How Employers Can Benefit from Rule 21 Motions

Facts

As remarkable as this will sound, notwithstanding the fact that the court in this case found the termination provision at issue to not be illegal, this will be a post focusing more on how the decision was reached than what the decision was.

But, for the sake of completeness, and given how much attention this blog has placed on considering termination provisions, and given that as of my writing this post the decision is not on CanLII, here is the termination provision at issue:

5. Termination of Employment by the Company: If your employment is terminated with or without cause, you will be provided with only the minimum payments and entitlements, if any, owed to you under the [ESA] and its Regulations,…including but not limited to outstanding wages, vacation pay, and any minimum entitlement to notice of termination (or termination pay), severance pay (if applicable) and benefit continuation. You understand and agree that, in accordance with the ESA, there are circumstances in which you would have no entitlement to notice of termination, termination pay, severance pay or benefit continuation.

You understand and agree that compliance with the minimum requirements of the ESA satisfies any common law or contractual entitlement you may have to notice of termination of your employment, or pay in lieu thereof. You further understand and agree that this provision shall apply to you throughout your employment with the Company, regardless of its duration or any changes to your position or compensation.”

11.(a) If any of your entitlements under this Agreement are, or could be, less than your minimum entitlements owning under the [ESA] …you shall instead receive your minimum entitlements under the [ESA]…

(h) This Agreement constitutes the complete understanding between you and the Company with respect to your employment, and no statement, representation, warranty or covenant have been made by you or the Company with respect to this Agreement except as expressly set forth herein. The parties have expressly contemplated whether there are any additional implied duties owed by the Company to you, at common law or otherwise, outside the written terms of the Agreement or under statute and confirm that there are no such obligations. This Agreement shall not be altered, modified, amended or terminated unless evidenced in writing by the Company.”

(k)… The invalidity, for any reason, of any term of this Agreement shall not in any manner invalidate or cause the invalidation of any other term thereof…”

As is common of wrongful dismissal cases, the dismissed employee challenged the validity of the contractual termination provision, arguing that it violated provisions of the Employment Standards Act, 2000, such that he should be awarded damages for pay in lieu of reasonable notice.

The employer believed that its contract was valid and enforceable and wanted the court’s opinion on that discrete issue.

The employer therefore moved under Rule 21.01(1) of the Rules of Civil Procedure for the court’s determination of the interpretation of the relevant contractual provisions as a matter of law and to strike out or dismiss the claim as disclosing no tenable cause of action.

Decision of the Ontario Superior Court

In granting the employer’s motion, the Honorable Justice Colin Stevenson of the Ontario Superior Court of Justice wrote the following:

[15] There is no reason why a rule 21 motion cannot succeed in a claim for breach of contract. While the circumstances in which the contract was signed may sometimes be in dispute and may require a trial for a fair adjudication, this is not always the case. Conway J. in Lincoln Canada Services LP v. First Gulf Design Build Inc., 2007 CanLII 45712 at para. 6-12, aff’d 2008 ONCA 528, found in that case that no facts were in dispute relating to circumstances when the contract was made. Deciding the case under rule 21 was an efficient use of the court process. No additional evidence would be available at trial which would be relevant to the determination of the points of law. The claim was struck out as disclosing no tenable cause of action because it was barred by the terms of a lease.

[16] Under Rule 21.01(1)(a) no evidence is admissible except with leave or on consent. The pleaded facts are assumed to be true. While the interpretation of this employment agreement is a mixed question of fact and law this does not mean that all issues of contract interpretation must proceed to a trial. Sattva Capital v. Creston Moly Corp, 2014 SCC 53 at para 58.

[17] The current case is a good example where the court’s interpretation of the agreement at this stage will be useful, efficient and just. The question whether the plaintiff is to be paid the minimum ESA requirements or whether the clause is void and unenforceable can readily be determined now. There are no disputed facts with respect to the interpretation of the contract, as opposed to whether the plaintiff was wrongfully dismissed. OHL Construcion Canada v. TTC 2015 ONCS 2712 at para. 23

Commentary

While part of me wishes to begin this section with a series of celebration memes, because not only is this decision a win for the employer but it’s a win for the system, I cannot help but reflect on how remarkable this case is not for its result but for its efficiency.

Let’s start with the fact that the motion was heard at all. The plaintiff filed his claim with the court at Toronto. Pursuant to the local practice direction of that court, contested motions must first pass through a form of triage called “Civil Practice Court” where the court’s permission must first be obtained before a motion can be heard. I have attempted to schedule a motion similar to that heard in this case, only to be denied permission ostensibly due to a lack of judicial resources. In that case, the parties were ordered to first attend a second mediation.

Second, after getting in front of the court, Justice Stevenson agrees to use the powers afforded to him by Rule 21 to summarily dismiss the plaintiff’s claim on the basis that he cannot possibly win. This decision, obtained at the very outset of the case, before the parties invested time and effort gathering and organizing document, attending examinations for discovery, and incurring the costs of a mediation, resolves the fundamental issue in dispute and demonstrates practicality at its absolute best. This comment is not exclusively directed at Justice Stevenson. Both parties should be commended for availing of the process afforded to them, for seeing the case for what it was and for “getting on with it.” Laurels for everyone.

If I could change one thing, it would be revising the requirement that motions brought pursuant to Rule 21 be heard by a judge and not “the court.” Unlike the summary judgment rules of Rule 20 where the powers can be exercised by “the court,” which includes as associate judge, Rule 21 requires a hearing by a judge. To me, it makes no sense to deny associate judges the power to resolve pure questions of law while affording them the power to dispose of cases based on a review of both facts and law. Rule 21 requires an expansion of jurisdiction to include such judicial officers. If anything, Rule 21 appears to be designed for disposition by associate judges.

Offer of Private Arbitration

Moreover, I would suggest that cases such as Bertsch can be resolved via expedited private arbitration.

If you are attempting to schedule a motion for summary judgment, especially if both sides are prepared to proceed via such a manner, then why not retain me to arbitrate it instead?

Price: $2,500+HST fixed fee, provided that the only matters in dispute are: whether the employment contract is dispositive of termination entitlement, quantum of reasonable notice, and mitigation.

If there are other matters in dispute, such as aggravated damages or Human Rights claims, then contact me and we can discuss process and price.

Written materials must comply with the Rules of Civil Proceedings.

Oral hearing of no more than one hour combined. Hearing available via Zoom; in-person in Ottawa at my Elgin Street office; or in-person, in Toronto or Thunder Bay, for disbursements (Porter Reserve + hearing room) and $2,000+HST for travel.

Written decision and reasons within 30 days of hearing.

Fun Fact You May Not Know: I’ve been sitting as an adjudicator in the sports realm for about one year now. At least one of my decisions has recently been upheld on appeal. I’ve also written dozens of workplace harassment reports and findings.

You’ve seen my writing via my blog. You have a sense of my knowledge base.