When Will A Suspension From Employment Amount To A Constructive Dismissal?

In the recent case of Potter v. New Brunswick Legal Aid Services Commission, the Supreme Court of Canada provided some interesting clarifications on the law of constructive dismissal.

In this case, Potter was appointed by the defendant as its executive director for a seven-year term.

During the first half of the term the relationship between the parties deteriorated and they began to negotiate a buy-out. Potter became ill before the negotiation was completed. Just before he returned to work, the Commission suspended him indefinitely with pay and delegated his powers and duties to another person. At the same time, it wrote to the Minister of Justice recommending that his employment be terminated for cause. It refused to give Potter any clear reason for the suspension.

Potter claimed that he had been constructively dismissed and sued. He lost at trial and at the Court of Appeal.

The Supreme Court of Canada had a completely different view and allowed the appeal.

The Supreme Court of Canada pointed out that in order to find that a constructive dismissal has taken place, the court must first identify an express or implied term of the contract that has been breached. The court will then determine whether or not that breach was sufficiently serious to constitute a constructive dismissal. The point of the exercise is to determine whether the employer’s conduct shows that it does not intend to be bound by the employment contract any longer.

The primary burden is on the employee to establish constructive dismissal but where an administrative suspension is at issue, as in this case, the burden will shift to the employer to show that the suspension was reasonable or justified. If the employer cannot do so, a breach will have been established and the employee will then have to satisfy the court that the breach substantially altered an essential term of the contract.

In this case, the contract had no express provision for a suspension. The Commission did have an implied authority to relieve Potter from his duties provided that it could show a business justification for doing so. The Commission could not show a business justification, for at least two reasons. Firstly, Potter was never given any reason for his suspension. To the court, an administrative suspension cannot be justified without basic level of communication with the employee. Secondly, the Commission’s claim that the suspension was simply to facilitate a buy-out was undercut by its own conduct, namely its letter to the Minister recommending a termination, the fact that Potter was replaced during a suspension period, and the fact that the suspension was indefinite.

As a result, the unilateral suspension constituted a breach and it was reasonable for Potter to perceive the breach as a substantial change to his contract. There had been a constructive dismissal and Potter was entitled to damages.

This case is a useful reminder to employers who are under the impression that suspensions are a viable alternative to outright terminations. If a suspension is merely a preliminary step towards a termination, which an employer chooses to take in the hope that the employee will simply get the message that is intended to be sent and resign, the employer is taking a risk that might not be worthwhile.

The Further Development of Ontario’s Summary Judgment Rule

Several weeks ago, I posted an article about the decision of the Supreme Court of Canada in Hryniak v. Mauldin, et al., and indicated that in my view this case represented a momentous shift in Ontario’s law on summary judgment.

Further cases released since that time have confirmed my view. I believe that we are approaching a point at which summary judgment motions will become the norm and trials the exception.

The most recent pronouncement in this regard, released several days ago, is the decision of Mr. Justice Corbett in Sweda Farms v. Egg Farmers of Ontario. In that case, a factually complex claim in which the plaintiff alleged that it had been the victim of a conspiracy, that it had suffered losses as a result of the misuse of confidential information, that it had been the victim of violations of the Federal Competition Act, and that it was entitled to damages for both breach of contract and unjust enrichment would never, under the old regime, have been considered a candidate for a summary judgment ruling in favour of either party and on any basis.

However, that is no longer the case.

Leaving the facts aside, the important part of the decision for our purposes has to do with the manner in which Justice Corbett analysed the results of the Hryniak case. In his view, that case:

“… provides a basis for a sort of reverse engineering of this motion, one that may be of great use in summary judgment motions in general. The Supreme Court of Canada is clear that the motions court should ask itself why it should not grant summary judgment”
[emphasis added]

The Court goes on to say that where the motion fails, the Court’s answer to that question “will become an agenda for the case up to its final disposition, in most cases, by the judge who presided on the motion for summary judgment.”

In the past, motion court judges have looked at voluminous motion records, raised their eyebrows and wondered how it could ever be possible to conclude, on the basis of such a significant amount of evidence, that the outcome of a case was beyond doubt. It is clear that this is no longer a relevant consideration. As the Court in this case said, “summary judgment motions come in all shapes and sizes, and this is recognized in the Supreme Court of Canada’s emphasis on ‘proportionality’ as a controlling principle for summary judgment motions. This principle does not mean that large complicated cases must go to trial while small single issue cases should not.” At the end of the day, a judgment will be rendered if it can be done fairly and justly without a trial, and a formal trial is no longer to be “the yardstick by which the requirements of fairness and justice are measured.”

To reiterate a sentiment that I expressed previously, the consequences of this new regime for litigants cannot be understated. While summary judgment motions were once the exception, it appears to me that they will now become commonplace. At the same time, of course, this will mean that the evidence that will be required either to prove a claim, or to prove that a claim has no merit, will now have to be generated at a very early stage in the proceeding rather than later in the process and usually after the completion of examinations for discovery and the exchange of undertakings.

Accordingly, and at its most basic, it now appears that the expense to which litigants can expect to be put near the outset of a matter is going to increase very substantially. At one time, intensive trial preparation commenced within the weeks preceding a scheduled trial. At that point, the meters began running almost continuously and the costs to a litigant of getting ready for trial began to mount. However, up to that point, the extent to which litigants were put to expense depended not only on the complexity of a matter but also on the willingness of counsel to expend the time necessary to prepare every minute aspect of a case any sooner than he or she had to do so.

This may no longer be the case. Even though summary judgment motions generally take place early on in a proceeding, and often before examinations for discovery, it is clear that the motions court will require a full evidentiary record in order to deal with a matter. In the Sweda Farms case, the Court found that the plaintiff had failed to provide it with sufficient hard evidence to justify its position. It asserted that it would be calling nearly 100 witnesses at trial but as at the date of the motion, it was found not to be able to put forward sufficient evidence to justify its position.

Accordingly, Sweda‘s claim was dismissed summarily. This is not withstanding the fact that as Courts have noted in the past, conspiracy claims by their very nature involve investigation and the generating of evidence usually not known to a plaintiff until after the completion of the discovery process.

Looking at the situation from a different perspective, I have for many years lamented the fact that pressure on litigants and their counsel to settle cases, relentless as it has been, has made it exceedingly difficult for parties and their lawyers wishing to go to trial to actually do so. This may have significant advantages for a number of litigants, who should be taking a serious look at settlement early on. However, a reduction in the number of matters going to trial does have some negative repercussions.

Firstly, while much of the law governing citizens of Ontario are contained in statutes, as much or more is reflected in jurisprudence. The fewer the number of matters that go to trial, the less guidance that becomes available to us all as to what our rights and obligations are, as society evolves.

Secondly, I am becoming increasingly aware of young and perhaps not so young lawyers in this province who wish to become proficient advocates, having fewer and fewer opportunities to actually go to trial and learn how to advocate. Fewer trials means fewer opportunities for professional growth. As a result, when matters ultimately do go to trial, to the extent that this ever happens, litigants are not as well represented as they might otherwise have been.

In my view, these trends will now be accelerated as a result of the change in the law of summary judgment. One can only hope that the positives will outweigh the negatives over the long haul.