As a commercial litigator and a mediator, occasionally I am reminded that all too often, people disregard Court orders in the sincerely held belief that they will get away with it.  Unfortunately, they sometimes do.

For that reason alone, I appreciate those instances in which such people are actually held to account for their sins. 

The recent decision of the Court of Appeal in Canadian Western Bank v Canadian Motor Freight Ltd. et al. is such a case.

In this case, a Receiver was appointed over the assets of a debtor, which was a trucking company.  The Receivership Order required the debtor to turn over its assets, principally a fleet of trucks, to the Receiver without interference.

Instead of doing so, the debtor and its management moved the fleet of trucks to a yard owned by a different entity, United Group.

After unsuccessful negotiations with United Group to recover the trucks, the Receiver obtained an Asset Recovery Order requiring United Group to provide the Receiver with access to its yard so that the Receiver could remove the trucks.  United Group and its management failed to do so and the Receiver made an application to the court to enforce the Order.

The motion judge found that the debtor and its management, and United Group and its management, were in civil contempt of the Receivership Order as well as the Asset Recovery Order.  In a separate hearing, the motion judge sentenced the directing mind of the United Group to four days in prison.  He also ordered others involved to pay significant costs awards.

United Group appealed from the decision, suggesting the motion judge had failed to take into account that there had been negotiations between United Group and its management with the Receiver concerning the Asset Recovery Order.  However, United Group put forward no evidence to contradict the evidence of the Receiver that it had come to United Group’s yard where the trucks were located for the purpose of removing them, but that United Group had refused to allow the Receiver to do so.

For its part, the debtor and its management argued before the Court of Appeal that the movement of the trucks to United Group was undertaken in the normal course of business because there was no room at its own premises to house the trucks.  The Court of Appeal observed that the motion judge, in an earlier Order, had referred to the fact that the implementation of the Receivership Order was being delayed specifically in order to give the debtor’s management time to assemble the trucks at its own premises to allow the Receiver to take possession of them.  At that time, the debtor’s management had made no reference to any need to deliver the trucks to United Group’s yard. 

The Receivership Order had clearly stated that immediate and continued access to the debtor’s property was to be provided and that all such property was to be delivered to the Receiver upon request.  The debtor and its management did not comply with that Order even though the implementation of the Receivership Order had been delayed for that express purpose.

The debtor’s management indicated to the Court that it had not intended to breach the Receivership Order.  The Court of Appeal made it clear that this was not an excuse.  It confirmed well settled law that in order to establish civil contempt, all that is required is proof beyond a reasonable doubt of an intentional act that is in fact a breach of a clear Order of which the person committing the act had knowledge.

In conclusion, the Court of Appeal pointed out that “it is a fundamental principle that orders of a court are to be obeyed.  There are not to be stalled, and they are not to be negotiated.  Serious consequences are to be expected by anyone who willfully fails to obey a Court Order”.  The Appeal was dismissed and presumably, someone spent 4 days in jail.

Call me old fashioned but to me, this was a win for the good guys!

In the recent case of Lake v. La Presse (2018) Inc., the Ontario Superior Court provided some useful guidance concerning an employee’s obligation to mitigate damages when there has been a wrongful dismissal.

In this case, the Plaintiff had been employed by the Defendant for 5.5 years. The employment was terminated without cause and there was no issue as to the fact that the Plaintiff was entitled to reasonable notice at common law.

The matter came before the Court as a summary judgment motion to determine the reasonable notice period, compensation for loss of a bonus over the reasonable notice period, and whether or not the Plaintiff took reasonable steps to mitigate her damages.

The particularly interesting aspect of this case has to do with the mitigation question.

In my experience, it is typical in these cases for former employees to produce evidence of unsuccessful job applications and leave it to the former employer to lead evidence at trial that, had more diligent efforts been made, the former employee would have become re-employed much sooner than actually was the case. Most employers find this to be an extremely difficult task.

In this case, the Plaintiff was the most senior employee in the Toronto division of a company that carried on business as a daily online French-language newspaper based in Montreal. The Plaintiff had ample experience working in sales and sales operations for media companies. She reported to the Vice-President of Sales and Operations of the Defendant, who was based in Montreal. Her duties included client development, training and management of sales teams, and developing and implementing the Defendant’s sales strategies. However, she did not attend weekly executive meetings or participate in setting strategic direction within the organization.

Her employment ended on May 30, 2019. At that time, she was 52 years of age. At the time of the motion, about two years later, she remained unemployed.

The Court noted that the onus is on the Defendant to demonstrate that the Plaintiff did not mitigate damages and that the onus is not a light one. However, where the Defendant overcomes that onus, the notice period can be reduced or eliminated altogether.

The Court pointed out that the Plaintiff was entitled, firstly, to some reasonable period of time before starting the job search in order to adjust to the situation and plan for the future, and secondly, to seek out reasonably comparable work for which she was qualified. However, after a reasonable period of attempting to find similar work, a Plaintiff must, at some point, lower her sights and take a lesser paying job, or use her skills in a perhaps unrelated industry.

Considering the Plaintiff’s position, the Court concluded that the Plaintiff should have been ready to begin her job search after a one-month adjustment period. In the year following the termination, she applied for 11 jobs, nine of which were for a vice president role, which was a more senior title than one that she had ever had. Accordingly, she focused her job search on a role that represented a promotion over her prior role.

The Court found that the appropriate notice period was nine months. In that time frame, the Plaintiff only applied for seven positions, six of which were a vice president role. Her first job application was submitted four and a half months after she stopped working for the Defendant.

Taking these facts into account, and apparently without any direct evidence from the Defendant as to available jobs, the Court concluded that the Plaintiff had failed to properly mitigate her damages. She should have started her search earlier, expanded the parameters of her job search, and applied for more positions in more junior roles. Accordingly, the period of reasonable notice to which she was entitled was reduced by two months. This case provides the useful reminder as to the seriousness with which the search for alternate employment must be pursued. It also demonstrates that while the onus to prove a failure to mitigate is always on the Defendant, that onus can be met if the Plaintiff can be shown to have acted unreasonably and without proper diligence.

Our new reality over the last year and a half has meant that in large measure, documents of all kinds have been signed electronically rather than in person – including sworn documents to be filed in Court. But what if someone denies having “signed” an electronic document?

In Ontario, the Electronic Commerce Act, 2000, provides for the legal recognition of electronic information in documents. While there are exceptions, such as wills and codicils as well as powers of attorney relating to an individual’s financial affairs or personal care, for the most part, the Act provides that an electronic document will be as effective as an originally-signed paper document provided that the electronic signature is reliable for the purpose of identifying the person, and the association of the electronic signature with the relevant electronic document is reliable. The Act does not specify how reliability is established. If some doubt can be raised as to the reliability of the application of an electronic signature, the document may be rendered invalid.

The question of how one can best assure reliability was recently addressed in the Texas Supreme Court case of Aerotek, Inc. v. Boyd. In Texas, legislation similar to that of Ontario is provided by the Texas Uniform Electronic Transactions Act, which provides that an electronic signature is attributable to a person by showing the effectiveness of the security procedures in place when the document was electronically signed.

In Aerotek, Inc., a number of contractors were hired by the plaintiff through an online hiring application process. Upon request, the plaintiff sent the applicants an email that provided a link to a registration page. On that page, each applicant created a user ID and a password and set up security questions. Each time an applicant accessed the system, this information was required to be inputted.

As the process of making the applications developed, each applicant had to sign an Electronic Disclosure Agreement agreeing to be bound by electronic contracts as if they had been signed in writing.

The process could not be completed without all of the contracts involved in the process being signed electronically. As documents were signed, those actions were recorded electronically with a time stamp. The system was designed so that the plaintiff could not alter any of this information.

Ultimately, four applicants completed the process and were hired. They were terminated and proceeded to sue the plaintiff. The plaintiff responded by insisting that the disputes be referred to arbitration pursuant to an arbitration clause in one of the documents that had been electronically signed. Each contractor then denied ever having seen, signed, or been presented with the document containing the arbitration clause.

Accordingly, the Court had to determine whether or not the electronic signatures were valid.

The Court concluded that there would be several different ways in which a party relying on an electronic document could prove the connection between an individual and an electronic signature. This would include requiring personal identifying information to register for an account, assigning a unique identifier to a user, taking steps to prevent unauthorized access to electronic records, requiring users to complete all steps in a process before moving forward, and using time stamps to show when actions were completed.

In this case, the Court concluded that the security procedures used by the plaintiff were sufficient to demonstrate that the electronic signatures could be attributed to the four contractors notwithstanding their sworn denials about ever having seen, signed, or been presented with the relevant contract. Accordingly, where documents are to be exchanged electronically, it is important to establish security procedures along the foregoing lines in order to be able to demonstrate reliability as required by the Ontario statute. If there are any gaps in the process that might give rise to a question as to its reliability, the document may well be invalidated.