The decision in Honda Canada Inc. v. Keays further explained the law on aggravated damages.  Mr. Keays worked 11 years for the company and was diagnosed with chronic fatigue syndrome.  He ceased work and received disability benefits. Mr. Keays returned to work and he was placed in a disability program which allowed employees to take absences if the employee provided a doctor’s note stating that the employee’s absence was related to his or her disability. Mr. Keays began missing work more frequently.   As such, the employer asked him to meet doctor of their choosing to determine whether the disability could be accommodated.  He refused to meet the doctor and he was terminated.

Mr. Keays commenced an action for wrongful dismissal. The trial judge found he was entitled to a notice period of 15 months, increased the notice period to 24 months because of the manner of dismissal and awarded punitive damages in the amount of $500,000.  The Court of Appeal reduced the punitive damages to $100,000.   The SCC affirmed the 15 months notice and set aside the award of aggravated damages for the manner of dismissal.  The SCC also set aside the award of punitive damages.

Keay’s adopted “moral damages” which are awarded to the employee as a result of the employer’s bad faith conduct, if the manner of dismissal causes mental distress.  The SCC explained that damages for the manner of dismissal are to be awarded based upon Hadley v. Baxendale.  In its decision, the SCC stated:

Damages attributable to conduct in the manner of dismissal are always to be awarded under the Hadley principle.  Moreover, in cases where damages are awarded, no extension of the notice period is to be used to determine the proper amount to be paid. The amount is to be fixed according to the same principles and in the same way as in all other cases dealing with moral damages. Thus, if the employee can prove that the manner of dismissal caused mental distress that was in the contemplation of the parties, those damages will be awarded not through an arbitrary extension of the notice period, but through an award that reflects the actual damages.

What You Need to Know

1. If an employee proves the manner of dismissal caused mental distress, which was in the reasonable contemplation of the parties, moral damages may be awarded;
2. Moral damages are no longer to be granted through an extension of the notice period.

1. The presumption that employees are entitled to reasonablenotice at common law is rebutted by clear language stating ashorter notice period;
2. Termination clauses that do not meet minimum entitlementsunder the ESA are void.

It is wise and strongly recommended that employees to-be consultan employment lawyer to obtain legal advice when presented with anemployment contract. If you are presented with an employment contact which you do not understand, this is more reason to do so.

Workplace Harassment

The Act defines Workplace Harassment as:

• means engaging in a course of vexatious comment or conductagainst a worker in a workplace that is known or ought reasonably to be known to be “unwelcome”

It is mandatory for Employers to develop a policy that addressesharassment which must be posted in the workplace.

The Act defines Workplace Violence as:

1. the exercise of physical force by a person against a worker, in aworkplace, that causes or could cause physical injury to the worker;
2. an attempt to exercise physical force against a worker, in aworkplace, that could cause physical injury to the worker;
3. a statement or behaviour that it is reasonable for a worker tointerpret as a threat to exercise physical force against the worker, ina workplace, that could cause physical injury to the worker.

Employers are also obligated to post a policy in relation to workplaceviolence. Employers are required to conduct a risk assessment to ensurethat employees are protected.
Once the risk assessment is complete, employers are required to developa workplace violence program which includes:

1. measures to contain the risks identified in the risk assessment;
2. the ability to summon immediate assistance when workplaceviolence occurs;
3. a mechanism to report incidents or threats of workplace violence tothe employer;
4. a mechanism to investigate and address incidents, complaints orthreats of workplace violence.

The Act also contains an obligation for an employer to “take all reasonableprecautions in the circumstances” to protect a worker from domesticviolence. Often times, violence in the home overlaps in the workplace.

Workplace harassment and workplace violence are serious matters that mayhave adverse mental and physical consequences. If you think that you havebeen subjected to harassment and / or violence in the workplace you are encouraged to contact a lawyer to obtain legal advice, as the areas are new and the meaning uncertain.

The Ontario Court of Appeal has stated the law clearly in the decision of LeVan v. Levan 2008 ONCA 388 (CANLII) with respect to an individual’s obligation to provide full financial disclosure of significant assets, debts and liabilities at the time of entering into a a marriage contract under the Family Law Act and of a lawyer’s obligation to counsel their client in this regard.
In LeVan, the Ontario Court of Appeal upheld the finding of the trial judge that the marriage contract should be set aside because of misrepresentation and insufficient financial disclosure by the husband to the wife.
The parties in LeVan lived together for one year before marrying in 1996; they separated in 2003. There were two children of the marriage who lived primarily with the wife after separation. The wife was a teacher but did not work outside home after marriage; she was the primary caregiver to the children.
The husband and his family owned the majority of the shares in a large manufacturing company. At the time of marriage the husband worked for one of the family companies and earned an annual salary of approximately $52,000. The husband also had an interest in family companies and in a family trust that were worth approximately $30 million. The husband’s family insisted that before marriage the parties should enter into a marriage contract; the marriage contract excluded the husband’s business interests and significantly limited the wife’s claim to spousal support.  The marriage contract was executed the week of the wedding.
The Court of Appeal upheld the trial judge’s finding that the husband breached his statutory obligation to provide financial disclosure to the wife.  As a result, the marriage contract was set aside and the wife was awarded an equalization payment of $5.3 million.

Bosch retained an independent consultant to conduct an investigation but refused to provide the investigative report. We brought a motion, on behalf of the Plaintiff, to compel Bosch to produce the Investigative Report.

The employer (Bosch) claimed that the report was not relevant or protected under solicitor-client privilege. We argued, on behalf of the employee, that the Investigative Report was relevant and not subject to privilege.

After argument, the Court agreed with our position, on behalf of our employee client, and ruled that the report was clearly relevant to what transpired between the employee and the employer while she was employed and the events that led to her ultimate dismissal.

The Court further ruled that the Investigative Report was not protected by solicitor and client privilege because the author of the document was not a client of the solicitor who commissioned the investigation leading to the preparation of the report; furthermore, the author of the report did not prepare it to obtain legal advice from the company’s solicitor or to assist the company in preparing a defence and therefore was not protected by litigation privilege. We were ultimately successful in obtaining the Investigative Report in addition to all of the Investigator’s notes that led up to the preparation of the final report. In the Court’s judgment, the Master expressly stated that Defence counsel’s position on the motion – that the Investigative Report was not relevant – was without merit. The Court awarded full recovery of the Plaintiff’s (employee’s) costs on the motion.

To read the full judgment of the Court please on the link: Ragoobar v. Robert Bosch Inc.

Lawyers and individuals involved in drafting marriage contracts are strongly cautioned by the Ontario Court of Appeal to provide full and honest financial disclosure of debts, assets and liabilities at the time of entering the marriage contract and to provide values thereof, where appropriate.

While LeVan deals with marriage contracts, specifically, the same rationale may be applied to all domestic contracts, including, pre-nuptial agreements, cohabitation agreements and separation agreements.  LeVan is a caution to all involved in the drafting, negotiation and execution of an agreement to provide all information that is available otherwise the agreement may be set aside due to insufficient disclosure, in which case, entitlements under the Family Law Act will prevail.

To read the full text of the LeVan decision please click: LeVan Judgment.

The employer bears the onus of proving that the employment contract has been frustrated.  If the contract is frustrated, then the employer is not liable to the employee either under statutory legislation or the common law.  If the contract is not frustrated then the employer may be liable to pay damages to the employee under the statutory regime and the common law.

It is imperative to review all of the circumstances and facts of each particular case in order to determine whether an employment contract has been frustrated due to an employee’s illness and absence from work.

Our firm acted as counsel for an employee, Dragone, in the recent Ontario case, Dragone v. Riva Plumbing Ltd. which was heard and argued on September 21, 2007.  Ms. Dragone was an office clerk who was on a medical leave of absence for approximately 14 months while undergoing treatment for metastasized breast cancer.  Riva Plumbing did not hire a replacement for Ms. Dragone during her 14 month absence.

Justice Perell held, after argument by our firm on Ms. Dragone’s behalf, that despite Ms. Dragone’s 14 month absence from work while undergoing treatment for metastasized breast cancer, this did not amount to frustration of contract because a “permanent incapacity to return to work” had not been established.  Further, the existence of long term disability benefits may postpone the time of frustration because it may be inferred that the contracting parties (the employer and employee) anticipated that the employee may require medical leave due to illness.  Justice Perell did note, however, that a temporary illness could constitute a frustrating event depending on the circumstances.

Various factors must be considered in determining whether a contract of employment has been frustrated due to an employee’s illness or incapacity.  When an employer has long term disability benefits in place, the employer has anticipated the possibility that employees may take sick leave.  Therefore, these employers should be more tolerant when an employee is absent and a greater period of time should elapse before an employer takes the position that an employment contract has been frustrated.  Other important factors to consider are the seniority of the absent employee, how important that employee is to the success of the employer’s business and whether a prolonged absence will be harmful to the employer; a short period of incapacity may frustrate a contract of employment if the absent employee is an executive, whereas a longer absence for an employee who does not occupy such a key role within the company may not.

A contextual analysis must be undertaken to determine whether an ill employee’s absence from work constitutes frustration of contract.  While an employer is entitled to terminate an ill and incapacitated employee after a period of absence from work for frustration of contract, employers should carefully consider the above factors before taking action, including whether the termination violates the Human Rights Code.

In Dragone, we argued that for a resignation to be enforceable by an employer against an employee it must be “clear and unequivocal”.  We strongly argued before the Court that words said or acts of resignation while an employee is under emotional trauma – words said in anger or desperation – can be recanted when emotions have settled, unless an employer acted to its detriment.

The Court agreed with our submissions on behalf of our ill client and held that Ms. Dragone made statements while under emotional trauma due to her cancer and later recanted them.  On this basis, the Court ruled that Ms. Dragone did not resign from her employment – the resignation was not clear or unequivocal.

If you would like to read the case, in full text, please click on the link to Dragone v. Riva Plumbing Ltd..

In Courier Complete v. Fraidakis (2005) O.J. No. 1106 (Ont. S.C.J.) a dispute arose between the employer, Courier Complete and, its employee, Fraidakis, a programmer, with respect to who owned software.  The employee developed the software using confidential company information and codes that otherwise would not have been available to him but for his employment.  The employee retained the only copy of the software on his home computer, refused to provide it to the employer and was terminated when he refused to hand it over.

Our firm acted for the employer and promptly brought an Application to Court to obtain an Order prohibiting the employee from copying, selling or distributing the software due to the irreparable harm that the employer would suffer if the software was disclosed, copied, sold or distributed (known as an injunction).  The motion for the injunction on behalf of the employer against the employee was successful and the employer’s business interests were protected in a quick, time and cost-effective manner.

To read the full text of the case, please click on the link: Courier Complete v. Fraidakis (2005) O.J. No. 1106 (Ont. S.C.J.) .