations that he was involved in and responsible for various activities of an 'urban terrorist group'....
(These were drawn from a longer list of of particulars in the Notice which Warman provided under the Libel and Slander Act; I don't have a listing of the 41 postings the jury ultimately found were tortious, however, so I cannot assert that any particular libellous statement was actually made.  Moreover, I have listed these as allegedly libellous statements, and should absolutely not be taken as suggesting that any of these statements about Mr. Warman are true.)

The defendants, until the end of trial, maintained the defence of 'justification' - i.e. that the defamatory remarks were true.  (From the wording in the costs endorsement, I infer that they abandoned the justification argument at the end of trial.  I invite clarification from any of those involved.)  The defendants also relied upon the defence of 'fair comment'.  However, 'fair comment' only protects good faith comments, and the jury found that the defendants' actions were motivated by malice.

The jury awarded a total of $42,000 against the various defendants, including $9,000 in aggravated damages and $18,000 in punitive damages.


In this very recent decision by Justice Smith, Mr. Warman was awarded costs, as well as injunctive relief preventing them from publishing further defamatory statements about Mr. Warman.

The costs decision is relatively unusual - on a claim which resulted in $42,000 in damages, the plaintiff obtained a costs award of $85,000.  Ordinarily, that result is undesirable for reasons of proportionality.  However, these were unique circumstances.

Firstly, Mr. Warman offered to accept an offer of $5000 plus costs, and the defendants turned it down.  They consistently failed to acknowledge any wrongdoing, did not take down the offensive postings until 9 months after receiving the aforementioned Notice, and maintained the defence of justification until the end of trial.  The only offer the defence ever made was, prior to trial, an offer to settle on the basis of payment by Warman of $55,000 in legal fees.

Secondly, there's an expectation and recognition that there is more at stake for a plaintiff in a defamation action than the damages themselves - he's seeking vindication, a clearing of his reputation.

Thirdly, the litigation was lengthy and highly contentious, and the defence requested a jury trial which added to the cost and complexity of proceedings.  (Indeed, it's very strange to have a jury trial in a matter of this value.)

The bottom line is that, in light of the very acrimonious nature of the proceedings, the importance of the issues to the parties, and the fact that the defence fought tooth and nail without ever canvassing reasonable settlement options, a relatively high costs award is to be expected.

The defendants made a strange argument, that because the plaintiff's offer to settle was within the jurisdiction of the Small Claims Court, the action should have been brought in Small Claims Court, and therefore only nominal costs should be awarded.

It's strange for a few reasons:  The argument would seem referential to Rule 57.05, which says that where a plaintiff obtains judgment for an amount within the jurisdiction of the Small Claims Court, the court has discretion to refuse to award costs to the plaintiff.  But the judgment here was not within the Small Claims Court jurisdiction, the offer to settle doesn't trigger that rule, and there is no reason to think that it should.

As well, the defence chose a trial by jury, which is not available in Small Claims Court, and the plaintiff sought (and obtained) an injunction, which is also not available at Small Claims Court.  The implication that it was unreasonable to bring this action in the Superior Court...just doesn't make sense, and is suggestive of the 'kitchen sink' approach to litigation which the costs award otherwise implies was taken by the defence.


The injunction is also interesting.  It's pretty straightforward, ultimately:  The jury found that the defendants had maliciously and persistently defamed Warman, and the evidence and conduct of the trial showed that they were pretty unrepentant about it, suggesting that it could well happen again.  Accordingly, the judge made a permanent injunction restraining the defendants from continuing to publish the defamatory statements.

What's more interesting is freedominion's reaction to it.  As of January 23, 2014, they have converted the forum to a "Members Only" forum, which can only be viewed by members.  If you try to go to their site at this moment, you'll see a large graphic:  "Censored!  Closed to the public", with an explanation that they were ordered not to publish, or allow to be published, anything negative about Richard Warman.  They go on to explain the following, in support of a pitch for donations to fund their appeal:
This means we are barred for life from ever operating a public forum or a blog (even about cookie recipes) where the public can comment. If we do so, any one of Warman’s handful of supporters could, and probably would, use a common proxy server to avoid being traced, plant a negative comment about Warman on our site, and we would both be charged with contempt of court. If that happened --unlike in the Ottawa courtroom where we were blocked at every turn from presenting a defense-- we actually would have no defense. We would both go to jail.
Simply put, this is untrue.  There's a mens rea component to contempt - you cannot accidentally or inadvertently commit a contempt of court.  If they took reasonable precautions against the publication of prohibited defamatory statements about Warman (setting clear rules about defamatory speech, moderating the forum responsibly, and deleting any such defamatory statements as soon as they become aware of them...i.e. do the things that would have prevented them from getting sued in the first place), then I simply don't see how the test for contempt could be met.  Though, of course, it likewise strikes me that the finding of 'malice', combined with the approach to the litigation described by Justice Smith, suggests that these particular defendants may not be particularly enthused about the notion of policing against comments that defame people they don't like.

Further, the assertion that they would both go to jail ignores the range of penalties available for contempt.  Where contempt has been 'purged' - i.e. where you have taken the necessary steps to bring yourself back into compliance with the order (namely, delete the offensive comment) - that's a mitigating factor.

I might almost think that their lawyer may have told them, "In an abundance of caution, just take down the forum."  But 'abundance of caution' advice in the defamation context typically sounds like "If you can't say anything nice..." - suggesting that Warmanites are going to entrap them and send them to jail may well be toeing the line a bit.  (Not to mention seeming really disingenuous.  In light of the jury's conclusions, and Justice Smith's commentary on the point, it seems a stretch to suppose that somebody who posts something negative about Warman on their forum must be planted by Warman.)

The Appeal

It appears that the Fourniers will appeal.  They've commenced an Indiegogo fundraising campaign entitled "Anonymous Troll Could Send Us To Jail!" to help finance the appeal - as of the time of posting, they've raised over $4000.

I haven't seen the specific grounds of appeal alleged, but what I can say is that appealing a jury award is challenging.  A jury's findings of fact are almost bulletproof, unless there's no basis in the evidence at all for them.  In general, you need to find a problem with the procedure of the trial - i.e. a judge's ruling on the admissibility of evidence, or something of that ilk - or with the judge's instructions to the jury.

So unless there are relevant evidentiary issues in play, the jury's finding of malice is unlikely to be successfully appealed.  And that's a pretty core aspect of the litigation.

I've also seen comments from the Fourniers' suggesting that defamation law as it stands is 'unconstitutional', because of "presumed guilt, malice, and damages".  Not sure if that factors into the appeal, but it's a deep misapprehension of the law.  If I bring a defamation action, I need to prove that you said something defamatory about me.  The onus is upon me.  Some of the defences have a reverse-onus, but that's not unusual, and you only have that onus once I've satisfied my onus.  So to say that there's "presumed guilt" is incorrect.  If you can establish a defence such as 'fair comment', on a balance of probabilities, then the onus shifts back to me to prove malice.  In other words, there's no presumption of malice.  As for presumed damages...that's actually completely normal.  "General damages" are damages presumed by law, and they're really common throughout tort law.

As well, it'd be really challenging to argue that a constitutional threshold is triggered by defamation law.

[Update, February 25, 2014:  I've now received a copy of the Notice of Appeal, with the grounds of appeal being alleged.  I've prepared a detailed commentary on that subject, found here.]

The Underlying Issue:  Defamation on the Internet

Reading some of the commentary supporting freedominion on the point, the running theme is 'freedom of speech', the notion being that the internet provides a revolutionary new opportunity for people to make themselves heard, and that defamation law should not stand in the way of this freedom.

With that in mind, I suppose we stand at a crossroads:  We can see the internet as a lawless land where anything goes, where you can speak your mind with impunity regardless of the impact.

Or we can treat the internet the way we treat other modes of communication, and hold people responsible for the consequences of what they say.  Freedom of speech is still protected, but within reasonable limits, and on the understanding that people may face consequences for their speech.

If we were to opt for the former, the result would be that the internet's power to misinform would become vastly greater, to the point that its ability to inform - its value as a source of information - would be enormously compromised.

If I were to say that Premier John Doe of Erewhon were a convicted child molester, some readers would believe it.  And why not?  Even for those who know to take things with a grain of salt, I'm here using my real name, and am verifiably a member of a respected profession, with access to legal databases...and most importantly, if I were saying it without it being true, I'd be running a serious risk of getting sued.  That risk holds me to a certain degree of reliability.  Otherwise, it would be perfectly fine for me to drive up readership by writing the occasional post casting defamatory aspersions at public figures.  I can guarantee you my readership would grow more quickly than the public realization that I'm fibbing about such things.

The removal of a remedy from the victims of my disparaging remarks would be awful from a public policy perspective, and would only be abated if and when people came to realize that, in fact, nothing on the internet has any reliability whatsoever.  Which would make the internet pretty pointless.

The internet is a medium for information.  It has its reliable sources and its unreliable sources, and as such is no different from other media (think: magazines), except that it's easier to add to and more convenient to access.  By giving users of the medium carte blanche to make unsubstantiated and harmful allegations against others, we would be seriously harming the integrity of the entire medium.  Sure, it would be accessible, but who cares about accessibility to the medium that isn't worth paying attention to?

This is why I support treating the internet the same as any other means of communication.  It's a powerful tool, accessible to everyone, and we make it better by holding its users to the same standards that would apply elsewhere.


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.

Monday, January 27, 2014

The Plight of an "Independent Contractor"

There's an unusual case out of the Federal Court in VIH Helicopters Ltd. v. Rennie.  Hat-tip to Ian Mackenzie of Mackenzie DRS for posting and tweeting about it.  The issue, fundamentally, is whether or not a worker was an employee or independent contractor.  Though it's somewhat more nuanced than that.

The differences between employees and independent contractors is a topic I have frequently addressed before.  There's a common misconception that, if you hire someone on as an 'independent contractor' instead of an employee, that relieves you of a number of obligations (employment standards obligations, EI, CPP, etc.)...and that the difference is entirely in what you call the relationship.

What you call the relationship is a factor, but it isn't determinative.  There are well-established legal tests that Courts will apply to lift up the rug on a supposed independent contractor relationship and determine whether or not it is, in substance, an employment relationship.  But the Rennie case cuts the other way, suggesting that Mr. Rennie couldn't claim to be an employee after holding himself out as an independent contractor to the employer, to the CRA, and to the courts in a matrimonial dispute.  It's interesting, but somewhat troubling.

Procedurally, it's a little bit different from your average wrongful dismissal.  Mr. Rennie sought unjust dismissal damages under the Canada Labour Code - the Federal jurisdiction statute that applies to employment relationships in a fairly narrow range of industries.  The CLC provides for an administrative tribunal process by which an adjudicator determines unjust dismissal questions, and if a party isn't happy with the result, they can apply for "judicial review" to the Federal Court, arguing that the adjudicator made an error of law.

This decision is on such a judicial review application.

The Facts

The worker at issue in the case is a helicopter maintenance engineer named Matthew Rennie.  He began working for VIH in or around summer of 1993.  VIH had 93 people doing the same job, 80 being employees and 13 choosing to be characterized as independent contractors.  VIH apparently wanted to make him a "full-time employee", but Rennie opted instead to be, as he testified, a "contract employee".

(As a note of terminology, Justice Zinn put little emphasis on Rennie's use of the phrase 'contract employee', considering the terminology to be self-serving, redundant, and at best putting the relationship into the 'dependent contractor' category, which doesn't work for "unjust dismissal" complaints under the CLC.  However, I look at that terminology as having a different emphasis.  While Justice Zinn is right about the redundancy of the phrase, it's most often used to describe fixed term contracts of employment.  This understanding of the language may or may not be consistent with the agreement they actually entered into, but it is fully consistent with Rennie's use of it in his own testimony.)

Rennie initially invoiced through an unincorporated business name, Matt Rennie Engineering.  The pay structure looked like an independent contractor relationship - he charged GST, he didn't get paid vacation, no withholding for tax, CPP, or EI, etc.

In 1996, VIH wrote to Rennie advising him that he didn't meet their accountant's requirements for a 'contractor', and that to continue to be a 'valid contractor', he needed to satisfy a number of demands - basically, resign and enter into a new contract via an incorporated company.  (For background on the effect of a corporation in an "independent contractor versus employee" dispute, look at this post.)

A similar letter was sent out in 1998.  Eventually, all the terms were complied with, except that no resignation letter was ever provided.  Rennie's father, Clifford Rennie, incorporated a company called "Blue Stone Engineering Ltd.", which entered into a consulting agreement with Matthew Rennie, and VIH retained Blue Stone to provide Matthew Rennie's services.

In 2008, VIH notified Blue Stone that it was terminating its contract, on 14 days' notice as required by the contract.

The Nominal Issue:  Did the Arbitrator Err by Excluding the Matrimonial Affidavits from Evidence?

In 2000 and 2001, affidavits from both father and son, characterizing the relationship as an independent contractor relationship, were put into evidence in a matrimonial proceeding between Matthew Rennie and his wife.

VIH wanted to lead those affidavits into evidence.  The adjudicator declined to admit them into evidence at the initial hearing, for five reasons:

Reason #1:  The Affidavits were Stale

The adjudicator noted that the affidavits were sworn several years before the cause of action arose.  Justice Zinn rejected this reason, highlighting that there was no contention that the nature of the relationship had changed since the affidavits were sworn.  That's a fair point.  However, it appears that the contract between the parties were renewed on an annual basis, and it may deserve a little more discussion when the contract, of which VIH argues the affidavits should inform the interpretation, was dated some 7 years after the affidavits were sworn.

Reasons #2 and #4:  The Affidavits had a Different Purpose

The adjudicator notes that the affidavits were sworn in an unrelated family law matter.  Justice Zinn's response basically amounts to "So what?"  They were sworn by their affiants, so if they speak to the matters in issue in this proceeding, they should be admitted.  I'm inclined to agree with Justice Zinn on this point.  Except that I'm not so sure that they're relevant, but that comes later.  Also, these reasons strengthen the adjudicator's point in reason #5, but that too comes later.

Reason #3:  The Affidavits are not Relevant

Okay, I'm paraphrasing in this subtitle.  The adjudicator noted that "[c]ase authorities already referred to by me on the issue of whether the complainant was an employee or an independent contractor at the time of his dismissal depends on the true nature of the employment relationship as analyzed and assessed under common-law principles and not on the parties' views, statements or understanding of the legal effect of such relationship."

The choice of words is a little soft, but the point is overall pretty accurate on the law.  However, as Justice Zinn points out, the parties' "views" are in fact relevant to the test, though not a determinative factor.  However, when you're faced with the contracts themselves, signed by the parties, expressly indicating that it's an independent contractor relationship and not an employment agreement...I seriously doubt that it the characterization of the relationship by the parties, for the purpose of the Wiebe Door test, is going to be an issue in dispute.  The intention of the parties was to create an independent contractor relationship.  That's right there in black and white.  So rather than beating a dead horse by admitting more and more evidence of Rennie calling himself an independent contractor, you'd think they'd move on to other factors.  And perhaps more importantly, what Rennie called himself in other contexts is irrelevant to the Wiebe Door test.  (My point is that, if Rennie was saying, "I didn't understand the contract language, and never realized that the terms of the contract disentitled me to protection under the Canada Labour Code", I would call that contention irrelevant to the Wiebe Door test.)

Justice Zinn also notes that the affidavits were relevant to the "estoppel issue in dispute".  I'll explain the estoppel issue in more depth, but suffice it to say that that simply cannot be right.  Estoppel, of the sort relied upon by VIH, requires reliance by the party seeking to assert it.  It is completely impossible, at law, that an affidavit sworn by Matthew Rennie in a matrimonial proceeding against his wife could have been relied upon by VIH in a way that would generate an estoppel.  It's even more problematic to suggest that Clifford Rennie's affidavit can estop Matthew Rennie from pursuing a remedy.  But more on estoppel later.

Reason #5:  Clifford Rennie is Deceased

The father passed away, and could no longer be cross-examined for clarification of the evidence in his affidavit.  Justice Zinn queried whether there's ambiguity requiring a cross-examination, but finds that the lack of opportunity to cross-examine would go to weight, not admissibility.

I have my doubts about that.  In judicial proceedings, there are only certain contexts (such as motions) in which affidavit evidence is admissible standing alone, and generally that does come coupled with an opportunity to cross-examine.  (I might lead your affidavit to show that you admitted a fact I want in.  I might lead an affidavit of your witness if it has a prior inconsistent statement, to impeach his credibility.  But if I try to lead an affidavit of a third-party witness for the truth of its contents in a trial, I should generally be producing the witness in person instead, to be subject to cross-examination.)  Affidavits are witness evidence, and without an opportunity to cross-examine on an affidavit there's an abrogation of natural justice.  While the standards for admissibility are somewhat relaxed in administrative tribunals, it wouldn't generally be an error in law to reject evidence which would be inadmissible in courts.

Particularly in light of the different purpose for which the affidavit was prepared, it wouldn't be surprising or improper if the affidavit itself wasn't comprehensive for the purposes of the instant litigation - i.e. that, for the sake of the matrimonial litigation, it was a complete and truthful account, yet it nonetheless omitted details which - while not relevant to the matrimonial issues and therefore properly omitted - would substantially change its interpretation in respect of the employment litigation against VIH.

Justice Zinn found that the adjudicator had erred in law by excluding the affidavits.

The Estoppel Issue

This is unusual.  Not a surprising argument, from a lawyer's perspective, but nonetheless unusual.

Promissory estoppel is an equitable doctrine which, to put it a little too simply, says that if I promise you (by words or conduct) that I won't stand on my legal rights, and you act in reliance on that promise, I can't hold it against you.

There's a query you sometimes see from employers, trying to set up an "independent contractor" relationship:  "Why can't we just get the worker to promise not to come after us for failing to comply with employment standards, and to cover his or her own taxes, EI, and CPP?"

The simplest way of looking at the reason is this:  You can't contract out of employment standards minimums (this is true under the CLC as well as the Provincial ESA, though for slightly different reasons).  For employees, an attempt to say, "You get less than minimum wage" is void, by operation of statute, and trying to say "You're not an employee" is not a workaround.  If you're an employee, by operation of law, you have certain statutory entitlements, and there's no ritual contract-signing which will protect an employer from them.

But even then, it still seems strange that the parties can carry on a relationship for years as an 'independent contractor' relationship, and then suddenly when the employer goes to terminate the relationship, the employee starts claiming that the employer should have made EI contributions, and now owes pay in lieu of notice.  So, as I said, it isn't surprising that a lawyer would argue 'estoppel' at some point.  I have never seen it argued before, however, and there are good reasons why estoppel cannot apply in this context.

What does the employer seek to block by the estoppel argument?  What is the origin of the legal rights Rennie is seeking to assert, which VIH is saying should not be asserted?  The answer is this:  Part III of the Canada Labour Code.  There's some fairly solid jurisprudence in the labour law context (think: unions) that estoppel cannot block the operation of a public statute.  If that same principle applies here, and there's good reason to believe that it would, then the estoppel argument is dead in the water already.

Indeed, one might argue that the provisions in the CLC which prevent parties from contracting out of their obligations would also bar the operation of estoppel.

Along similar lines, though, one can look at specifically how the worker has supposedly promised not to take the position that he is an employee, and the answer is simply this:  He acted in accordance with a contract that said that he isn't an employee.  And conversely, the payor's only reliance - a necessary element for estoppel - is through its acting in accordance with the same contract.  Looked at in that light, it is completely incoherent to regard the matter as one of estoppel:  It's contract law, plain and simple.  The promise was the agreement.  The CLC expressly overrides that promise - it would make no sense to suggest that a contractual promise which is barred by operation of statute can be successful if framed as an estoppel instead.

In other words, I seriously doubt that estoppel properly applies to these circumstances at all.  And for the reasons I noted earlier, the affidavits absolutely cannot be relevant to an estoppel argument.

The Bottom Line

Justice Zinn merely sent the case back down to the adjudicator - the proper remedy on a successful judicial review.  But if the estoppel argument succeeds, that's troubling.

Most faux 'independent contractors' have little choice but to accept the designation.  In order to get paid, they have to invoice, including GST.  They then have to represent themselves to the CRA as self-employed (otherwise why are they collecting and remitting GST?).  And the vast majority of them have no idea that there's anything irregular or illegal about the arrangement until (a) they get assessed by the CRA or (b) they get fired and go talk to a lawyer about it.

There's a reason that you can't contract out of employment standards - it's a protection of vulnerable employees, and it applies across the board.  To suggest that an employee, who often doesn't know any better, can prejudice those guaranteed statutory rights by acquiescing to the terms of the very concerning.


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.

The Supreme Court's "Culture Shift" - Is the Civil Trial Extinct?

In 2010, Ontario amended the process for 'summary judgment' - a motion to dispose of the litigation, one way or another, without a trial.  In the past, it was highly restricted, limited to cases where there was no real dispute in the evidence.  Following the recent changes, judges now have broader powers to assess conflicting evidence on summary judgment motions and even to hear oral evidence if necessary, and summary judgment is appropriate where there is no issue "requiring a trial".

In the Hryniak v. Mauldin case (and related cases), the interpretation of these changes has been working its way up through the courts, until last week it was decided by the Supreme Court of Canada.


I'm not going to go into detail on the underlying facts of the litigation - it's a complex case involving allegations of theft and fraud of millions in an investment financing scheme.  The original summary judgment motion involved affidavits from 18 different witnesses, 28 volumes of evidence, and four days of oral argument.  The motions judge, in a 269 paragraph decision, granted summary judgment against Mr. Hryniak, though dismissed it against other defendants.

The Court of Appeal allowed the appeal, concluding that a motions judge needs to have a "full appreciation" of the evidence.

The Supreme Court's decision, authored by Justice Karakatsanis, agreed with the Court of Appeal that the Hryniak case was not appropriate for summary judgment, but significantly disagreed with the Court of Appeal's reasoning.

Access to Justice and Proportionality

Few will be surprised to hear that the Supreme Court is concerned by the cost of justice, and much of Justice Karakatsanis' decision was an explanation and illustration that "ordinary Canadians cannot afford to access the adjudication of civil disputes", and the resulting problems.  The Court goes so far as to say that "rule of law is threatened".

There are a number of particularly astute observations:  The fact that the cost of a full trial is out of reach for most Canadians is more-or-less self-evident at this point.  The result is that most matters settle, and while settlement is usually regarded as a good thing, Justice Karakatsanis makes a useful yet seldom-stated critique:  "while going to trial has long been seen as a last resort, other dispute resolution mechanisms such as mediation and settlement are more likely to produce fair and just results when adjudication remains a realistic alternative."  Completely true.

Alternative processes are noted, such as private arbitration and self-representation.  Self-representation "often creat[es] further problems due to their lack of familiarity with the law", and private arbitration - while it may be appropriate as between particular parties - is not "an accessible public forum for the adjudication of disputes", which is necessary for rule of law and the development of the common law.

One of the running themes through the decision is proportionality.  "If the process is disproportionate to the nature of the dispute and the interests involved, then it will not achieve a fair and just result."

The Supreme Court accordingly argued that a "culture shift" is necessary away from the traditional trial; that whether or not justice is done does not turn on whether or not the 'virtues' of a full trial are achieved.  In doing so, it completely rejected the "full appreciation" test adopted by the Ontario Court of Appeal.
Focussing on how much and what kind of evidence could be adduced at trial, as opposed to whether a trial is "requir[ed]" as the Rule directs, is likely to lead to the bar being set too high.  The interest of justice cannot be limited to the advantageous features of a conventional trial, and must account for proportionality, timeliness, and affordability.
Furthermore, the Court puts a great emphasis on the new power of a motion judge to hear oral evidence unless it is in the "interest of justice" that such powers be exercised only at trial.  And it's a broad interpretation as to the "interest of justice", in light of the complexity of the issues, the relative cost and speed of proceeding by way of summary judgment as opposed to a full trial, proportionality, and the consequences of the motion in the litigation on the whole.

The evidence on a summary judgment motion "must be such that the judge is confident that she can fairly resolve the dispute"; but the Court highlights that a documentary record, when supplemented by the new powers available to the motion judge, "is often sufficient to resolve material issues fairly and justly"...and moreover, "when the use of the new powers would enable a judge to fairly and justly adjudicate the claim, it will generally not be against the interest of justice to do so."  These powers, while discretionary, are "presumptively available, rather than exceptional".  Of course, those powers are there not to take the place of a trial, but rather to assist in the determination of whether or not a trial is necessary.

The Court goes on to explain the "roadmap" for deciding a summary judgment motion.

First, a motion judge should evaluate whether or not she can resolve the issues without using the new fact-finding powers available.  If she cannot, and there appears to be a genuine issue requiring a trial, then she must turn her mind as to whether or not the need for a trial can be avoided by use of the new fact-finding powers.

As well, even when a motion for summary judgment fails, the judge may make other orders to streamline the litigation moving forward, to bring the matter to trial in the most cost-effective and timely manner possible.  Perhaps more importantly, "in the absence of compelling reasons to the contrary, [the motion judge] should also seize herself of the matter as the trial judge."  That's a big deal.


Civil trials are relatively rare already.  And while the Hryniak case remains an example of a rare case requiring a trial, the framework laid out in this decision will send very large numbers of other cases to summary judgment motions - probably including most wrongful dismissal actions.

I've posted about several other wrongful dismissal actions decided on summary judgment in the past; it can be a very expeditious way of dealing with a matter.  The case of Pegus v. Ecorite Distributors Ltd. comes to mind as a decision very reflective of the 'proportionality' concerns raised by the SCC in Hryniak.  (In that case, there was a motion for summary judgment based on 'deemed admissions' by the employer in a low-dollar-value case which had been pending for three years.  The employer sought to withdraw the deemed admissions, and Justice Gray permitted said withdrawal, but proceeded to decide the issues in dispute anyways and grant summary judgment.)

I suspect that we'll be seeing a lot more summary judgment motions in the days to come.


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.

Friday, January 24, 2014

Ontario would be "Forum Conveniens" for Employee Claim, but for Hypothetical Employer Counterclaim

Here's an interesting scenario, of the recent case of Solloway v. Klondex Mines Ltd.:

A mining company, Klondex Mines, is incorporated in British Columbia, with its head office in British Columbia.  It has a wholly owned subsidiary, Klondex Gold, incorporated in Nevada, with its head office in Nevada.  Then there's Solloway, who was president (and a director) of the parent company, and Chairman of the Board of the Nevada subsidiary, who has been involved with both companies for thirty years.  His most recent employment contract is under B.C. law, but he lives in Florida and mostly works out of New York, though he regularly attends to the companies' business affairs in Toronto.

Under his employment contract, Solloway was entitled to stock options in the parent company, though those options would terminate if he was dismissed for cause.

In June 2011, at the annual meeting of the parent company's shareholders in Toronto, there was a proxy battle, resulting in a settlement agreement (the "K2 Settlement Agreement") between the management and the dissidents:  They agreed on how to constitute a new board of directors, and Solloway stepped down as President and CEO, though remained Chairman of the Board for a period of 12 months (i.e. until the next AGM).  He remained president, director, and employee of the subsidiary company.

In July 2011, for regulatory compliance reasons, Klondex Mines had to cancel a portion of his stock options, because they had issued too many.  A negotiation ensued between Solloway and Klondex Mines, and they entered into a Release and Settlement Agreement, in September 2011, which was made in Ontario and purports to be governed by Ontario law, which protected Solloway's remaining options, guaranteeing them even if he ceased to be an employee, officer, or director.  Solloway ceased to be a director, officer, and employee of the companies in June of the following year, when the dissident shareholders took control of the Board.

Part of the release also involved a release of all claims by Klondex Mines against Solloway, in reliance on an express representation that Solloway had not engaged in wilful misconduct, among other things.

And here's the hitch:  Klondex now alleges that, around the time the Release was signed, Solloway began conspiring to appropriate a business opportunity from Klondex, conspiring with other Nevada employees to do so.  They have also alleged that he misappropriated company funds for improper personal expenses.  They then notified him that he was being terminated retroactively for cause.

Solloway then brought an Application in Ontario for an interpretation of the effect of the Release and Settlement Agreement, arguing that the allegations of wrongdoing (which he denies) are immaterial to his entitlement to exercise his stock options.

Klondex argued that Ontario does not have jurisdiction to hear the Application, or alternatively that it is "forum non conveniens" - i.e. that the Ontario courts should decline to hear the matter because it is better dealt with in Nevada.

The Court's Analysis

Justice Perell dealt fairly cleanly with the argument that Ontario doesn't have jurisdiction to interpret the agreement; the agreement was made in Ontario, and purports to be made under Ontario law.  This creates a "real and substantial connection" to Ontario sufficient for the Ontario courts to take jurisdiction.

However, whether or not Ontario should accept jurisdiction is more complicated.  The test for forum non conveniens is fairly complicated, looking at factors such as the location of the majority of the parties, the location of key witnesses and evidence, contractual provisions specifying applicable law or jurisdiction, the avoidance of a multiplicity of proceedings, the applicable law and its weight in comparison to the factual questions to be decided, geographical factors suggesting the natural forum, and whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage in the domestic court.

In looking at those factors, there are three principles to be borne in mind:  The threshold for displacing the plaintiff's choice of jurisdiction is high, so the existence of a more appropriate forum must be clearly demonstrated; the court should consider and balance the efficiency and convenience of a particular forum with the fairness and justice of that choice to the parties; and that because a forum non conveniens motion is brought early in the proceedings, the court should be cautious about fact-finding, and should assess the factors based on the plaintiff's claim if there's a reasonable basis in the record.

Justice Perell noted that "but for one major analytical problem, I would conclude that Ontario is an appropriate forum and I would exercise the court's discretion and dismiss Klondex Mines' motion."

The one major analytical problem is that "there are more claims and disputes between Mr. Solloway and Klondex Mines and Klondex Gold to be litigated."  Klondex indicated an intention to bring an action against Solloway for his alleged misconduct, and there was a prospect that Solloway might "up the ante" by adding a wrongful dismissal claim.  And the real problem becomes that Ontario really isn't the appropriate jurisdiction for litigating all of those claims.  (Indeed, Solloway already commenced an action for expense reimbursement in the BC Small Claims Court.)

The Court sums up the problem thusly:  "if one analyzes the factors about a convenient forum just in context of Mr. Solloway's Application, Ontario is forum conveniens but Ontario becomes forum non conveniens for resolving the omnibus and interrelated disputes between the parties if those claims were advanced in Ontario."

Solloway argued that Klondex is "high jacking" his Application, which "is a neat and free-standing interpretive matter that can be decided regardless of whatever suits Klondex Mines and Klondex Gold may bring against him."  However, Justice Perell noted that while Solloway "may own his own claims", he cannot control the claims his opponent may bring, and if his opponent does bring claims in Nevada, they would end up with an undesirable multiplicity of proceedings.  "The horns of the dilemma for the court, however, is that Klondex Mines and Klondex Gold has yet to commence proceedings against Mr. Solloway in Ontario or anywhere else."

The compromise solution implemented by Justice Perell was to stay the application conditionally on Klondex commencing proceedings in B.C. or Nevada within 60 days.


This is a tricky case.  Justice Perell is an experienced and astute judge, and he wisely highlights that the exact timing at which Solloway (allegedly) began his improper pursuit of a business opportunity might be very important.  I agree with him:  If Solloway was actively engaged, when signing the Release and Settlement Agreement, in such an overt breach of his fiduciary duties as Klondex alleges, that could very probably result in the agreement being set aside.  That wouldn't be the end of Solloway's claims, but it would probably be the end of the applicability of Ontario law - he would have to then turn to the Stock Option Plan, under B.C. law, and argue that he's still entitled to them notwithstanding the purported retroactive termination for cause.

(The retroactive termination for cause, by the way, is really strange, and illustrates the significant bad blood that is often characteristic of these dissident proxy takeovers.  More on that in a bit.)

So when Justice Perell hints that the Application may need to be converted into an action, and may need to litigate many of the same issues that would be involved in Klondex's claims against Solloway, he's really zeroing on the central points.  He's also right that those claims really have no place in an Ontario court.

At the same time, Solloway does own his own claims, and his claims are the only ones currently being litigated, and it isn't exactly like there was a rush to get in the first punch here.  It's been over a year since the retroactive termination, nearly two years since he stopped working for the companies, and the facts connected to his alleged wrongdoings are becoming stale indeed.  So it seems quite odd to say that he's wrong to bring an application in Ontario because Klondex might want to bring an action that's better litigated elsewhere.

It isn't unusual for a party to decline to litigate until the other side takes them to court.  "I want to put this behind me, but if we have to fight about it, then I'm going to counterclaim."  So, to that extent, it's kind of natural for Klondex to only want to litigate in response to Solloway's own claims.  Yet it seems very odd for Klondex to be able to succeed on a forum non conveniens motion on the basis of the convenience associated with a counterclaim it hasn't brought, where it fails on the convenience of the proceeding actually before the Court.

As well, employment law is an area where jurisdiction matters.  Employment law is fairly uniform across Canada, but in most of the United States it is very different.  (The central difference is that most non-union employment in the U.S. is "at will", meaning that either party can terminate the relationship without notice at all.  In Canada, not only has the common law developed in a very different direction, but "at will" employment is generally illegal.  But this distinction bleeds into other areas of the law as well, including contract interpretation, the meaning of 'just cause', etc.)  In theory, a court is able to apply the laws of another jurisdiction - so an action might be properly brought in Ontario, and be required to interpret Nevada's laws, but for a number of reasons that's less than ideal, and especially so in employment law where our judiciaries have such fundamentally different perspectives on where the justice lies.

Therefore, bringing the omnibus litigation in Nevada, where the witnesses to the alleged misconduct are, would nonetheless deprive Solloway of a legitimate juridical advantage of having a 'just cause' issue determined in Canada.

Respectfully, I think the problem in this decision lies here:  Justice Perell correctly identified that the issues of Solloway's alleged breach of fiduciary duty may be relevant to this Application, but didn't follow through on that analysis to its conclusion - that the factual elements (such as location of the witnesses) leaning towards Nevada being a more appropriate forum actually are directly engaged by Solloway's application itself.

If they weren't, then the 'multiplicity of proceedings' is less concerning, because you're litigating about completely discrete issues.  But because they probably are, that means that the appropriate analysis is to weigh those factors directly against the factors which Justice Perell found made Ontario the appropriate forum for the Application itself.  In other words, rather than query the convenience of trying Klondex's hypothetical claims alongside Solloway's actual claims, look at the convenience associated with hearing Klondex's defence to Solloway's claims.

(Again, there's an analytical problem - this was an Application, not an Action, though it could yet be converted into an Action.  Thus, the 'convenience of the witnesses' is less important until and unless it is converted into an Action.  It may well be that this should have doomed Klondex's motion, however - that without first successfully arguing a motion that it needs to be converted into an Action, there's no basis for staying it, because there's no 'convenience of the witnesses' issue engaged, and no potential to try their proposed counterclaim alongside it.)

Dissident Shareholder Takeovers

These takeovers happen from time to time, where a group of stakeholders become disillusioned with the existing management regime, and decide to change it up.  In publicly traded corporations, they're relatively rare, because it takes a lot of resources to mount a proxy campaign, so only heavily-invested shareholders will find it worthwhile, rather than 'voting with their feet', so to speak.

In small closely-held corporations, they're even rarer, because where you have a single person or family with a majority of the voting shares, it's next-to-impossible to unseat them.

However, where you have a middling number of shareholders, this can happen more frequently.  I've also seen it happen with not-for-profit organizations where an existing board member gets ambitious and starts campaigning against existing managers.

Regardless of how it happens, it's almost inevitable that, by the time it's done, there's an axe to grind with previous management.  And so the fact pattern here - that the new Board started an investigation into the activities of previous management, and found a basis to allege significant misconduct - is pretty much par for the course.  Whether or not those allegations are sustainable or not is a different matter entirely.

In general, the core of the allegations are going to be against the old President and CEO, and - regardless of the objective reasonableness of his actions - such allegations are typically fairly difficult to make out, because the old President and CEO was usually pretty cozy with the old Board, and would often have gotten their approval to do the things that the new Board thinks was misconduct.  The problem being that, if the old Board knew of it and approved it, it usually isn't misconduct.

That's why the new management often has an uphill battle:  Proving that the old management did some sneaky-looking stuff often isn't that hard, but proving that the sneaky-looking stuff was actually misconduct is another question entirely.

UPDATE:  March 20, 2014

Last week, Justice Perell released a costs decision, ordering Solloway to pay $42,000 in legal fees.  Ouch.

Solloway argued that, because of the circumstances of Justice Perell's decision, being that Ontario would have been an appropriate jurisdiction for Solloway's application alone, but wasn't because of other disputes which Klondex planned to raise, there shouldn't be costs on the motion.

Justice Perell acknowledged that "there is an initial attractiveness to Mr. Solloway's argument", but on further analysis the argument appeared to be "not much more than in all the circumstances, it was not reasonable for him to expect that he would lose the motion".  But he contested and lost the motion, so the normal presumptions apply:  Loser pays costs.

Respectfully, I think Solloway's argument may have been more than that.  Klondex only succeeded on a contingent basis (i.e. the application is stayed unless they fail to bring another action elsewhere), and only because they expressed an intention to do something that they had sat on for a lengthy period of time.  There's really no question, on the basis of Justice Perell's findings, that Solloway was reasonable in bringing his application in Ontario in the first place.  Even if he might have reasonably anticipated the counterclaim, it's unreasonable to expect him to pick a jurisdiction based on claims against him which haven't yet been made.  It would have been insane for him to simply consent to the order sought on the motion:  At this point, he's already incurred significant legal fees in bringing the application (which, remember, was appropriate for Ontario, according to Justice Perell), and Klondex still hasn't commenced the proceedings elsewhere that engage a factual matrix inappropriate for consideration in Ontario.

Were I in Solloway's shoes, then even in hindsight (i.e. anticipating Justice Perell's conclusions on the motion), I would have contested the motion unless (a) an agreement with Klondex could be reached about where and when other proceedings would be brought and (b) Klondex agreed to compensate me for costs thrown away.  After all, they're asking to get rid of my properly-brought proceeding because it isn't convenient to claims that they haven't yet made.

There are cases where the successful party should be denied costs, or even ordered to pay costs - most frequently where the motion is for some kind of technical or procedural relief, necessitated by the moving party's own conduct (say, a last-minute adjournment request for good but avoidable reasons, or setting aside a dismissal for delay), and where the court can look at the responding party and say something like "I feel for you, but the interests of justice and fairness are better served by granting the relief."

This might fall into that class of cases:  It's a jurisdictional issue, and not even jurisdiction simpliciter (on which basis Solloway succeeded, too).  Fundamentally a technical issue, not going to the heart of the matter, with the finding not implying that Solloway did anything wrong by bringing the application in Ontario.


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. 

Monday, January 20, 2014

Plumber Wins Wrongful Dismissal Action at Small Claims Court

Here's another recent case out of the Kitchener Small Claims Court, decided by Deputy Judge Sebastian Winny.  I've posted about a number of his cases before, largely because he is one of a handful of Deputy Judges whose decisions are regularly published.  (See my commentaries on Dechene v. Dr Khurrum Ashraf Dentistry, Mitchell v. 2156625 Ontario Inc. [appeal here], and Patterson v. Hanson Hardscape Products Inc.)

This decision is a delightful read for an employment lawyer.  Might be a bit arcane for others, but it's a really well-thought-out decision on a matter with some very interesting and unusual legal issues.  I don't always agree with Deputy Judge Winny, but he might yet prove me wrong about whether or not employment law matters belong at the Small Claims Court.  Though, to be fair, there were lawyers on both sides in this case.

The case is Kuntz v. Dordan Mechanical Inc., involving a non-unionized plumber who worked for the defendant for just over five years.  He started as an apprentice, and had a series of 'layoffs' while he attended school to work towards his licence qualifications, which he finally obtained in March 2012.  There was one other short layoff in early 2012, for one week, with a fixed return date.

The biggest challenge for Mr. Kuntz to overcome is a rather dated legal doctrine called "custom and usage", and in particular its application by the Ontario Court of Appeal in 1999 in the case of Scapillati v. Potvin Construction Ltd.

Custom And Usage

Let's step back for a moment and ask:  How does a term become part of a contract?

There are fundamentally two kinds of contractual terms - express and implied.  Express terms are obvious -they're the terms that you've discussed and agreed to.  However, quite often, the express terms of a contract don't cover every contingency; they leave certain rights unspoken, and in that case the law leaves open the possibility of "implied" terms, so long as they don't contradict express terms.  Some implied terms arise by operation of law, such as the requirement to give reasonable notice of termination of employment.  Other implied terms are rooted in doctrines of common intention, as to what the contracting parties would have expected when entering into the contract.

One of these doctrines is 'custom and usage', and in essence it means that there is a practice so widespread in the trade or industry that everyone can be assumed to know of it and expect that it will be followed.

The Scapillati case was a wrongful dismissal case dealing with a carpenter in the construction industry.  He worked for Potvin on and off for a lengthy period of time; when there was work, they would call him in.  When there wasn't, sometimes for months at a time, they wouldn't.  Occasionally, he would call them up when he was looking for work, and they would bring him in.  After a particularly lengthy layoff - about two years - he ran into the old employer and was invited back to work.  He continued for about 8 months before being laid off again - he was told that he would be recalled, but he never was, and he sued in wrongful dismissal.

Scapillati was treated as a short-service employee, having only been there a few months since a lengthy layoff, and the courts concluded that there was a custom in the on-site construction industry to dismiss or lay workers off without notice or pay in lieu.  The Court of Appeal's analysis was slightly more nuanced, noting that custom was a factor in the analysis, but in that case, for an otherwise short-service employee, the reasonable notice period was nil.  As well, they considered it relevant that Mr. Scapillati was able to foresee the layoff before it happened.

However, this doctrine is very seldom applied, presumably because relatively few on-site construction workers are non-union.  (In unions, these matters are determined with reference to collective agreements.)  I have come across Scapillati before, and seen employers try to use 'custom'-based arguments to justify their actions, but it's a difficult thing to do outside of some fairly narrow circumstances.

Yet, within the construction industry, as Mr. Kuntz was, Scapillati seems more applicable.  The employer took the position that, following Scapillati, Mr. Kuntz was not entitled to any notice of termination.

However, Deputy Judge Winny distinguished this case from Scapillati, on the basis that he did not consider most of Kuntz's layoffs to be true layoffs, and the other was simply a one-off with a fixed return date.  He noted that the custom was merely one factor to be weighed against the Bardal factors, and awarded five months' pay in lieu of notice.

The Analysis

What's really interesting about this case is Deputy Judge Winny's analysis of Scapillati in light of some of the other principles of wrongful dismissal.

Tension #1:  Availability of Replacement Employment versus Layoffs Without Notice

The Bardal factors look at, among other things, the availability of replacement employment when assessing the reasonable notice period.  If there isn't other work available, you're entitled to more notice.  That's the theory, at least.

Yet Scapillati seems to endorse a notion that, when the work dries up, the employer should be able to send away employees more cheaply.

It's not a direct conflict, of course.  The theory is that the workers follow the work - that when one employer's work dries up, it's because somebody else has the contract, and now that other company is looking for labour.  However, that's not always the case.  Many non-union construction workers work solely or mostly for one employer, and if that employer can't keep them working, things become difficult.  If you don't know where the work has gone, or if the economy is struggling on a larger scale, you're looking for work for a longer time, and without the safety net that pay in lieu of notice usually offers.

Philosophically, it definitely seems that Scapillati favours a more employer-friendly view of the law than does most employment law in this sense.

Tension #2:  Foreseeability of Termination

In the Scapillati case, the Court of Appeal considered the foreseeability of layoff to negate any obligation to give advance notice.  If you can see it coming, why do you need the employer to tell you?

This was based in something of a void of relevant jurisprudence; now, however, there is plenty of case law on the point, and most of it goes the other way.  Deputy Judge Winny referred to more recent cases from the Ontario Court of Appeal finding that a notice of termination has to be 'clear and unambiguous' - i.e. telling somebody "You might be laid off soon" isn't good enough; if you want to give working notice, you need to tell them in writing that "Your employment will end on this particular date."

Tension #3:  Letting Collective Bargaining Practices Drive Non-Union Common Law?

Deputy Judge Winny expressed some dissatisfaction with the decision in Scapillati altogether, questioning whether common law governing non-union workplaces should be "affected by customs which result from collective bargaining".

I'm not sure that this is a fair characterization of how on-site construction industry employment practices arose - I suspect that the labour mobility that's characteristic of on-site construction practices is the cause, and not the effect, of the rather unusual treatment of the construction industry in labour relations regimes (not to mention in employment standards legislation as well).

The problem is that not all employment relationships in the construction industry work that way, so the legal regimes tend to be over-inclusive, and often preclude parties from structuring their relationships in otherwise-legitimate fashions.  But I digress.

Deputy Judge Winny also referenced the Elsegood v. Cambridge Spring case (my commentary here), which he litigated at the Court of Appeal, as authority that "At common law, an employer has no right to lay off an employee".  It's a phrase right out of the Elsegood decision, but it misses a crucial point here.  The line immediate after that was "Absent an agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee's employment, and would be a constructive dismissal."  Which, notwithstanding the bizarre recent case of Trites v. Renin Corp., has been a fairly widely accepted proposition of law.  But it could be otherwise stated, "Absent an express or implied contractual term..."

Custom and usage theoretically allows one, in the right circumstances (though the on-site construction industry is probably it for 'the right circumstances') to find an implied term allowing unilateral layoffs by the employer.  In which case the Stolze doctrine, which says that you need a contractual term in order to implement unilateral layoffs, is satisfied.

I'm not sure if Deputy Judge Winny referenced that proposition to suggest that the custom and usage in the construction industry is contrary to the common law on the point - which would be wrong - or merely to illustrate that it yields a very different result from other employment relationships.  But at the end of the day, while I'm not sure I share his way of getting there, I have some similar concerns to him with Scapillati - the implication that there's an entire class of employees who, by virtue of the nature of their work, have zero job security regardless of tenure or level of responsibility, seems very much out of step with the rest of employment law.

However, this decision, in and of itself, goes a long way to alleviating those concerns, reinforcing the contextual analysis to be applied in a common law analysis of employee rights.  There will be employees like Mr. Scapillati who have no entitlement to notice of termination, but that doesn't mean that employees like Mr. Kuntz, working for a single employer for five years, must be treated the same way.


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. 

Thursday, January 16, 2014

York U's Accommodation Crisis: Should the Code be Changed?

I posted last week about the controversy at York University regarding the accommodation of a student whose religious beliefs prevent him from mingling with women.

My argument, simply, was that there's no undue hardship in the specific accommodation being sought.  He didn't want a gender-segregated environment; he chose to isolate himself by taking online courses, and was simply asking to be excused from a single group assignment in an otherwise-online course.  In respect of the same assignment, other students had been excused in the past, without any unfairness resulting to other group members.

While I've seen one legal commentator argue that it's wrong to accommodate this student, the vast consensus among lawyers and legal academics appears to be consistent with my conclusion:  The decision to accommodate was the only correct decision in light of the Human Rights Code.

However, there's a significant backlash - people consider this result to be unacceptable, and think that the Code should be changed.

I think this calls for a closer analysis of why.

Why is this result argued supposedly unacceptable?

Professor Paul Grayson, who is the professor of the course in question and defied his Dean to refuse to accommodate, was published today in the Globe.  He argues that the Code is out of touch with Canadian values because it leads religious rights to "trump" gender rights.  He points to gender segregation in publicly-funded swimming pools, which "are likely to engender feelings of inferiority in girls", and that it leads to a feeling among young men that it is natural and desirable that they seek and obtain gender-segregated environments.

The result, Professor Grayson argues, is that "the rights of female students are suffering from religious compromise at all levels of education."

Religious Rights Do Not "Trump" Gender Rights

The claim that there's a hierarchy is false.  There's really no cogent line of reasoning to suggest that excusing this student from a group assignment would have resulted in unfairness to the girls in the class, or elsewhere, directly or indirectly.  So there's no interest competing or conflicting with this student's religious rights.

The request to work alone isn't even inherently demeaning to women.  (Indeed, gender segregation isn't inherently demeaning to women in general, as it becomes a reciprocal obligation on both men and women.  It's the reasons for gender segregation that can, in some faiths, be demeaning to women.  But that reason is very distant from this request itself, which isn't even for such segregation.)

Most of the outrage is based on 'slippery slope' positions or broader and unsubstantiated extrapolations - if we accommodate this request, where does it stop?  Should we start requiring female students to cover their faces?  Create gender-segregated classes?  Keep women off campus?  Will this accommodation lead to restrictions on personal liberty, to people in public places being required to change their behaviour to conform with the religious values of others?

Those are absurd suggestions, and do not in any way flow from the Code principles leading to the conclusion that this student needs to be accommodated.  There's no slippery slope here; there are pretty clear legal doctrines delineating where the obligation to accommodate stops.  This case is on one side of the line; those other extreme cases are easily on the other side.  In other words, they are not appropriate analogies to use to illustrate wrongness of this result.

What the Professor takes issue with is the pervasiveness of the value system, the notion that gender segregation is an acceptable way to live one's life, because the fact that people live in accordance with that belief system marginalizes women.

Indeed, there is very little doubt that many religious and cultural practices - across a fairly wide range of groups - marginalize women.  But it is absolutely not the case that the Code protects that marginalization, (except in very specific contexts, such as the Catholic Church refusing to ordain women).  A man cannot justify an assault against a woman on the basis of religious beliefs.  Outside of certain religious institutions, an employer cannot justify refusing to hire or promote women on religious grounds.  A service provider generally cannot refuse to serve women, or serve women differently, for religious reasons.  The Code quite expressly prohibits all of these things, and is actually an extremely important statute for gender equality.

Ultimately, I don't think I'm misstating Professor Grayson's position if I say that he believes that gender segregation is socially unhealthy, and therefore a religious desire to avoid working with female peers should not be accommodated, regardless of the nature of the specific accommodation sought.

Which doesn't seem unreasonable when framed that way.  But the problem is in its implications:  It requires us to evaluate the merits of religious belief systems, and to decide which religious beliefs are entitled to accommodation and which ones aren't.

I'm going to state the obvious and say that that's a huge problem.  Freedom of conscience is at the core of Canadian values, that people can subscribe to whatever crazy religious beliefs they want.  If we start requiring religious beliefs to conform to other Charter values in order to entitle their adherents to freedom from discrimination, then a lot of religions are in trouble.  And so is our religious freedom altogether - it's not really freedom if you're told "You can believe in whatever religion you want, without discrimination, so long as it's one of our approved belief systems."

Objectionable Religious Beliefs are Everywhere

Consider the Catholic Church, the single largest religious denomination in Ontario.  (Approximately 70% of Ontario is Christian, and nearly half of those Christians are Catholics.)  The Church doesn't exactly have clean hands from a 'gender equality' point of view.  They have a number of doctrines which directly conflict with women's rights under the Charter (consider their stances on abortion and contraceptives), but the most obvious and most controversial is their refusal to ordain women as priests (and, by extension, as bishops, cardinals, and pope).  The senior ranks of the church are all entirely reserved for men.

There's a fair bit of controversy on the topic, but the Church has been very clear dealing with dissidents:  If you think that women should be eligible for ordination, you are a heretic, and can be excommunicated.

There are a number of canonical justifications for the exclusion of women from ordination, but at its core, all such justifications imply that women are further-removed from the divine than are men.  The underlying rationale is highly demeaning to women, the result is highly discriminatory against's really quite an appalling reality.  It's legal, because the church itself is subject to an exemption from the Code.

But does this delegitimize the Catholic faith?  Does this cast a shadow on Catholics seeking accommodation, that accommodating them somehow means that society therefore shares their apathy toward women's rights?  If a Catholic requires permission to not work Sunday morning to be able to attend church, does it make sense that the employer might say, "Until the Church starts ordaining women, accommodating your need to attend service would be an endorsement of their discriminatory hiring practices, and therefore we're not going to do it"?

Any denomination that regards Leviticus as binding authority is abhorrent, from a Charter perspective.  Many religious groups of all stripes staunchly oppose gay marriage.  Most religions categorically prohibit one thing or another that the Charter categorically protects.

It would be highly inappropriate for us to start evaluating whether or not religious beliefs, themselves, are consistent with other Charter principles.  If we did so, it would completely undermine religious liberty in Canada.  And, frankly, I don't know a single religious denomination that could hold its own laws up to Charter scrutiny.

The Limits of Religious Freedom

Ultimately, here's my point:  People are entitled to believe, without discrimination, in whatever incarnation of the divine they so choose.  Those beliefs may seem offensive, discriminatory, or downright wacky (and, frankly, many of them do, looked at in the right light), but people are entitled to believe.  And that is as it should be, in a free and democratic society.

There are limits of religious freedom.  My religious freedom does not, for example, give me the right to force my religious laws upon you.  I can't compel you to abstain from what my holy book calls a moral crime.  I can't murder my daughter for her immoral actions, even if my religious beliefs say I'm obligated to do so.  I can't expect to be able to carry a ceremonial religious weapon on an aircraft.  I can't expect to be able to wear religious headdress on a construction site, unless that headdress is compatible with a hard hat as well.  These are all limits on what I can do or expect others to do, on the basis of my religious beliefs.  And those limits are defined by the reasonableness of the accommodation sought, not by the reasonableness of the religious belief itself.

These limits, which already exist in the law, are what make the Code's result in this case palatable.  Because this case is the exception, marked by the exceptionally marginal nature of the accommodation sought, and because in all of the 'harder' cases we might look at, it's much easier to find 'undue hardship'.


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. 

Friday, January 10, 2014

A "Hierarchy" of Human Rights?

There was a story in the Toronto Star yesterday, picked up in a column in the National Post today, relating to a York University student asking for religious accommodation that he not be required to "meet in public with a group of women" - most of the course was online, with the exception of one in-person focus group assignment, from which the student asked to be excused.

The Dean sought legal advice and determined that the student's request should be granted, but the professor defied the Dean and - with the rest of his department - created a new policy that required him to reject the request.

It's not hard to see how the request would be controversial.  The underlying reason for the request is deeply sexist, even if under the umbrella of a religious proscription (good faith or not).  The professor, according to the Star, sees the Dean's response as having prioritized religious rights over women's rights.

On this, at least, the professor is wrong.  The Dean's response makes a great deal of sense, from a legal perspective, once viewed in the right light.

From a sociological point of view (and, incidentally, it was a sociology class), I see the professor's argument.  "In order to meet an instance of a religious requirement we have tacitly accepted a negative definition of females."  Certain religious beliefs and cultural practices are distinctly misogynistic, placing women in a subordinate role to men.  As a society, how can we reconcile tolerance and accommodation of those beliefs, with our own convictions (both social and legal) that men and women are equal?

I've seen a number of instances where human rights are alleged to conflict.  The reality is that such conflicts are actually exceedingly rare, and this case is not one of them.

The Duty to Accommodate

The Human Rights Code requires service providers to reasonably accommodate religious requirements up to the point of "undue hardship".  In other words, for an employer to impose a sweeping uniform requirement that conflicts with religious dress requirements, and refusing to make exceptions on religious grounds without considering whether or not it's practical to do so, may well be committing unlawful discrimination.  However, permitting ceremonial weapons on airplanes is probably going to fall beyond the limit of "undue hardship", and refusing to waive justifiable safety-related uniform requirements will not generally be seen as unlawful.

So there's a line, if it isn't always a clear one.

In this case, we have an individual seeking religious accommodation in the form of being excused from a certain assignment.  The accommodation he sought, from the report, appears to be exactly the same as that given to other students studying abroad who were therefore unable to perform the in-person requirement.  That suggests against the accommodation being 'undue hardship' - the only difference is that the professor feels that the religious beliefs underlying the request are demeaning to women, and that he doesn't want to be complicit with such demeaning religious beliefs.

I strongly support gender equality.  I find many religious beliefs to be offensive for that reason.  Yet, however strongly I may disagree with a particular religious belief, that in and of itself is not sufficient to conclude that it is not worthy of reasonable accommodation up to the point of undue hardship.

Offence to somebody else's statutory rights likely will be 'undue hardship'.  But that doesn't appear to be going on in this case.  He's asking to be excused from the group, and it's unlikely that that's much loss for the group.  If he were asking for the women to be removed from the group instead, or to be required to cover their faces, etc., then that would be clearly absurd, clearly a violation of the rights of those women, and clearly not something the University could be expected to do.

As it stands, his request was a discreet email to the professor, asking for accommodation of his religious beliefs, and there's no reason to think that granting the request would have caused any harm of any kind whatsoever to anyone.  And, moreover, the substance of the request itself is something the University is prepared to grant in other circumstances.  This is why the Dean's legal advisors presumably would have recommended granting the request:  There does not appear to be undue hardship.  It's not a case of one individual's rights up against another individual's rights.  It's a question of whether or not an individual who maintains religious beliefs which are offensive in the abstract is nonetheless entitled to protection against discrimination for those beliefs.  And the answer to that question would almost certainly be yes.

Is This Belief Real?

Challenging the bona fides (good faith) of a particular religious belief can be a risky venture.  It may well be that this guy just doesn't like working with women, and is veiling his sexism in religious beliefs.  Indeed, the wording of his email, emphasizing that the majority of his group was women, implies to me that it would be less objectionable if the group simply had fewer women.  That would suggest against a hard-and-fast "don't work with women" rule, which would undermine a claim to be entitled to accommodation.

Still, there are countless religious sects, cults, denominations, etc., and many people have some pretty crazy sincerely-held beliefs.  The closest I've seen to this was a workplace run by Christians whose beliefs prohibited men and women from eating together.  (This was a non-exempt workplace, and so the extent to which religious dogma infiltrated company policy was deeply problematic, but that's another matter.)  Ultimately, it isn't hard for me to imagine that there are people with sincerely held beliefs to the effect claimed by this student.  (I'm broadly familiar with certain scriptures within Judeo-Christian theology, for example, suggesting that one becomes 'unclean' by touching anything touched by a woman who is menstruating.  I'm not entirely sure how one who subscribed to that belief could put it into effect in a modern society except by limiting contact with women.  Though my understanding is that it's possible to purge the resulting state of being 'unclean' by bathing and washing one's clothes...which is good advice for anyone touching anything touched by strangers.)

However, if it is a hard-and-fast rule against congregating in public with groups of women, this guy is in for a rough ride in the real world, at least in Canadian society.  Even if one assumed that this guy has a legitimate human rights complaint (not saying he does; I don't necessarily know all the facts), how would he pursue it?  The Human Rights Tribunal is a public tribunal, and a great many human rights lawyers and adjudicators are female.

I highly doubt that the HRTO would accede to a request for a male adjudicator, even if it's for religious reasons.  Likewise, if the representatives and lawyers for the responding party were female, there's really nothing he could do about that.

What If Every Male Said That?

You'll note that part of my argument above is that nobody - in particular, none of the women in his group - will likely suffer any harm of any kind whatsoever by his request being granted.  (Publicity notwithstanding, they shouldn't really have even known about it.)  Of course, if it weren't just one person making the request, but a widespread social phenomenon in a community, then that could harm the program and the female participants in the program.

In a human rights context, it's widely accepted that it's no defence that a person isn't substantively harmed by the discrimination.  (Relevant to damages, but not a defence to an allegation of a violation of the Code.)  If I said, "Sorry, I don't serve Scots", the reality is that there are plenty of other lawyers in this city ready and willing to serve Scots; Scots will not be rendered unable to obtain legal services unless my hypothetical prejudices became widespread.  (For clarity, the prejudice is purely hypothetical - I have Scottish heritage myself, if my Scottish Gaelic surname didn't give that away.)  At the end of the day, that somebody else will pick up the business I've turned away is not the point.

However, when we're looking at the duty to accommodate, the analysis changes.  There's a budding concept in law called "saturation".  Mostly theoretical at this point, but I consider it fundamentally sound.  The case in point is this:  You operate a 7-day-per-week call centre in small-town Quebec, with rotating shifts.  One day, an employee comes to you and says, "I'm Catholic, and my Priest recently reinforced that Sabbath observance is of utmost importance to my eternal soul, so I can't work Sundays anymore."  Accommodation analysis says you figure out whether it will be 'undue hardship' to schedule others into his place on Sundays instead.  In a large call centre, shouldn't be a problem.  You tell the employee, "Sure, we can work with that."  Five minutes later, a second employee comes in with the same request.  Okay, fine, accommodating two employees who can't work Sundays isn't a problem.

But where it becomes a problem is here:  In small-town Quebec, almost all of your employees will be Sunday Sabbath observers, and likely all in the same congregation, too.  If the local Priest is telling his parishioners not to work on Sundays, he's talking to almost all of your employees, and any of them who listen will come seeking accommodation, and suddenly most of your workforce is looking to be excused from the Sunday schedule, to the point that, if you accommodated all such requests, you would no longer be able to properly staff your operations on Sundays.  That's almost certainly going to be relevant to the question of "undue hardship".

Likewise, if every male in the class claimed that they needed religious accommodations because they couldn't work with women, that would have a result with very different considerations than the instant case.


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.