Friday, January 31, 2014

140 Law - Legal Headlines for Friday, January 31, 2014

Here are the leading legal headlines from Wise Law on Twitter for Friday, January 31, 2014:

- Elysia Cherry, Legal Assistant
Visit our Toronto Law Office website: www.wiselaw.net

Section 46.1 of the Ontario Human Rights Code: Civil Remedies for Human Rights Claims

BY SIMRAN BAKSHI, STUDENT-AT-LAW, WISE LAW OFFICE

The enactment of section 46.1 of the Ontario Human Rights Code in June of 2008 provided for a much-awaited civil remedy for human rights claims. The expectation was that a number of human rights cases, particularly those closely related to a civil cause of action would be diverted to the courts, thereby preventing multiplicity of proceedings.

However, though the provision has now been in force for more than five years, damages have been awarded for discrimination in only one, rather recent case. Far from opening the floodgates of human rights litigation in civil proceedings, plaintiffs appear to be resorting to s.46.1 of the Code rather cautiously. A review of Ontario’s human rights system revealed that as of 2012 there had been only 19 reported cases in total which addressed human rights within a civil action, of which 14 cases specifically relied upon s.46.1 of the Code. None of these cases rendered a finding of discrimination.
Some questions…

The focus of the Court thus far appears to be on setting the parameters of civil proceedings for human rights claims. As a result of the dearth of substantive s.46.1 jurisprudence, there remain a number of questions that will require the Court’s direction going forward. This includes:
  •  The status of a human rights claim if the accompanying civil cause of action is dismissed;
  •  Whether the Court will award damages for discrimination if s.46.1 has not been expressly pleaded;
  • How the Court will exercise its jurisdiction to award non-monetary restitution (i.e. reinstatement; systemic remedies etc.)?
  • The range  and quantum of damages the Court may award for discrimination;
  • Whether the limitation period for bringing human rights claims pursuant to s.46.1 will extend to two years, given that it accompanies a civil cause of action?
Some possible answers…

Civil Cause of Action as a Condition Precedent – Section 46.1(2):

Pursuant to section 46.1(2), in order to commence an action seeking compensation for discrimination, a human rights claim must be accompanied by a civil cause of action. 

While this requirement is straightforward in itself, questions emerge as to what the status of a human rights claim becomes if the underlying civil cause of action is dismissed.  Case law suggests that where a civil cause of action is struck down prior to trial, the accompanying human rights claim cannot survive on its own. 

What is interesting however is that if a human rights application is commenced at the Tribunal prior to any decisions being rendered on a motion to dismiss a civil claim (recall that this may often occur as the limitation period for bringing an application pursuant to the Code is only one year), the application may be barred pursuant to s. 34(11) of the Code

As a result, an individual may be left with no remedy for an alleged human rights violation purely on procedural grounds. In the case of Aba-Alkhail v University of Ottawa, 2012 HRTO 656, which presented with similar circumstances, the Tribunal held as follows:
[29] With respect to the applicant’s argument that he would be left with no human rights redress if both the civil suit and the Application are dismissed, I note that the Divisional Court recently emphasized that even in those circumstances section 34(11) is not discretionary and bars an application from proceeding: Grogan v. Toronto District School Board, 2012 ONSC 319. The Tribunal does not have jurisdiction and, to paraphrase the Divisional Court, it does not matter that the civil action could be withdrawn or dismissed. “In short, s.34(11) requires an applicant to choose between the Tribunal and a (concurrent) civil action”: see para. 48…
There has yet to be a case in which damages have been awarded for a human rights claim, notwithstanding that the accompanying civil cause of action has been dismissed at trial. Presumably, given the framing of s.46.1, a human rights claim can still succeed as a separate cause of action. The Court affirms this position (although somewhat in obiter) in the case of Mykki Cavic v Costco WholesaleCanada Limited, 2012 ONSC 5307:
[47] The defendant has argued that in the event that I dismiss the plaintiff's claim for wrongful dismissal, I need not determine the issue of breach of the Human Rights Code. It is the position of the plaintiff that this is part of the claim and must be determined. I treat this claim as separate from the wrongful dismissal claim and will deal with the issue below.

Pleading the Code:


In Beaver v. Dr. Hans Epp Dentistry Profes sional Corporation, the Tribunal affirmed that a human rights application will be barred pursuant to s.34 (11) of the Code where “the facts andissues in a court action are the same as those in the application." What this means in practice is that an application can be barred even if a Code violation has not been expressly plead in the Statement of Claim. While the Tribunal’s position is well established, it remains to be seen if the Court will award damages for discrimination if section 46.1 of the Code has not been expressly plead. Presumably, given the Tribunal’s position, it would follow that a Plaintiff should similarly be entitled to compensation for discrimination so long as the pleading makes reference to human rights obligations and/or the Code.

 

Some Guidance – Wilson v Solis Mexican Foods


Human rights damages were awarded by the Ontario Superior Court for the very first time in the recent case of Wilson v Solis Mexican Foods Inc, 2013 ONSC 5799.

The Plaintiff in this case was a Certified General Accountant employed by the Defendant for almost a year and a half. Within a year of commencing her employment, she suffered a back ailment which eventually led to her taking leave from her position. Shortly thereafter, she was informed by the Defendant that her employment was being terminated as a result of the business being restructured.

The Plaintiff brought a claim for wrongful dismissal and further alleged the termination of her employment to have been discriminatory. Given her rather short-lived employment with the Defendant, she was awarded 3 months’ reasonable notice. The Court went on to find that the Plaintiff’s disability had been a factor leading to the decision to terminate her employment. In deciding the quantum of damages to be awarded for said discrimination, the following factors:
[90] First in this case, the plaintiff lost “the right to be free from discrimination” and experienced “victimization”. Second, the defendant’s breach of the statute is serious. The defendant orchestrated the dismissal and was disingenuous at various times both before and during termination.
As a result, the Court held the appropriate award to be $20,000 pursuant to s.46.1 (1) of the Code.
- Simran Bakshi, Student-at-Law, Toronto

The Post-Secondary "Child:" Guidelines Need Not Apply

BY ANA KRALJEVIC, LAWYER, WISE LAW OFFICE

Once a child reaches his or her eighteenth birthday, the age of majority, the question of whether that child is entitled to support becomes highly fact-driven and contextual. 


As J. D. Payne and M.A. Payne note in their text, Child Support Guidelines in Canada, 2012,:
Once a child attains the age of majority, the child is no longer presumptively entitled to support. The onus falls on the applicant [in this case the mother] to prove that an adult child who is pursuing post-secondary education is entitled to support...
The first question that is normally asked is whether the child can still be considered a child of the marriage.  

Canada's Divorce Act defines a “child of the marriage” as:
The child of two spouses or former spouses who, at the material time, 
(a) is under the age of majority and who has not withdrawn from their charge, or 
 (b) is the age of majority or over and under their charge but unable, by reason of illness, disability or other cause, to withdraw from their charge or to obtain the necessaries of life.
Once it is determined that the child over the age of majority is indeed a “child of the marriage,” the next question becomes whether the Guideline table amounts are applicable, having regard to the “means, needs, and other circumstances of the child” as well as the “financial ability of each spouse to contribute to the support of the child.”

Pursuant to s. 3(2) of the Guidelines, the court must decide whether the usual Guidelines approach is appropriate and is permitted some discretion in departing from the standard Table amount:
AMOUNT OF CHILD SUPPORT 
Child the age of majority or over 
3(2) Unless otherwise provided under these Guidelines, where a child to whom a child support order relates is the age of majority or over, the amount of the child support order is 
(a) the amount determined by applying these Guidelines as if the child were under the age of majority; or 
(b) if the court considers that approach to be inappropriate, the amount that it considers appropriate, having regard to the condition, means, needs and other circumstances of the child and the financial ability of each spouse to contribute to the support of the child.
Wesemann v. Wesemann, a 1999 British Columbia Supreme Court ruling, sets out a four step test that determines the appropriate model to be applied for the support of a child over the age of majority:
Step 1: Determine whether the child is a "child of the marriage" as defined in the Divorce Act.
Step 2: Determine whether the approach of applying the Guidelines as if the child were under the age of majority is challenged. If it is not challenged, determine the amount payable based on the usual "Guidelines" approach.
Step 3: If the usual Guidelines approach is challenged, decide whether the challenger has proven that the usual Guidelines approach is inappropriate. If not challenged, the usual Guidelines amount applies. 
Step 4: If the usual Guidelines approach is inappropriate, it is necessary to decide what amount is appropriate, having regard to the condition, means, needs and other circumstances of the child and the financial ability of each spouse to contribute to the support of the child.
In Gagnierv. Gagnier, [2003] O.J. No. 2183, the court noted that if the circumstances of a child over the age of majority closely resemble that of a child under the age of majority, it is likely that that usual Guidelines approach would be appropriate.  Therefore, if the child continues to reside at home with one or both parents, earns little to no income, and is generally dependent on others for support, then the usual Guidelines approach will probably be followed.  However, if a child over the age of majority resides away from home in order to attend a post-secondary school in another city, or, that child earns a sustainable income and shows self-sufficiency, the usual Guidelines approach may not be applicable. 

In this case, the child, Matthew, was nineteen years old when he left home in Ottawa and began attending Queen's University in Kingston on a full time basis. He was found to be “a child of the marriage.” As the mother challenged the Guidelines approach, the judge proceeded to Step 3 of the test.  The judge found that it would be inappropriate to apply the usual Guidelines approach to a determination of child support for the following reason:
The costs of attending university in another city are significantly greater than attending university while living at home. In addition, Matthew does not have a job or a significant income.
In applying Step 4 of the test, the judge found: “Considering all the circumstances of this case, I find it is reasonable that Matthew contribute $7,000 towards his university expenses from employment income, scholarships, student loans or gifts leaving a balance of $8,700 to be apportioned between the parties.

In arriving at those two specific figures, the judge conducted a thorough analysis of Matthew’s reasonable needs, with respect to both post-secondary and personal expenses.  Given the judge’s finding that Matthew was a “bright, capable young man” he concluded that it was reasonable that he make a contribution towards his own education to help defray the costs of his education.  It was estimated that he could earn approximately $5,000 during the summer months through full-time employment and could apply for student loans to make up the rest.

The finding in this case is echoed in many other judicial decisions wherein the courts have found it appropriate for children to make reasonable contributions towards their education expenses. With the rising costs of post-secondary education and children taking longer to leave the nest, courts strive to create a balance that apportions the obligations of support fairly among all parties, and that includes the parents as well as the child. 

- Ana Kraljevic, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Thursday, January 30, 2014

Counsel, Your Crystal Ball is Busted

BY GARRY J. WISE, LAWYER, WISE LAW OFFICE

Today at SlawTips, I look at research that tells us lawyers' predictive abilities could use a bit of work:
The take-away from this research is that legal professionals appear to tend toward optimistic, but unrealistic bias in favour of our own clients’ positions. We should thus exercise caution in assessing – and relying on – our own predictive abilities.

Our early impressions about the merits of our clients’ claims may be coloured by the professional blind spots identified in this research. We may also be swayed by our natural empathy for our clients or by incomplete information on opposing parties’ positions that may be available at early stages.

In short, we should manage our own expectations about results – and the client expectations they generate – with extreme care.
Which brings us to today’s Practice Tip:
Before predicting outcomes, take a closer look. Reality checking ought to start with us, not with pre-trial judges, months or years after the fact.
- Garry J. Wise, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Restrictive Covenants - Unbreakable Shackle or Unenforceable Nuisance?

BY NITIN PARDAL, LAWYER, WISE LAW OFFICE

The start of one's employment relationship is akin to the honeymoon period of a marriage. However, when things go sour, the resulting "divorce" can become acrimonious. For employees, the dissolution of the employment relationship is especially difficult if an employer relies upon restrictive covenants in the employment contract that restrict the employee's future employment prospects.

What are Restrictive Covenants?

Restrictive covenants in the employment context can generally be divided into the following two categories:

  • Non-Solicitation Clauses: A clause in an employment contract that prohibits a departing employee from soliciting customer of his/her former employer.
  • Non-Compete Clauses: A clause in an employment contract that attempts to keep former employees out of a business. These types of clauses are generally unenforceable on public policy grounds as courts have generally found that the society has an interest in every individual carrying his/her trade freely. Courts generally do not enforce a non-compete clause if non-solicitation clauses adequately protect the employer's interest.
Unlike other commercial contracts, courts are cognizant of the special nature of an employment contract. 

On the one hand, an employer may have a legitimate interest in protecting it's trade secrets, confidential information and trade connections. On the other hand, the imbalance of bargaining power between an employer and employee may lead to the inclusion of a restraint of trade which was not negotiated "freely." 


Accordingly, blanket restraints on freedom to compete are generally held unenforceable in Canada. Non-solicitation agreements, which preclude contact with and solicitation of the former employer's customers, are more likely to be upheld, however,if they are reasonable in scope and duration.


In Elsley v. J.G. Collins Ins. Agencies, the Supreme Court of Canada articulated the following four-part test to determine whether a post-employment contractual restraint could be enforced:

  1. Does the employer have a proprietary interest entitled to protection?
  2. Are the temporal and geographical restrictions too broad?
  3. Are the terms of the restraint clear, certain and unambiguous?
  4. Is the restraint reasonable in terms of public interest?
A Contract within a Contract

Restrictive covenants will be more rigidly enforced if the context is a commercial agreement.  They are somewhat less likely to be enforceable if the relationship between the parties is one of employer-employee. 


However, what if the contract governing the employment relationship is set out in a commercial contract for the sale of assets? Although Canadian jurisprudence on the topic of "restraint of trade" is extensive, the Supreme Court of Canada's decision in Payette v. Guay Inc. last year provides clarity on the enforceability of a "restrictive covenant linked to a commercial agreement from the scope of one linked to a contract of employment (Payette,, para 5)."


Such was the problem associated with Mr. Yannick Payette's employment. Upon selling his crane rental business to Guay Inc. and in an effort to "ensure a smooth transition in operations following the sale" (Payette, para 12), Mr. Payette was employed as a consultant for a six month period. The agreement of sale provided that Mr. Payette was bound by a non-competition and non-solicitation clause. At the end of the six month transitional period, the parties agreed on a new "contract of employment for a fixed term that was optional and separate ...[that was further] renewed beyond that date for an indeterminate term (Payette, para 13)."

At the termination of his employment, Mr. Payette began a new job as a operations manager at company that was a direct competitor of his former employer. Legal proceedings were commenced with Guay Inc. alleging Mr. Payette breached the restrictive covenant embedded in the commercial agreement, while Mr. Payette argued the restraint of trade imposed by his former employer was unreasonable and unenforceable.

Freedom of Contract versus Freedom to Contract

In rejecting Mr. Payette's argument, the Supreme Court of Canada held that the restrictive covenant in this case was made in a commercial context and was lawfully enforceable. The mere fact that these clauses appeared in a hybrid agreement did not "negate the foundations and rationale" for their inclusion in the commercial contract - being the protection of the assets acquired by Guay Inc. Accordingly, the primary purpose of these covenants was to govern the sale of business rather than govern Mr. Payette's post-sale service as a consultant.

Here are a list of factors the Court considered in coming to this conclusion:
  • Wording of the Contract: "actual language of the parties' agreement confirms that the existence of the restrictive covenants is closely related to the conditions for the sale of the assets, which were negotiated and accepted by the appellant Payette as a 'vendor', not as an 'employee' (Payette, para 47)."
  • Context of the Agreement: "the main point of the sale transaction for the respondent was to acquire the vendors' goodwill, skilled employees and customers. If the respondent had not obtained the protection in question, the transaction would never have taken place (Payette, para 49)."
  • Lack of Power Imbalance: "the October 2004 agreement, which had a substantial value of $26 million, was entered into following lengthy negotiations between well-informed businesspeople who were on equal terms and were being advised by legal and accounting professionals (Payette, para 62)."
If you have executed (or are being asked to execute) a non-competition or non-solicitation agreement, obtain legal advice before acting.  The consequences of breaching a valid restrictive covenant can be very significant in terms of damages awards.  These are employment documents that should never be simply disregarded.
- Nitin Pardal, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

140 Law - Legal Headlines for Thursday, January 30, 2014

Here are the leading legal headlines from Wise Law on Twitter for Thursday, January 30, 2014:
- Rachel Spence, Law Clerk

Visit our Toronto Law Office website: www.wiselaw.net

Friday, January 24, 2014

140 Law - Legal Headlines for Friday, January 24, 2014

Here are the leading legal headlines from Wise Law on Twitter for Friday, January 24, 2014:
- Rachel Spence, Law Clerk

Visit our Toronto Law Office website: www.wiselaw.net

Tuesday, January 21, 2014

140 Law - Legal Headlines for Tuesday, January 21, 2014

Here are the leading legal headlines from Wise Law on Twitter for Tuesday, January 21, 2014:
- Rachel Spence, Law Clerk

Visit our Toronto Law Office website: www.wiselaw.net