Lluc Cerda, a senior associate at Samfiru Tumarkin LLP and counsel for the appellant with Lior Samfiru, said the bar was waiting for the court’s decision in Taylor v. Hanley Hospitality Inc., 2022 ONCA 376 “precisely because we were hoping to get that statutory interpretation of the Act, of the regulation.”
“We would have liked to get a decision on that, the Court of Appeal could have exercised its jurisdiction, but I think they were ultimately correct in the conclusion that they reached. Although a decision would be helpful to the employment bar, it has to be done the right way. We can’t rush to get to a decision and throw aside the rules of evidence and the rules of procedure. It has to be done the right way, so that the right answer is reached based on all the available and necessary information being before the court,” he explained.
Lluc Cerda, Samfiru Tumarkin LLP
At issue on appeal in Taylor was the “amendments to ss. 50.1 and 141 of the ESA and the provisions of O. Reg 228/20 made under the ESA that create a new category of leave under the ESA: the infectious disease emergency leave (“IDEL”).”
The court noted that ss. 50.1(1.1)(a) and (b) of the ESA “prescribe the circumstances when an employee is entitled to an IDEL without pay if the employee will not be performing the duties of his or her position. Section 50.1(1.2) prescribes when an employee is entitled to a paid leave of absence and the employer’s obligations to provide pay if an employee is required to miss work for reasons associated with COVID-19.” And s. 50.1(1.3) “provides that under s. 50.1(1.2), an employee is entitled to a total of three paid days of leave.”
“O. Reg. 228/20, made under the ESA and subtitled, ‘Infectious Disease Emergency Leave’, for the purposes of s. 50.1 of the ESA designates COVID-19, among others, as an infectious disease. It then sets out the parameters of and entitlements to IDEL,” the court explained.
According to court documents, the appellant, Candace Taylor, “is employed as an assistant manager of the respondent’s Tim Hortons’ storefront in Whitby, Ontario” and was placed on “a temporary lay-off” without pay.
The appellant pleaded that “following her temporary lay-off, the respondent continued its operations with a reduced staff and that her temporary lay-off was therefore ‘a business decision made by the [respondent] in response to unfavourable economic conditions’ and not related to COVID-19.”
Taylor launched an action against the respondent in July 2020 “claiming damages for constructive dismissal, bad faith/breach of honest performance, loss of benefits and unpaid vacation pay and vacation pay, plus costs on a substantial indemnity basis and pre- and post-judgment interest.”
According to court documents, the respondent “defended the action, denying the appellant’s allegations of constructive dismissal and bad faith.” The respondent pleaded in its statement of defence dated Sept. 9, 2020, that “as a result of the Ontario government’s declaration of the state of emergency and subsequently imposed emergency measures due to the pandemic, it was ‘left with no choice but to temporarily lay off over 50 employees,’ including the appellant.”
The respondent also pleaded that “the appellant ‘agreed she would be temporarily laid off from her position,’ that the appellant was on infectious disease emergency leave and never terminated from her employment, and that the appellant was recalled to work effective September 3, 2020 and remains in the respondent’s employ.”
According to court documents, the appellant “did not deliver a reply.”
Therefore, the respondent “brought a motion under rule 21.01(1)(a) of the Rules of Civil Procedure for the determination of an issue before trial, namely, whether the appellant’s action was precluded by virtue of the provisions of s. 50.01 of the ESA and of O. Reg. 228/20 passed under the ESA and asked for the dismissal of the appellant’s action.”
The motion judge, Justice Jane Ferguson of the Superior Court of Justice, determined that “the respondent’s motion was an appropriate rule 21.01(1) motion ‘as it involves statutory interpretation (and no matters of credibility).’ ”
According to court documents, Justice Ferguson “accepted as uncontested the respondent’s allegations in its statement of defence because the appellant did not deliver a reply and found that the appellant did not resign and was not constructively dismissed.”
“In interpreting s. 50.1 of the ESA and O. Reg. 228/20,” the court noted Justice Ferguson “applied the facts that she accepted as admitted or by way of judicial notice and concluded that these provisions displace the appellant’s common law claim for constructive dismissal and held that the appellant was on IDEL for all purposes; was deemed not to be laid off for all purposes; and was not constructively dismissed for all purposes” and therefore “dismissed the appellant’s action.”
On appeal, Taylor submitted that Justice Ferguson “erred in taking judicial notice of facts not in evidence as well as by misconstruing the pleadings and the pleadings rules.” She also submitted that Justice Ferguson “erred in concluding that the COVID-19 amendments” to s. 50.1 of the ESA and the associated O. Reg. 228/20, “that establish temporary infectious disease emergency leave, displace the appellant’s common law right of action for constructive dismissal.”
Justice Lois Roberts, writing for the Court of Appeal, determined that Justice Ferguson “made several errors of law in her approach to the respondent’s motion and, effectively, treated the respondent’s rule 21.01(1)(a) motion as if it were a motion for summary judgment.”
Justice Roberts noted that the “well-established approach to be followed on a motion brought under rule 21.01(1)(a) was recently reviewed” by the Court of Appeal in Beaudoin Estate v. Campbellford Memorial Hospital, 2021 ONCA 57: “(1) The test is whether the determination of the issue of law is ‘plain and obvious’; (2) The facts pleaded in the statement of claim are assumed to be true, unless they are patently ridiculous or manifestly incapable of proof; (3) The statement of claim should be read as generously as possible to accommodate any drafting inadequacies in the pleading.”
The court found that Justice Ferguson “erred in failing to apply the correct principles on a motion under rule 21.01(1)(a).”
“Importantly, she failed to assume that the allegations in the statement of claim were true. This led her to misapply the provisions of rule 25.08 that stipulate where a reply is necessary and the deemed effect of the absence of a reply,” explained Justice Roberts.
The court noted that Justice Ferguson was also “required to assume as true that the respondent had temporarily laid off the appellant because of unfavourable economic reasons and that the respondent had treated her differently than other employees that continued to work at its Tim Hortons’ storefronts.”
“As the appellant had already pleaded in her statement of claim a different version of the facts from that pleaded in the respondent’s statement of defence, which denied the appellant’s allegations, it was not necessary for the appellant to repeat the same allegations in a reply,” wrote Justice Roberts, noting that “Rules 25.08(1) and (2) require a reply only where a party ‘intends to prove a version of the facts different from that pleaded in the opposite party’s defence’ and where a party intends to reply to a matter in the defence ‘that might, if not specifically pleaded, take the opposite party by surprise or raise an issue that has not been raised by a previous pleading.’ ”
“As neither of these circumstances applied here because of the allegations already contained in the statement of claim, no reply was required nor even allowed under rule 25.08(3),” the judge added, further noting that Justice Ferguson “erred in treating the allegations in the respondent’s statement of defence as admitted facts.”
The court noted that it was “open to” Justice Ferguson “to take judicial notice of the litany of adjudicative facts set out in paragraph 4 of her reasons.”
“These adjudicative facts mirror many of the disputed allegations contained in the respondent’s statement of defence concerning the impact of the COVID-19 pandemic and of the government’s various emergency measures on the respondent’s operations and its business decisions,” Justice Roberts wrote.
Justice Roberts stressed that the “concept of judicial notice allows a court to receive ‘facts’ that are ‘so notorious or uncontroversial that evidence of their existence is unnecessary.’ ”
“This does not allow parties ‘to put before the court controversial evidence to the prejudice of the opposing party without providing a proper opportunity for its truth to be tested,’ ” she added, noting that the “threshold for judicial notice is strict since the facts are not proved by evidence under oath nor tested by cross-examination.”
The court explained that “[U]nder the rule 21.01(1)(a) motion that the respondent chose to bring, the only facts that the motion judge was entitled to accept as true as far as they related to and affected the parties were those in the statement of claim.”
“As a result, there was no basis for the motion judge’s myriad findings, including that the appellant had not resigned from her employment and that the appellant was on an infectious disease emergency leave because of the COVID-19 emergency government-mandated measures and therefore was not constructively dismissed by the respondent,” wrote Justice Roberts, noting it was also “incumbent on the motion judge to determine whether the ESA provisions even applied to the appellant’s circumstances.”
“In particular,” the court found that Justice Ferguson “failed to consider whether the appellant’s situation fit within the exemptions provided under ss. 5, 6 and 7 of O. Reg. 228/20.”
“She therefore failed to consider whether the appellant was on IDEL because, according to the appellant’s statement of claim, she was put on a ‘temporary layoff’ prior to the filing of the regulation on May 29, 2020. The motion judge was required to accept the statement of claim as true,” explained Justice Roberts, determining that Justice Ferguson had “erred in dismissing the appellant’s action which required the adjudication of the material facts that were in dispute and the determination of whether the ESA provisions even applied to the appellant’s circumstances.”
“Unfortunately,” Justice Roberts noted, Justice Ferguson’s “interpretation of s. 50.1 of the ESA and O. Reg. 228/20 was tainted by the analytical errors that I have just reviewed.”
“She erred by following the respondent’s submissions and primarily basing her interpretation of these provisions on her impermissible and unsubstantiated findings concerning the parties’ employment relationship, the appellant’s employment status, as well as the legislative intention and context underlying these provisions, for which there was no evidentiary foundation,” the judge explained, stressing that the disputes could “not be resolved on a rule 21 motion without evidence.”
In Justice Roberts’ view, the “respondent’s rule 21 motion was ill advised.”
“Given how intertwined the statutory interpretation issues were with the factual issues, the respondent’s rule 21 motion could not serve its stated purposes of disposing of all or part of the action, substantially shortening the trial or resulting in a substantial saving of costs. The motion judge erred in not dismissing the respondent’s rule 21 motion and further erred in dismissing the appellant’s action on the basis of an interpretation of the statutory and regulatory scheme that she should not have undertaken,” she determined.
According to court documents, the parties “urged” the Court of Appeal to “interpret s. 50.1 of the ESA and O. Reg. 228/20,” submitting that “even if these provisions are ultimately found not to apply to the appellant’s circumstances in this case, this court’s interpretation of them will nevertheless be useful to the parties and provide guidance on these issues for employees and employers in general.”
However, Justice Roberts was not persuaded and declined to interpret the provision and regulations.
“Not only was this remedy not sought in the parties’ respective pleadings, but for the reasons stated above, this panel has neither the record nor the submissions that would permit us to carry out a proper analysis of s. 50.1 of the ESA and O. Reg. 228/20,” she explained.
In a decision released May 12, Justice Roberts, with Justices Bradley Miller and Benjamin Zarnett in agreement, allowed the appeal and “set aside the motion judge’s order, including any costs order in favour of the respondent that may have been made.”
The court also dismissed the respondent’s rule 21 motion and remitted “the action for determination before another judge in the Superior Court of Justice.”
Cerda noted that the Court of Appeal has been “pretty consistent” at “confirming that rule 21 motions are very limited and shouldn’t be used to answer unsettled questions of law and questions where there’s factual disputes and applying the law to the facts.”
“Basically, this was a non-controversial decision on that point and followed well established precedent,” he added.
He noted that on the substantive issue, “the Court of Appeal did not decide the matter, but gave some inclination … on what would be expected to be on the record for them to make a decision on the issue of whether the infectious disease emergency leave effects an employee’s right to claim constructive dismissal under common law.”
“Importantly,” he said, “they thought that … the Ministry of the Attorney General’s intervention would be required, or at least highly appropriate.”
However, Cerda said, the Ministry of the Attorney General withdrew its “request to intervene on the eve of the motion to obtain intervener status.”
“Essentially, the Court of Appeal was saying that the infectious disease emergency leave was part of a larger legislative response and needs to be placed in its larger context before we could really come to a definitive conclusion on its interpretation. And that needs to be supported by the records,” he explained.
Cerda said it’s important to remember that “Taylor was one of three decisions that deal with whether the IDEL … impacts the common law of constructive dismissal.” The other two decisions are Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 and Fogelman v. IFG, 2021 ONSC 4042.
Taylor was the only one that’s been overturned, he said, noting that the “two cases remain, and both go in the same direction, essentially saying that employment rights of employees are not affected by the regulation including the right to claim constructive dismissal.”
“There was uncertainty in the law until the appeal; that uncertainty is gone now. I think all the relevant decisions point in the same direction, that employee rights have not changed. There is quite a lot of certainty now, I think, in the law as we move forward now that Taylor has been overturned,” he explained.
Counsel for the respondent was not able to respond to request for comment before press time.
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