Another Chapter in the Mehedi v. Job Success Saga

More than a year ago, I posted about the case of Mehedi v. 2052761, involving an individual suing a company called "Job Success" for fraud - basically alleging that he paid them a lot of money for them to find a job, with guaranteed results which never materialized.

A brief overview of the procedural background:  It went to trial in 2011, and the judge accepted the defence evidence that there were no specific guarantees made.  Mehedi appealed, and in January 2012 the appeal was dismissed.  In February 2012, CBC ran a "Marketplace" segment about a related company to Job Success, going undercover with hidden cameras, and caught the same people who testified in the 2011 trial making exactly the kinds of guarantees which they had testified they don't make.

Ever call a telecom company and end up getting bounced from department to department, repeatedly, sometimes back to one you've already talked to, having to wait on hold for hours each time?  Imagine that you're on hold for months, and that's basically what happened next to Mehedi.

Self-represented, he brought a motion for judgment in March 2012.  This was the wrong move; the motion judge concluded that he needed to have the trial judgment set aside first, and suggested he obtain legal advice.  He obtained legal advice recommending that he try to file a motion to lead new evidence before the same trial judge, so he wrote to the judge.  He then received a letter advising that it was inappropriate to communicate with the judge directly, directing him to schedule the motion through the Court Registry.  The scheduling office told him that they didn't know the specific judges' schedules, and suggested that he obtain dates directly from the trial judge's office.  He went back to a lawyer at this point, who contacted the trial judge's assistant in late November 2012 to obtain dates - but unfortunately the trial judge was not sitting in civil court in the foreseeable future.  The assistant suggested bringing a motion to the Superior Court (before a judge to be assigned) to introduce new evidence.

So Mehedi brought a motion in March 2013, which was adjourned twice, eventually being heard in May 2014.  The Superior Court's answer?  Because the matter had gone to the Court of Appeal, the motion should be made at the Court of Appeal level.

So Mehedi followed that direction, and brought a similar motion at the Court of Appeal - heard in July 2014.  The Court's conclusion:  "Regretting the inconvenience Mr. Mehedi has encountered, I conclude that his motion to introduce new evidence should be brought in the Superior Court before a motions judge in the ordinary way."  Again.

The new development is that Mr. Mehedi brought his motion, which was heard by Justice Whitaker in November 2014.  Justice Whitaker dismissed the motion with very brief reasons, finding that he wasn't convinced that the new evidence would have made a difference in the overall disposition of the case.

So...back to the Court of Appeal, which released a new decision in October 2015, allowing the appeal.

While there's some interesting (from a lawyer's perspective) discussion of the appropriate test, the Court of Appeal was of the view that the test was satisfied either way (and that Justice Whitaker's reasons on the issue were not adequate).  The Court of Appeal re-opened the trial and remitted the matter back to the trial judge for consideration of the admissibility and impact of the new evidence.

Discussion

Reopening a trial after a decision has been rendered is highly exceptional:  There's a significant interest in finality, so the courts don't do it lightly.

But this factual situation is very unusual.

On the appeal, there was some debate as to the appropriate test to be applied.  It looks, though, like the Court downplayed the differences between the tests.

The Baetz test looks at whether the new evidence could reasonably have been obtained for trial, along with various other factors such as whether or not the moving party delayed in bringing the motion and the overall fairness to the parties and those who have acted in reliance on the judgment, in the circumstances.

The Sagaz test is often formulated with two questions:
(1)  Could the evidence have reasonably been obtained for use at trial?
(2)  Could the evidence reasonably have affected the outcome of the trial?

However, there are other comments in the Sagaz decision which allude to general fairness principles, as well as specific concerns about reliability of the evidence.  The Court of Appeal appears to question how much of a difference there really is between the two tests at all.

And, either way, it does indeed seem that the test is made out:  The new evidence was released by a third party after the hearing of the appeal, so it certainly wasn't available to Mehedi.  It certainly could have affected the outcome of the trial, which hinged in large part on the trial judge regarding it as "unrealistic and unreasonable" that the defendants might have made the promises which they were alleged to make; the trial judge would have had cause to rethink that conclusion if he saw this video evidence of them making similar representations to others.

And in terms of the general fairness issues, the delays were not Mehedi's fault; he began seeking this relief immediately when the evidence became available, and a very short period of time after the original appeal.

Interestingly, the Court of Appeal referred to the Irving Shipbuilding Inc. v. Schmidt case (where the employer improperly obtained an Anton Pillar Order against an employee, and proceeded to ransack the employee's home) as a precedent for the test.  If you'll recall my commentary on the motion to introduce fresh evidence in Schmidt, I referred to the Mehedi fact pattern as an "excellent example" of a case where the evidence couldn't have been available at the hearing.

Lessons Learned

I have a great deal of sympathy for the ordeal that the system put Mr. Mehedi through.  It's hard to excuse the different courts disagreeing as to the correct procedure; with increasing numbers of self-represented litigants trying to access the legal process, it's hard to excuse a process so complicated that the courts themselves can't parse it.

That being said, it may have been much smoother had Mr. Mehedi had the assistance of counsel throughout.  More thorough legal submissions to Justice Whitaker may have made a difference, eliminating the need for this appeal.  A lawyer might have been better-positioned to convince the Superior Court, on the first attempt at the motion, that it had jurisdiction to hear the motion notwithstanding the earlier appeal.  (Whenever you're seeking unusual relief at court, you're likely to hear the question, "Where do I draw the jurisdiction to grant the relief you're seeking?"  If you can't answer that question - and sometimes it's a very legally sophisticated question - then you're in trouble.)

Better advice, earlier, would certainly have prevented him from bringing the doomed motion for judgment without first moving to admit the new evidence.

There are times when lawyers and judges can legitimately disagree amongst themselves as to how an issue should move forward.  If lawyers always agreed on everything, we wouldn't need judges.  If judges always agreed on everything, we wouldn't need appeals.  As a lawyer, sometimes I have to make a decision on process, and then I have to defend that choice.  In the absence of a cogent justification for a procedural decision, it's easier for an adjudicator to say "You chose...poorly" and dismiss the proceeding than it is for the adjudicator to find a way to grant the relief.

Consider my recent post about Finney v. Cepovski, where the Landlord Tenant Board said (to paraphrase) "We can't award damages for utilities", so the landlord went to the Small Claims Court instead, which said "They were wrong; that process was the right one, and so the court can't help you."  At the LTB, I would have strenuously argued about jurisdiction, and may well have caused the adjudicator to think twice about declining to award damages.  Coming out of the unsuccessful LTB hearing, I would have suggested judicial review at the Divisional Court instead of a Small Claims Court action (which would have been the better avenue).  But even at the Small Claims Court, I'd have had arguments up my sleeve to try to convince the Deputy Judge to take jurisdiction anyways.

Sometimes, even with a lawyer, you still get locked out.  But it's less likely.  You're more likely to choose an available course of action in the first place with good legal advice, and more likely to be able to convince the applicable adjudicator that, in fact, the course you have chosen is the correct one.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

Long-Service Employee Signs Fixed Term Contract - And Regrets It

Brent Riskie worked for Sony Canada since 1989 - he was presumably around 19 or 20 when he started.  As of earlier this year, he had a Toronto-based management position.

Last year, he wanted to move to Ottawa for family reasons, and asked the employer to accommodate such a move, that he would largely work from his new home and travel to Toronto on an as-needed basis.

The employer was reluctant.  Riskie, and his immediate supervisor, pressed the matter.  Eventually, Sony agreed to do so, but only on a trial basis, and insisted that he sign a fixed-term contract in order to do so.  While negotiations were still ongoing, he completed his move.  The contract was signed July 28, 2014, with an expiration date of March 31, 2015.

His department went through a restructure in early 2015, and on February 18, 2015, he was advised that his contract would not be renewed.  He received statutory minimum notice and severance payments - approximately 7 months.

It sounds like he likely would have been restructured out regardless of the move, and probably would have been entitled to somewhere close to two years of pay in lieu of notice.  Instead...

Recently, Justice Dunphy upheld the fixed term contract, and denied him further recovery.

The Issues

The problem was obvious:  The employer was ostensibly entitled to just...not renew the contract.  So Riskie had to find a way around that, argue that the fixed term provision was of no force and effect.

To that end, he made a few arguments.  One was 'duress' - the framework is interesting, but this doesn't look like a close case for it.  The fact that he might have felt obligated by his personal circumstances to move and accept whatever terms were put to him...doesn't affect Sony's entitlement to insist on those terms.

Two other arguments were stronger, though.  One was that the contract was unenforceable for lack of consideration, and the other was an ESA compliance issue.

Lack of Consideration

As I've noted many times before on this blog, an employment contract needs to give an employee something 'new'.  If you hire me, and then ask me to sign a contract after you've hired me, then the question is 'what am I getting out of this contract that I don't already have'?  In the absence of 'fresh consideration', the contract fails the test for enforceable promises at common law.

So the interesting quirk here is that he actually moved before the new contract was signed.  So it looks an awful lot like the 'fresh consideration' cases:  He's doing the job from Ottawa, and now he's signing a contract which...ahem...entitles him to work from Ottawa.

It's a compelling argument, at face value.

On the other hand, there's a very strong moral argument going the other way:  He knew, when he made the move, that he was going to be required to sign such a contract, and that the employer wasn't acquiescing to the move without terms on it.

Justice Dunphy focuses on that, and characterizes the 'fresh consideration' argument as "a technical argument devoid from any real-world substance".  (That's true of a lot of consideration-based arguments.  It's a very technical legal concept.)

At law, it is a fairly straightforward reality that none of that actually matters, if the employer actually did acquiesce to his terms and allow him to move notwithstanding the absence of a signed contract.

The saving grace in Justice Dunphy's reasoning on the point is this:  "it was a case of “take it or return to Toronto”".

It there's the evidence to substantiate that understanding, that Sony permitting him to work from Ottawa while negotiations were ongoing was without prejudice, and that they reserved the right to recall him to Toronto if negotiations failed, then Justice Dunphy's conclusion is right.  And I don't know what evidence was before the court - but I don't think that you can take such a reservation as implied from the fact of ongoing negotiations.

ESA Compliance

Here's another interesting one.  There's an early termination clause in the language of the contract, in the same paragraph setting out the term of the agreement, allowing the employer to terminate it on 30 days' notice.

On its face, that was deeply problematic:  A termination clause cannot contract out of the statutory minimums, and for a 26 year employee, there's a minimum notice period of 8 weeks.  (Not to mention statutory severance.)  So this early termination clause was clearly void.

This raises the question of 'severability' - when the court finds that a given provision is void by operation of law, how does that affect the rest of the contract?

There's a conceptual challenge with writing out a small part of a contract:  A contract is agreed to between the parties as a whole.  It has long been said that a court will not rewrite a contract between the parties.

On the other hand, it's fairly compelling to remove the illegal portions of a contract and leave in place the legal portions.

There have been a variety of legal doctrines employed to resolve this tension, which are either limited or controversial.  The "blue pencil" approach has often been used to determine whether or not it is possible to sever language, and how to do so:  Can a fair and coherent contract be left between the parties merely by striking out the problematic language?  By contrast, there's 'notional severance', which allows the court to controversially insert language in order to remove the illegal effect from the contract.

I've very seldom seen the 'blue pencil' approach openly discussed in employment law cases:  It is clear from the seminal Machtinger case from the Supreme Court of Canada that, at minimum, an unenforceable termination clause must be struck in its entirety.  It is incumbent upon an employer to ensure the legality of its contractual language, and the employer cannot turn to the courts to try to fix the contract after the fact.

And the question seldom arises as to how far beyond that unenforceable language we need to do.  Where it has arisen, the cases sometimes involve clear 'severability clauses' guiding the court's interpretation.  For example, in the recent decision in Miller v. Convergys CMG Canada Limited Partnership, the British Columbia Court of Appeal enforced a severability clause which spelled out that the different numbered paragraphs in the agreement were separate promises, and if one was unenforceable, the rest should be left intact.

In the absence of a clear severability clause, the question can be much more difficult.  But it seems to me fairly unusual to do what Justice Dunphy did with Mr. Riskie's contract, striking out the 'early termination' language while leaving the rest of the same paragraph intact.  Was it a separate promise?  Consider for a moment that, had the same severability language from Miller been present in this contract, it would have clearly required the whole paragraph to be struck.

Also consider that a fixed-term contract without an early termination clause can be exceedingly onerous for the parties.  In general terms, and in the context of a 26-year relationship, there are compelling reasons to think that one might have to read a 'fixed term' promise together with a corresponding 'early termination' promise.

Nonetheless, Justice Dunphy regarded them as being "logically and textually independent of each other", and found that they "are not a package that must stand or fall together."  Accordingly, despite the flaws in the early termination language, the fixed term was enforceable.

Lessons to be Learned

There are some very interesting legal issues in this case, dealing with severability and consideration, but the more significant issue is likely practical:  Be careful what you sign.

It's possible that the relocation to Ottawa was so important to Riskie that he would have done it even knowing the consequences.  Maybe he even sought legal advice on the terms, and no doubt would have been advised (a) that the early termination clause was probably not enforceable but (b) that changing from an indefinite-term contract to a fixed-term contract could have an immense impact on his existing rights upon termination.

What Riskie probably didn't anticipate was a restructure unrelated to his own circumstances.  Likely, he was confident that Sony would see that the new arrangement was viable, and that he would be able to continue to carry out his duties effectively.  "I'm not worried about getting fired, because I'm a great employee."  But when a restructure occurred for other reasons, his circumstances - and his contract - put him squarely in the line of fire.

This is why and how I encourage pushback on clauses limiting termination entitlements, particularly for employees in senior roles:  It's not about trying to get that golden parachute; it's about job security, making the employer think twice before deciding to get rid of you as a cost-cutting measure.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

Using a Cell Phone in a Drive Through

There's a recent news story about a fellow who received a nearly $300 ticket for texting while in line at a Tim Hortons drive-through.

It's important to note that this took place in Beaumont, Alberta.  This is relevant.  While most traffic offences generally apply only to 'highways', Alberta's Traffic Safety Act expressly defines 'highways' as including private property like drive-throughs and parking lots generally used by the public.  Ontario's Highway Traffic Act does not, and the courts have consistently held that such properties are not 'highways'.  (Don't get fooled by the language, though.  We may casually use the term 'highway' as being distinct from 'city streets', but city streets are definitely highways within the definition of the HTA.)

So that wouldn't happen here in Ontario.

But it's not all that different from the 'texting at a red light' scenario.  Or, as the case may be, retrieving your phone from the floor at a red light.  Any use or handling of an electronic device, at any time you're on the road (unless legally parked), is an offence.  And it's an offence with a hefty fine.  A set fine of $490, with a maximum fine of $1000, plus three demerit points.  In terms of demerits, that's about on par with driving on the wrong side of the road.

There's a good reason to treat distracted driving so seriously:  It is a deadly problem on our roads.

But, perhaps, less so at red lights or in Tim Hortons drive-throughs.

I argue that the existing legislation is, in different respects, both overbroad and underinclusive.

The Legislation is Overbroad

This is an easy argument to make.  The law is premised on safety - steep penalties to discourage people from engaging in mortally dangerous behaviour.

Yet so many of the charges are laid in connection with cell phone use at red lights.

This is, in some ways, a practical enforcement issue:  It's easier to identify people using cell phones when they're stationary.  But part of that is because people are justifiably less concerned about the safe operation of their vehicle when they're stopped at a red light, and will be more likely to stare down at their phone for several seconds.  (Driving instructors will tell you that this is still unsafe:  Even when stopped at a red light, you need to be cognizant of your surroundings, to be prepared to respond to hazards that arise against you.  Part of defensive driving.  But that's really not what we're talking about when discussing the deadly hazards of distracted driving.  Driving defensively can certainly save lives, but it's rather disingenuous to ever attribute a fatality to a failure to drive defensively.)

So the message the law sends is "Just put away the phone."  This, on its face, doesn't seem so unreasonable - almost elegant in its simplicity.  Yet it isn't limited to telecommunications functions, either.  Changing the track on your iPod while stopped at a red light is an offence - and not just a minor offence, but a $490-$1000 fine.  Arguably, this takes less attention than changing the radio station on a built-in stereo - which will generally be legal.

I understand and agree with the need to seriously address the issue of distracted driving, because it's a safety issue.  But, frankly, somebody momentarily using a phone at a red light is simply not a safety issue in the same way, and imposing the same hefty fines to the person changing the song on their iPod at a red light, as to the person sending an email on the 401, makes no sense to me.

That being said, if somebody is holding up traffic because they haven't noticed that the light is green, there probably are (or should be) other lesser charges to cover that scenario.  I also wouldn't necessarily object to a lower 'distracted driving' offence covering red light scenarios; my argument is ultimately that it's rather absurd to treat all 'distracted driving' scenarios the same way.

The Legislation Fails to Address Actual Distractions

Earlier this year, York Regional Police kicked off a 'no cellphone pledge' campaign with a press conference, where the Regional Chairperson indicated that, on his way to the conference, he saw "four people talking on their hand-held cell phones, a woman putting on makeup, a man tying his tie, and numerous drivers juggling their breakfasts."

Distracted driving is dangerous.  Nobody disputes that.  Yet we've imposed a serious fine for holding a cell phone in your hand, while not directly addressing other common distractions at all.  Tying your tie?  Applying makeup?  Shaving?  Eating?  Drinking?  Smoking?  Reading?  I recall an occasion taking the GO bus downtown, and looking over into the vehicle next to us on the Gardiner and seeing a woman engrossed in a report she was reading.  While driving.  I wasn't so surprised when Rob Ford was caught doing the same thing.

Fundamentally, we have a major problem of people not giving driving the attention it deserves and requires.  It's far bigger than just cell phones.

And far bigger than hand-held cell phones, particularly.

There are plenty of statistics to support the proposition that talking on your cell phone significantly increases the odds of a serious collision.  And the existing research suggests that it is basically irrelevant whether or not you're on hands free.  The distraction of a phone conversation while driving isn't the result of the phone in your hand; it's the mental effort you're putting into the conversation that you should be putting into driving.

I'll admit that I make 'hands-free' calls in my car from time to time.  I don't generally like to do so, mainly because I find I'm a terrible conversationalist while doing so.  When the road calls for my attention, I pay attention to the road, and often lose my train of thought or miss what the other person is saying.  It's a matter of prioritization, which it seems many people don't do.  (It has also struck me, too, that there's a big difference between calling somebody to give an ETA in good driving conditions, as opposed to carrying on a heated argument during a blizzard.  There are gradations of distractions.)

There's a problem on the road, yes.  But the existing legislative regimes focus too much on what the hands are doing and too little on what the brain is doing - by obsessing about handsets and not caring at all about actual mental distractions.

And I think we can all agree that ticketing somebody in a Tim Hortons' drive through does not even come close to addressing the dangers posed by distracted driving.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

How Harper's Electioneering Backfired

In the days, months, and years to come, we'll hear a lot about yesterday's election - what each party did right and wrong to end up where they were.

How the Liberals came back from their catastrophic defeats in 2008 and 2011 to earn more seats than any Liberal government since Louis St-Laurent, getting more votes cast for them of any political party in Canadian history.  (That's 'raw numbers' of votes, not percentage of popular vote.  But seeing as this particular record was held by Mulroney from 1984, and survived 8 general elections over the past 30 years, that's still striking.)

How the NDP, rising to historic highs and official opposition status under Jack Layton in 2011, leading in the polls during the early campaign, only to collapse back to their earlier 'third party' status, being reduced to 44 seats, with only 8 in Ontario, and none in Toronto.

And how the governing Conservatives were finally returned to opposition status, after nearly ten years in power in a series of minority and majority governments.

There are countless complex dynamics explaining these events.  There's a lot to debate and discuss, and no single factor was determinative.

But I propose to narrowly discuss one factor, which I believe may have made the difference between a Liberal minority and a Liberal majority, likely having lost several seats for the Conservatives and NDP:  Per-vote subsidies.

History

In 2004, Jean Chretien ended corporate contributions to political campaigns, and replaced that with direct government subsidies, based on the votes the party received in the previous general election - an annual payment of $1.75 per year for each vote.  This ultimately came to account for over a third of overall political financing in Canada.  But it's less significant to the Conservatives, who are far more effective at private fundraising than the opposition.

In 2008, immediately after winning his second minority government, Harper introduced a mini-budget to address the financial crisis...and tacked on a provision scrapping the per-vote subsidy.  It was sly.  The Liberals were in shambles.  They had just had their most significant defeat ever, had their war chest totally drained by 3 elections in 4 years...and if they could be kept broke, they wouldn't be able to afford to be able to bring down the government.  It was truly Machiavellian politics - kicking the opposition, hard, when they were already down.

This prompted the 2008 'coalition' crisis which forced Harper to prorogue Parliament to save his job.  The mini-budget was killed, and the subsidy remained intact.  For a time.

After he won a majority government in 2011, however, Harper phased out the subsidy.  So in this election, there was, for the first time, no subsidy.  The opposition needed the money, and wasn't getting it.  Advantage: Tories, right?  Maybe not.

How the Subsidy Helped the CPC

The per vote subsidy, while not a significant amount of money per vote, turned out to be a significant driver against strategic voting.

I've always had mixed feelings about strategic voting.  It always seemed to me that strategic voting tends toward a two-party system, limiting the range of discourse in the body politic, and preventing new and different voices from being heard.  Anywhere outside Saanich-Gulf Islands, a vote for the Greens is really wasted, so people who vote strategically won't vote Green...and the actual grassroots support for the Greens will be understated, and they'll never be seen as a real alternative.  Self-fulfilling prophecy.

But the truth is that the problem isn't strategic voting.  It's the concept of a 'wasted' vote.  (To be clear, I don't really believe that votes are ever totally 'wasted', but that's another matter.)  In our First-Past-the-Post system, each seat is winner-takes-all on a plurality basis.  If 3/4 of a demographic is left-leaning, then it's natural for the left to develop a broader range of philosophies on the left.  So maybe you'll have a few candidates with slightly different approaches, but fundamentally similar political philosophies.  Then you get one right-wing candidate with *very* different philosophies, who wins because his limited support base isn't split.

That is the problem with FPP democracy.

Strategic voting is driven by the desire to make your vote count for something - to not be wasted.

And the subsidy gave votes a significance that was not limited to the First-Past-the-Post electoral consequences.  If you vote Green, even if the local Greens don't have a chance of winning the riding, you're giving that party money.  Not much, surely, but a little.  And strategic voting means that that cash goes to a party you don't like as much.

This was a persuasive moral argument:  The Greens aren't going to win seats this election, but getting a million dollars per year in subsidies means that they might have better resources to take seats in the next one.  It's about the long game.

So strategic voting was something of a bad word:  Voting for someone other than your preferred party was really a betrayal of your party and your values - sacrificing your party's long-term prospects in the interests of getting a less-harmful option elected today.  And since strategic voting, on a fundamental level, is about reducing split votes, this state of affairs was bad for the 'left' parties with their votes split, and more favourable to the CPC.

Not that people didn't try to find ways around it.  In previous elections, social media campaigns popped up for 'vote exchanges' - an NDP supporter votes Liberal in a Blue/Red battleground, and in exchange a Liberal supporter agrees to support the NDP in a Blue/Orange battleground...we both win, we both get to use our votes more usefully, and it's sum-zero on the subsidy.  This had a number of problems, not the least of which is that our ballots are inherently anonymous - you cannot take pictures of your ballot; you cannot make an identifying mark on your ballot; etc.  It was too open to abuse to be useful.

With the subsidy gone, that persuasive moral argument against strategic voting...no longer exists.  And for the first time, the discussion of strategic voting was unfettered.  In the early campaign, even NDP supporters were encouraging strategic voting - thinking that they'd generally be the beneficiaries of it.  The "Anything But Conservative" discussion took on new life, with nothing holding it back.  No need for a vote exchange:  We all win by voting 'against' the party we're trying to defeat, even without the need for a quid pro quo.

There were quite a lot of ridings won by relatively small margins.  It is likely that strategic voting made a significant difference to the outcome of various ridings and to the overall election result.

It was a serious electioneering misstep by Mr. Harper:  He recognized that his party had a fundraising advantage, and thought that he would strengthen his party's advantage by starving the opposition of public cash.  Yet, instead, he compromised his party's ability to count on the split votes of the opposition.

Another Court Applies 'Trust and Accounting' Method

There are an increasing number of wrongful dismissal cases going to a summary judgment motion before the expiration of the notice period, which raises the question:  How do we address 'mitigation' for the period yet to pass?

I've addressed the issue a number of times before, most recently this past July.

There's a bit of a schism in the law.  A couple years ago, in Bernier v. Nygard, Justice Morgan awarded pay in lieu of 18 months of notice to an employee, only 7 months after the dismissal, but impressed the award with a trust, meaning that if Bernier got a new job, he would owe money back to Nygard.  (The Court of Appeal upheld the approach as being open to the motions judge.)

Earlier this year, Justice Pollak ruled in Markoulakis v. SNC-Lavalin that the employee was entitled to 27 months of notice, but only 9 months had passed since the dismissal.  Justice Pollak opted for the 'partial summary judgment' approach, awarding damages only based on the time that had already passed at the summary judgment date (which were basically nil, given the initial package the plaintiff had received).

Shortly thereafter, Justice Perell decided the case of Paquette v. TeraGo.  Mr. Paquette's reasonable notice period was 17 months, and there were 10 months left to go at the summary judgment date.  Justice Perell applied the 'trust and accounting' approach as in Bernier, but went a step further, categorically rejecting Justice Pollak's 'partial summary judgment' approach as "cynical, patronizing, unfair, and expensive."  (I would add 'wrong' to the list of adjectives.  More below.)

Zoldowski v. Strongco

Last week, Justice Hood, a very recent appointment to the bench, decided a similar issue.  A 39-year-old 'parts administrator' with 17 years of service was dismissed, because technology made her position redundant.  On the facts, Justice Hood awarded a notice period of 14 months - very close to what the plaintiff sought.

It's always interesting to look at a new judge's first impressions of employment law.  Justice Hood, as a lawyer, was a civil litigator with a focus on corporate/commercial litigation, and appears to have had relatively little exposure to employment law principles in his practice.  When there were stacks of case law supporting different positions on the notice period put before him, he felt the need to remark upon it.

[12] As pointed out in Paquette at para. 25, the determination of a reasonable notice period is an art not a science. As a result most cases yield a range of reasonableness.

[13] This is apparent from the cases relied upon by both the plaintiff and defendant and the charts put together by each party in their respective factums. The plaintiff refers to 10 cases with what she argues are employees with similar positions, length of employment, age and salary as her where a range of 13 to 18 months was awarded. She submits therefore that 15 months is appropriate. The defendant refers to 4 cases, with what it argues are similar factors as the plaintiff’s situation, where 10 months was awarded. It submits therefore that 10 months is appropriate. I expect the defendant could have found an equal number of cases as the plaintiff if pressed. I do not consider the number of cases presented as relevant to the determination.

He went through a detailed analysis of the applicable principles, and it's a good analysis.

He referred to the Court of Appeal's statement in DiTomaso that the character of employment is of 'declining importance', and highlights that on the facts of this case, that the plaintiff's skill set has been made obsolete by technology actually makes her more vulnerable, and potentially makes it more difficult for her to find employment.  Makes perfect sense to me.

Her relative youth should improve her employability, but her long period of service tends toward a longer notice period.  As well, she led evidence that she made "numerous" job applications, but only received one interview, which Justice Hood felt indicated "there is a limited availability of similar employment."

And Justice Hood also followed Justice Perell's remarks about the relevance of an economic downturn.  "I believe I can take judicial notice of the general economic downturn in the GTA and Southern Ontario for the first half of 2015."

This served as a factor extending the notice period.  It's not a unique or unusual treatment these days, but it brings into focus just how much employment law has shifted over recent decades - there was a time when courts regarded a weak economy as not being a reason to increase the notice period, while poor financial circumstances of the employer was a reason to decrease the notice period.  (Not to say that this doctrine is totally dead:  Justice Lederer recently remarked that "the law does not ignore the dilemma of the employer".  But I find the context and decision he made on that point to be strange.  A commentary for another time, perhaps.)

Mitigation

Having decided on a notice period of 14 months, and with the motion being heard only 6 months after the dismissal, the mitigation approach needed to be considered.

The defendant argued that the 'trust and accounting' approach would disincent the plaintiff, who had a sick stepmother and three children, from seeking new employment for the remainder of the notice period.

Yes, they argued that.  We should leave her without any means of providing for her family or ailing stepmother for another several months, to encourage her to take a new job.  Justice Hood didn't call them out on it.  I will.  Later.

Justice Hood considered a few factors, including her mitigation diligence to date and the existence of other incentives to get back into the workforce.  In light of the fact that her salary wasn't high and the amount of the notice period left outstanding is just a few months, it would be unduly expensive to apply the 'partial summary judgment' approach.  While not repeating Justice Perell's condemnation of that approach, he nonetheless closely followed Justice Perell's approach, clearly expressing that there is a court-imposed constructive trust upon any mitigatory earnings made during the notice period.  (Note:  Not on the damages themselves.)

Commentary:  No Room for the Partial Summary Judgment Approach

This is a very good decision, on the law.  If I'm correct that Justice Hood had relatively little exposure to employment law before, he certainly paid attention to the applicable legal principles in coming to this decision.

But I've alluded before to my belief that the partial summary judgment approach is simply incorrect at law, and I'll take this opportunity to elaborate on that.

I don't pretend that the 'trust and accounting' approach is perfect.  It does have the impact of removing the incentive on employees to mitigate.  But that's seldom enough a successful issue at a trial for an employer, and it's probably something that one can reasonably anticipate at the summary judgment stage.  I predicted in my Bernier commentary that adequacy of mitigation efforts to date will be a factor in deciding the approach, and Justice Hood appears to have regarded it as such.  (I might suggest that the question is properly considered in context of the 'issue requiring a trial' analysis.  Which is complex, and not important to my core point here.)

Trust and accounting is a good, but imperfect, solution to a very difficult problem.

Whereas partial summary judgment is fundamentally premised on a misapprehension of the role of mitigation in wrongful dismissal law.

Damages Are Assessed at the Dismissal Date

Assume for a moment that I am an employee who is entitled to reasonable notice of dismissal, for the sake of argument, in the amount of 12 months.

To comply with the contract, the employer is supposed to give me 12 months of actual notice, giving me a notice to inform me that, effective 12 months from today, I will no longer be employed.  No need for a payout (well, not always), and no room for a mitigation analysis.

If I am dismissed without notice today, and without just cause, then that is a breach of contract.  And my damages are generally going to be immediately calculable - the value of what I would have received had I worked through the reasonable notice period.  (There are exceptions, where a value can't be calculated immediately.  Stock options, formulaic bonuses based on the employer's year end numbers, disability claims which may arise after benefits are discontinued, etc.  But in general, the numbers are pretty close to fixed on the date of the dismissal itself.)

Remember, pay in lieu of notice is not really a 'thing'.  It's shorthand for damages said to be suffered by reason of the termination without notice.

I am presumed, at law, to have suffered these damages.  If one supposes that I actually became unable to work the next day for medical reasons, and would have actually spent the year on an unpaid sick leave, then that doesn't matter.  Interest on the whole amount usually starts to accrue immediately.  I don't need to worry until my statutory minimum payment runs out before I can commence an action.  Based on the fact of dismissal alone, I can prove breach of contract, and I can prove damages.

But, and this is very important, I do not need to prove mitigation efforts to be entitled to recover damages.  Proving failure to make reasonable mitigation efforts, or proving actual mitigation, is the burden of the defendant employer.  (I fleshed this analysis out a bit more in discussing the Garcia case last year.)

To say "damages aren't proven until the plaintiff can show he didn't get a job through the notice period" would fundamentally alter the nature of wrongful dismissal damages, and of contractual expectation-based damages in general.  In essence, it turns mitigation into part of the cause of action, which would lead to all sorts of weird effects - causation issues (was it really the termination the deprived me of income, or just poor economic circumstances, or my own obsolete skill set?); a shift in the burden of proof (I'd need to prove not only that I didn't get a job, but also that I reasonably couldn't have - a burden which currently rests on the employer in the inverse, and is a heavy burden at that); etc.

In the correct analytical framework, the Court is called upon to determine whether or not the plaintiff has satisfied its burdens to establish breach and damages, and assesses damages accordingly, and then inquires into whether or not those damages should be reduced as an effect of mitigation.

Justice Perell was cognizant of these principles - hence why he clarified that the trust applied not to the award of damages, but rather to any mitigatory earnings.  It isn't that mitigation reduces damages; mitigation earnings are applied against damages.

Hence, if I hypothetically got into court the day after a wrongful dismissal, I would be immediately able to prove damages through the entire notice period.  There is no principled reason for a judge to grant summary judgment only in respect of the portion of the notice that has passed, as is entailed in the partial summary judgment approach.

The Partial Summary Judgment Approach Misapprehends the Nature of Summary Judgment

The point of the summary judgment process is simply this:  If an issue doesn't need a trial, it should be resolved without a trial.

If the evidentiary record is incomplete, or reveals disputes that a trial is necessary to resolve, then motions court will order a trial of the issue.

But refusing judgment in favour of a "wait and see" approach?  It is inconsistent with the objectives of the Summary Judgment rule.

What if we weren't talking about summary judgment motions?  What if a case moved with unusual speed, and ended up in a full trial before the end of the reasonable notice period?  (It's improbable, but not impossible.  It could happen.)  You couldn't grant 'partial judgment'; you couldn't order "wait and see"; the court would need to fully and finally adjudicate the issues in dispute.

There would be only two avenues open to a trial judge, faced with such a quandary:  Trust and accounting, or contingency reduction (more below).

Thus, in the absence of a material dispute requiring a trial for resolution, there's no basis for a court to not grant full and final judgment.

Partial Summary Judgment Renders Injustice

In this case, the plaintiff had young children, and a sick step-mother.  The employer thought that these were disincentives for the plaintiff to find work if she got income replacement damages anyways.

She had possible commitments on her time (which arguably might have actually justified a 'failure' to mitigate, in light of the statutory provisions for family medical leave).  And, probably, significant financial obligations.

It is one of the core injustices of wrongful dismissal law that the non-breaching party - the plaintiff employee dismissed without notice - is very often in financial dire straits as a result of the termination, and thus in a weakened bargaining position, forced to accept a small bird in hand rather than pursue the two in the bush to which she is entitled.  The cost of litigation is often an impediment to pursuing one's rights, but the "law's delay" (one of Hamlet's many grievances) creates problems for dismissed employees, many of whom live hand-to-mouth, and require income continuity in order to satisfy their various financial obligations.

I have seen desperate employees take new jobs of far less prestige and income than that from which they were dismissed, because they have bills to pay.  The employer had no right to expect the employee to take that job in mitigation, but is entitled to count the earnings as 'mitigation earnings'.  Meaning that the employer benefits significantly from the employee's desperation.

The plaintiff in this case ought to have received continuous income over a 14 month period.  That was her contractual entitlement.  And then the employer - the party which breached her contract in the first place - proceeds to argue that, she should be forced to actually live without the income to which she is entitled...to keep her motivated.  The inhumanity of it is striking.

The employer is entitled to expect her to act as a reasonable person would, in her search for replacement employment.  Not as a desperate person would.

And the facts here are not particularly exceptional.  It is generally true that a dismissed employee will be in a more difficult financial position than the employer which dismissed her.  Given that, and given that it was the employer in the first place who committed the breach of contract, it makes little sense that the employee should be the one expected to bear the hardship of unnecessary delay.

The Problems of Disincentives are Small

While I have acknowledged the problem - even in my discussion of Bernier two years ago - that the trust and accounting method effectively relieves the employee of the obligation and incentive to mitigate, the problem is not large.

Employers are relatively seldom successful in proving 'failure to mitigate', and even when they do, it's not usually a large discount.  It isn't a high standard for the employee in the first place.  If an employee can walk into court after several months and show a strong record of mitigation efforts, then that record can often be considered on its own merits.  An employee who attacks the job hunt in good faith will still have incentives to get back into the job market asap, in most cases, and it's unlikely that they will stop altogether because of a judgment.  With a strong mitigation record for the earlier months, and even a weak mitigation record in the later months, it would be unlikely that an employer would achieve a meaningful discount to the award.

In the closer cases, where the employee's mitigation record is more questionable, there may be reasons to take other approaches.  One option, in truly borderline cases, is for the judge to determine that the evidence on the record doesn't provide a full appreciation of the mitigation issue, and therefore that a trial of the issue is needed.  The other approach, which Justice Pollak acknowledged as a possibility but which neither counsel argued for, is the contingency reduction approach.

And I think the contingency reduction approach needs to get a little more consideration than it has in the last couple of years.  I'm not aware of any wrongful dismissal cases in Ontario where it has been taken, but it isn't altogether unheard of in Canadian employment law.

But they're ubiquitous in personal injury law.  Suppose that the expectation is that you'll never work again, so you get a lifetime of income replacement damages...except that there's a chance you might recover more than anticipated, so there's a fairly arbitrary discount applied to your damages on that basis.

Courts in other Provinces have contemplated contingency reductions in wrongful dismissal cases on a not-so-irregular basis, but such awards are, in fact, very rare, and usually quite modest.  And there are reasons for that.

Firstly, the reasonable notice period actually integrates relevant considerations to the contingency reduction:  Essentially, when asking what the reasonable notice period is, we're asking 'how hard will it be to obtain replacement employment?' or 'how long will it take to find replacement employment?'  While there certainly are cases where employees obtain new employment within the reasonable notice period, the reality is that the assessment of the notice period itself actually builds in an assessment of the probabilities.

Secondly, a reduction would tend to be a low percentage of what's left in the notice period.  In this case, with 7 months left in the reasonable notice period, a 10% reduction (for the sake of argument) would amount to about $2800, on a notice period worth about $56,000 altogether.  The assessment of the reasonable notice period itself is an imprecise science, and such a modest difference falls well within reasonable margins of error.  It's a de minimis issue in such cases, and considering its inherent arbitrariness, it would be a relatively rare case where it became important to assess such a reduction.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

Elizabeth May should be in the Munk Debate

A few more political posts than usual here, but hey, 'tis the season.

Allow me to preface by saying that I will not be voting Green in this election.  Having said that, I do hold a certain respect for the party, its platform, and its leader, Elizabeth May, who - prior to the dissolution of Parliament - was the Member of Parliament for Saanich-Gulf Islands.

First, a bit of a background on the Greens and their leadership.

Recent History of the Greens

Prior to 2004, the Greens were regarded as a fringe party in Canada.  In the 2000 election, they reached what was then a high watermark of public support, with 0.8% of the popular vote (compared to 0.24% in 1993 and 0.43% in 1997).  But under leader Jim Harris, they achieved a much better showing in 2004, with 4.29% of the popular vote.  He repeated the performance in 2006, with 4.48% of the popular vote - over 650,000 votes cast in favour of Green candidates across the country.

In a proportional representation system, that would have translated to 13 seats.  In our system, that translated to zero seats.  But the 'per vote' subsidies being what they were, it got the Greens some funding.

In 2006, Elizabeth May took over the party.  She got off to a good start, running in a by-election in London North Centre, and achieving a second-place finish.  (The Liberal candidate won with 35% of the popular vote; May achieved 26% of the popular vote; the Tory candidate only got 24% of the popular vote.  As losses go, it was a big win for May.)

But the bigger win came when Blair Wilson, elected in 2006 as a Liberal, joined the Greens, officially giving the Greens their first seat in Parliament.

In the 2008 election, May ran in her home riding of Central Nova.  This was Peter Mackay's riding, and widely regarded as a Conservative stronghold (and, probably, a bad idea for May to run there).  But the Liberals opted not to field a candidate in that riding, and she took on the uphill battle.  She had a strong showing, but ultimately still lost.  Nationally, the Greens had their strongest showing ever, with nearly a million votes - 6.78% of the popular vote.  No seats to show for it, though, and Blair Wilson lost his seat.

And 2008 was really where 'participation in the debate' became a big deal.  Elizabeth May actively sought an invite from the media consortium, and the media consortium turned to the other leaders to get their thoughts on the topic.  Stephen Harper and Jack Layton replied that they wouldn't attend if May was invited.  Stephane Dion said that he didn't have a problem with May going, but it wouldn't be worth attending if Harper wasn't there.  And Gilles Duceppe didn't care.  So the consortium decided not to invite May.

But after a fairly significant public backlash, people started to change their tunes, and ultimately Elizabeth May was included in the 2008 televised election debate.

In 2011, the consortium actually did exclude May - the best arrow in her quiver in 2008, being a party with Parliamentary representation, simply no longer existed in 2011.

However, in 2011, the Greens changed their strategy:  Rather than running a scattershot national campaign, and pitting their best against Conservative Cabinet Ministers, they would run a concentrated campaign on ridings they could win.  As a result of this shift in strategy, their national percentage of the popular vote fell significantly...but May won her seat in Saanich-Gulf Islands.  Later, NDP MP Bruce Hyer crossed the floor to the Greens.

This Year's Debates

The debates have become very unusual in this election.  Harper boycotted the traditional 'consortium' debate altogether, instead agreeing to a series of debates hosted by independent parties.  And the other leaders, wanting to debate Harper, go where he goes.  It's somewhat concerning, because it really exploits the power of incumbency, to get to decide the venues (and, in a roundabout way, the format) of the debates.  I've argued before that the televised debate should be regulated under the Canada Elections Act, with clear rules regarding participation and format,  It's an important institution to Canadian democracy.

The Macleans debate, in August, included Elizabeth May.  The more recent Globe and Mail debate, citing the need for a 'focused debate', elected to exclude her.  Likewise, the organizers of the upcoming Munk debate felt that the format would be unduly hindered by inviting all six parties represented in the House of Commons.  (In addition to the 'big three' and the Greens, the collapsed Bloc Quebecois still held two seats, and there's another breakoff Quebec Party with seats, Forces et Democratie [Strength in Democracy], which formed last year when a Bloc member and and NDP member decided to start their own party.)

And one might reasonably ask if it makes sense to include regionalist parties like the SD or the BQ, particularly when they're at the fringe.  Nobody ever really thought that the Bloc had any place in the English language debates, but being a major party in Parliament, they were entitled to be there.  (Okay, personally, I found that Gilles Duceppe made the English language debates far more interesting.)  And few Canadians have even heard of the SD party.

So, in order to draw a principled line to keep the numbers down, the new buzz phrase is 'official party status'.  If you were following politics back in 93, you may heard the phrase used then, talking about how the Progressive Conservatives were reduced below the 'official party status' threshold.  The impact of official status is on certain Parliamentary privileges, like the right to ask questions during Question Period.

But the truth is that, constitutionally speaking, the impact of party status is quite limited.  We vote for individual Members of Parliament, and then they get together as a group in Ottawa and decide who will be Prime Minister, etc.

Representation in the House of Commons Should Be the Standard

The consortium has never excluded party leaders on the basis of a lack of 'official party status'.  With the almost-exception of 2008, representation in the House of Commons has always been the standard.

And yes, there are examples:  In 1993, Preston Manning of the Reform Party was invited to participate in the debate, on the basis of having one MP who won a by-election in 1989.  This created a debate with a then-unprecedented five leaders.  In 1997, despite having been reduced to two seats, Jean Charest of the Progressive Conservatives was invited to participate.

This makes sense.  If, as a party, you have enough support to represent us in our elected assembly, and to participate in the various debates on legislative initiatives the define government policy, then surely that's enough support to warrant participation in an election debate watched by millions of Canadians.

The nature of Canadian Parliament is changing.  More grassroots parties, both regional and national, are popping up, and earning some degree of public support.  It is not despite those parties, but because of them, that we must continue to respect this representation tradition.  Three of the last four Federal elections resulted in minority Parliaments.  It is very likely that the next one will be, as well.  And in minority Parliaments, 'fringe' parties can have a greater significance - it is conceivable that Federal policies could be made or broken by the votes of 'fringe' parties.

And so we need to hear from them.  It's crucial for our democracy.

As a footnote, I might be persuaded that parties created on the floor of the House of Commons, as the Greens arguably were in 2008 and as the SD is now, might be an exception.  (The Greens had a strong support base before then, though, whereas the SD can't show any level of grassroots support whatsoever from election results.)  Otherwise a hard-and-fast 'representation' rule could be open to abuse, with every independent deciding to form his or her own party.  (Don't get me wrong, I like Brent Rathgeber, a Conservative-turned-Independent MP from Alberta, and I think people would be well-advised to listen to him, but I wouldn't support him entering a leaders' debate.)

Elizabeth May is Worth Including

Those of you who have watched both debates, as I did, noticed a few stark differences between them.  Firstly, the Macleans format was just all-around better.  Paul Wells was an effective moderator, guiding the debate well but staying out of it, whereas the Globe debate was marked by various free-for-alls of all three talking over each other.

But the biggest difference was Elizabeth May.  On most policy areas, she absolutely shone in the Macleans debate.  While the other leaders were largely sticking to talking points, she looked unscripted, but was rapidly firing off various accurate and important facts, and checking the other leaders' facts on the spot.  She was sharp, and looked like the one with the best grasp of the issues, all around.  She was the only one who showed up looking to have an adult conversation about the issues facing Canada, and the debate was immeasurably better for her participation.

I particularly liked her zinger that whomever advised Harper that his moratorium on Senate appointments is constitutional 'needs to go back to law school'.  Because it's almost certainly true.

Her perspective was sorely missing at the Globe and Mail debate.  And while she was 'live-tweeting' her responses to the various questions...well, firstly, it isn't the same.  In a debate, she's putting a fact to Mr. Harper and asking him to respond to it; when live-tweeting, it's more like fact-checking.  Secondly, if you were trying to follow the bedlam of the debate itself, it was pretty much impossible to watch May's video clips at the same time.

So, organizers of the Munk debate, invite Elizabeth May.  She was elected to Parliament under the Green banner, as leader of a national party, with a wide support base across the country.

If you can't fit the leader of such a party into your debate format (whether or not that means you have to invite other leaders as well), then you have no business running a televised election debate in the first place.

Conservatives Charge "Tour Media" $12,500 per Week - Is That Legal?

At the outset, let me say that I'm not an expert on electoral law, and so the question posed in the title of this entry is a real question, from my perspective.  I should also highlight that, while there has been media coverage of the CPC practices in this regard, I don't know how long this is going on, and for all I know the other parties might engage in similar practices.

I'd welcome input from more authoritative sources.

Last month, a couple of independent media sources wrote pieces venting about how they're being shut out from the Conservative campaign by the high cost of being 'tour media'.

My attention was caught by this Vice.com piece, which explains the CPC's cost breakdown in detail:  $3000 per day, or $12,500 for a full week, or $78,000 for the whole campaign.  The week prior, the Tyee wrote a similar article, which oversimplified the billing structure, but the essence of the story was the media's changing role in election coverage.

Vice was upset because, even if they attend Harper's campaign events, they don't get to ask questions:  Harper only takes five questions per appearance: four from 'tour media' and one from 'local media'.  Even where there wasn't a fifth question lined up, Vice still got snubbed.

And one might reasonably be concerned about the approach:  In order to have the right to ask questions of a sitting Prime Minister, a media source needs to shell out big bucks to the party itself.  That seems troubling, from a democratic perspective.

But my concern is somewhat narrower:  I question whether or not this sizeable fee constitutes an impermissible campaign contribution under the Canada Elections Act.

Elections Canada Weighs In

In general, in Canada, corporations are not permitted to make political contributions.  But the Act overall is quite complex, and it was hard for me, as a non-expert in the area of law, to come to any conclusive questions.

So I asked Elections Canada.

And, after a surprising delay, they responded:

...if media are charged for participation on a leader’s tour or other candidate event, the amount charged must not exceed the commercial value of any tangible benefits received by the media person (such as meals, flights, lodging).  Any excess amount would constitute a contribution by the media corporation to the party and thus be impermissible under the Canada Elections Act.

It doesn't really answer the question conclusively, but I never really expected more than this - an explanation of the framework itself.

It still has to be taken with a grain of salt, though, because I'm not entirely sure where the interpretation arises:  For instance, nowhere in the Canada Elections Act does the word "tangible" occur at all.

Of course, there's s.377, which addresses 'ticketed fundraising' events - you know, those $500/plate fundraising dinners for a $50 dinner?  In such events, the difference between the ticket cost and the "fair market value of what the ticket entitles the bearer to obtain" is the contribution.  But that doesn't speak to this, because - inherently - selling tickets to corporate media cannot be a fundraising activity.

So, having looked through the various treatments of 'contributions', I can't find anything that would permit a large cheque from a corporation to a campaign, even if it is the fair market value for goods received.  Perhaps there's a 'flow-through' aspect to such money, that it's not regarded as going to the campaign in the first place (and such that the expenditure also would count against spending limits).  I can only speculate, but that's my best guess here.

Regardless, EC's interpretation is quite sensible, certainly in keeping with the spirit of the Act.  You can require a media source to cover its own share of the costs of touring with you, but you can't go beyond that.

How do we determine "commercial value"?

Happily, the Act does contain a useful definition of "commercial value":

“commercial value”, in relation to property or a service, means the lowest amount charged at the time that it was provided for the same kind and quantity of property or service or for the same usage of property or money, by
(a) the person who provided it, if the person is in the business of providing that property or service; or
(b) another person who provides that property or service on a commercial basis in the area where it was provided, if the person who provided the property or service is not in that business.

In other words, you can't get around contribution rules by setting arbitrarily high values on services provided directly by the campaign.  It's about fair market value.

So What's the Answer:  Are the Tories Breaking the Law?

I'm not in a position to answer this conclusively, even assuming that Elections Canada's answer is correct.  I have no idea what 'tangible benefits' the media personnel receive while touring with the CPC.

But it is really hard for me to see how they could possibly add up to $3000 per day.  Even if we're talking about really nice meals, really nice hotel rooms, and a really nice seat on a really nice bus...that's a tough sell.

And there are other tell-tale signs that something fishy is going on here:  If the 'commercial value' of tangible benefits warrants a $3000 per day fee, then how is it that it's significantly less if you buy in bulk?  While there are sometimes rational explanations for bulk discounts, this doesn't seem to be one of those scenarios.

Likewise, if the money is entirely about cost recovery, why would the party actively incentivize media sources to become tour media, to the detriment of non-tour media?

I would invite commentary from those more familiar than I with campaign practices and campaign laws:  Is this sort of thing normal, and only making headlines now because of the wide dislike for Mr. Harper's media practices?  Or is this generally unheard of?  Or somewhere in between?  Is this something for which there's a clear (or even arguable) legal basis?  Is it somehow conceivable that media personnel might actually receive $12,500 per week in tangible benefits while touring with the Tories?

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

Which Doctrine to Apply: Common Employer or Successor Employer?

A recent case out of the Superior Court of Justice, Dear v. Glamour Designs Ltd., highlights an interesting nuance in the law surrounding transitions between employers.

The defendant in this case was one corporation within a family-owned group of businesses:  Special Occasional Sales Ltd., Glamour Designs Limited, and International Fashion Group, all of which were operated by members of the Maccarone family:  Vince Maccarone is president of IFG; his daughter Michelle is president of GDL, and there's a Katherine Maccarone listed as president of SOS.

Mr. Dear began working for SOS as a sales representative in March 2005.  There were a number of temporary layoffs in the tail-end of his employment period - one wonders whether or not these may, in and of themselves, constituted a constructive dismissal - and he was finally dismissed effective December 2014.

The hitch here is that SOS itself discontinued its operations in August 2013, and his employment thereafter was with GDL.  Dear claimed that they constitute 'common employers', and therefore that GDL is liable for employment-related liabilities of SOS.

Dear claimed that Vince told the employees in or around August 2013 that they would continue in their jobs but be compensated by GDL.  The defendant denied that, claiming that SOS had actually terminated the employment relationship by way of a notice given in March 2013 (which they could not produce).  GDL argued that, after the employment relationship between SOS and Dear was terminated, GDL stepped in and hired Dear.

Common Employers

At common law, the concept of 'employer' is a little bit flexible.  You're not strictly limited to claiming against the corporation that signs your payroll cheques; the case law has looked at a lot of different scenarios where a single business might have its affairs ordered into various corporations (for legitimate reasons, no less), but there are compelling public policy reasons not to arbitrarily limit the employees from being able to claim against any of those corporations.  As the Court of Appeal found in 2001 (citing a British Columbia decision):

As long as there exists a sufficient degree of relationship between the different legal entities who apparently compete for the role of employer, there is no reason in law or in equity why they ought not all to be regarded as one for the purpose of determining liability for obligations owed to those employees who, in effect, have served all without regard for any precise notion of to whom they were bound in contract. What will constitute a sufficient degree of relationship will depend, in each case, on the details of such relationship, including such factors as individual shareholdings, corporate shareholdings, and interlocking directorships. The essence of that relationship will be the element of common control.

On the other hand, there are plenty of scenarios where one person might have a substantial ownership stake in multiple discrete businesses, and there are good reasons why an employee of one such business should not be able to claim across the corporate veil in such cases.

So there's a fairly significant amount of case law now looking at the factors to earmark common employers, including the degree of integration of the businesses and the common control of the corporations.

The judge accepted Dear's position that GDL and SOS were common employers.  It's a little thin on some of the facts:  I don't know what SOS' business was, nor what GDL's business was.  It would be surprising if a new business could pick up a dissolving business' sales staff seamlessly if there wasn't some degree of integration between the businesses, or if NewCo wasn't actually absorbing OldCo's business line, but the bottom line for us is that we're looking at a fairly finite selection of facts in the decision:

1. That the companies were all owned by relatives of each other;
2. That the companies had adjacent offices;
3. That Vince, at least at times, controlled or was at least involved in both corporations, issuing Records of Employment for both.

The judge then finds that the corporations "could easily have operated as one", and therefore was a single business.  That is, essentially, the test, but without knowing the business models of the different businesses, it's hard to know if there are additional facts underpinning this conclusion.  And that uncertainty is concerning:  On a face value read of the decision, it appears to be a precedent supporting a notion that businesses owned by close relatives will generally be responsible for each other's employment liabilities.  A difficult proposition to justify.

The important result of the finding, of course, is that Dear's employment was nearly a decade (as opposed to a little over a year) which has dramatic effect on his notice entitlements.  Accordingly, the judge awarded him judgment on the basis of nearly a decade of service.

Commentary

It's not clear to whether or not the 'common employer' finding was truly warranted.  It seems plausible, but I'm not sure what other facts were on the record.

However, on my read of the decision, I can't help but question if a 'common employer' analysis was even necessary.  It seems to me that the issue could likely been resolved on the basis of a 'successor employer' analysis.

It appears to be common ground that the transition from SOS to GDL occurred in or around August 2013 - presumably, Dear was on SOS' payroll one day, then GDL's the next.  (Not only did none of his layoffs cover that period, but it actually wouldn't matter to the successor employer doctrine if one of them had.)  If his duties didn't change significantly in that transition, then the only cogent explanation for the transition would be that, for employment relations purposes, GDL had acquired at least part of SOS' business.

This isn't a high standard - it doesn't require a formal purchase and sale of a business.  Transfers - even informal transfers - of office equipment, inventory, leases, good will, or other parts of the business - will often meet this test.  As I pointed out in another borderline common employer case, I have very seldom seen true 'successions of convenience' where one business winds up its business, and then a second and totally unrelated one opens up a similar business in the same location, without any dealings between the two.

Indeed, the very question of 'common employers' seems likely to be the wrong one in the context.  There's no question that GDL employed Dear, nor that GDL dismissed Dear.  We're not trying to pierce the corporate veil at all here, which is what the 'common employer' doctrine is typically about.  Rather, we're trying to determine whether or not Dear's notice period from GDL should bear in mind his prior years of service with a different organization.

If GDL's and SOS' businesses were closely related enough to possibly warrant a common employer finding, it seems essentially impossible that GDL could not have been a successor employer.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

Where Can A Landlord Recover Unpaid Utilities?

Deputy Judge Winny recently decided a Small Claims Court case dealing with a residential tenancy matter, which he said highlights the "imperfect intersection" between the jurisdictions of the Small Claims Court and the Landlord Tenant Board.

The Landlord had gone to the LTB to seek arrears of rent, including several hundred dollars for unpaid utility bills.  The adjudicator orally stated that the utilities were outside the Board's jurisdiction, and declined to award such damages, instead just awarding the 'rent' component of the arrears.

The Board's formal order made no reference to utilities.

Deputy Judge Winny disagreed with the adjudicator, finding, "In my view the board had jurisdiction over the claim for unpaid utilities."  Because the Board had jurisdiction, the Small Claims Court didn't.

This is immensely frustrating for a litigant, where you have a claim, but every venue to pursue it tells you, "This isn't our department."  The legal system can sound a bit like a telecom company, passing you from department to department.  (Kind of reminds me of the Mehedi case, where Mehedi kept getting bounced between the Court of Appeal and the Superior Court for a motion to set aside a judgment.  The difference is that, notwithstanding ridiculous delays, Mehedi probably will eventually have his case heard.)

Deputy Judge Winny expressed concern that the Board hadn't referenced the utilities in its formal order, but essentially suggested that the Landlord should have appealed the order under the Act, instead of pursuing the claim at Small Claims Court.

Commentary

For the most part, I agree with Deputy Judge Winny's analysis:  Utilities are within the jurisdiction of the Landlord Tenant Board, and the LTB was probably wrong to find otherwise, and the ideal avenue for the Landlord would have been to seek reconsideration or to appeal the decision.

However, I don't agree that the Deputy Judge should have embarked upon an analysis of the Board's jurisdiction in the first place.

Here's the thing:  The Board's process is quite informal.  In an ideal world, we'd see written reasons as to why the Board dismissed the claim for utilities, but ultimately, oral reasons (even without a transcript) are probably going to end up being sufficient, within the context of the Board's process.

On the facts of this case, the Deputy Judge had a formal order from the Board that did not dispose of the utility claim, but an uncontested accounting of oral reasons that the claim was dismissed for jurisdictional reasons.

If the Deputy Judge was able to regard the Board as having dismissed the claim as being outside of the Board's jurisdiction, and I would argue that the basis was there to so conclude, then this would most likely result in what we call "issue estoppel", or "res judicata".  The Board, being a body of competent jurisdiction, had decided finally and specifically the question of the Board's own jurisdiction over utility claims, in a proceeding between the same parties.  Simply, it is not open to the Small Claims Court to re-open the question, even if it disagrees with the answer the Board gave.

By treating the question as being subject to res judicata, the Deputy Judge could have proceeded to consider the merits of the claim and award damages if appropriate, without even opining about the jurisdictional question (or perhaps expressing his doubts about it in obiter), and without creating a precedent as to the Small Claims Court's jurisdiction.  A messy solution in certain conceptual ways, but it would have gotten at the justice of the case.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.