In Barnett v. Canadian Nuclear Laboratories Ltd., 2025 ONSC 6400, released on Nov. 17, Justice Brian Holowka found that when the subsidiary took over the worker’s employment, her earlier contract with the Crown corporation continued to govern the relationship, by assignment or novation.
“Ms. Barnett’s transfer was seamless. It is noteworthy, in my view, that no new contracts were signed. She simply began receiving her pay from CNL,” the judge wrote.
In July 2014, the plaintiff, Georgina Barnett, was recruited to work for Atomic Energy Canada Limited (AECL), a Crown corporation responsible for managing Canada’s radioactive waste and decommissioning needs.
It was expected that the plaintiff’s employment and contract would be assigned over to AECL’s subsidiary and defendant Canadian Nuclear Laboratories Ltd. (CNL) soon after she joined the company.
The hire letter for the plaintiff stated that AECL was undergoing restructuring and that it was expected that, by fall 2015, a private sector contractor would manage her employment through a GoCo (government-owned, contractor-operated) agreement.
The contract also included a forum selection clause that provided that the courts of Ontario would have exclusive jurisdiction to determine any dispute related to the agreement.
According to CNL, Barnett became an employee of CNL in November 2014. In September 2015, AECL, CNL and the defendant Canadian National Energy Alliance Ltd. (CNEA) entered into a tripartite agreement, under which CNEA was to provide management oversight and direction to CNL.
Under the GoCo model, key personnel were seconded from CNEA to CNL. The plaintiff regularly reported to CNL staff at a Manitoba facility where she worked and the CNEA board in Ontario.
Barnett’s employment was terminated in January 2024, and she commenced an action against both CNL and CNEA alleging a breach of contract due to her dismissal without notice, and allegedly discriminatory conduct exhibited by the employer leading up to the dismissal.
She commenced the action in Ontario even though she resides in Manitoba, and the contract between her and CNL was established in Manitoba.
CNL sought an order dismissing or permanently staying the action on the grounds that the court lacked jurisdiction or, alternatively, on the basis of forum non conveniens.
CNL and CNEA argued that the forum selection clause did not apply, and CNL took the position that it was not a party to the agreement between Barnett and AECL.
Justice Holowka rejected this argument, noting that Barnett had entered into an agreement with AECL less than four months before CNL assumed employment.
“It is noteworthy that she continued her work seamlessly without entering into any new contractual arrangement. When AECL drafted and the parties executed the contract, it was understood that Ms. Barnett would be transferring to CNL shortly,” the judge wrote.
He also observed that the contract had explicitly referenced this situation by stating that Barnett may be assigned to a wholly owned subsidiary of AECL as part of an internal reorganization of AECL.
“I am satisfied that when CNL, a wholly owned subsidiary of AECL, assumed Ms. Barnett’s employment, the AECL contract was either deemed assigned or replaced through a novation,” the judge ruled.
The court also held that CN had not shown any strong cause to disregard the Ontario exclusive forum selection clause in this case.
He noted that while Barnett primarily worked at a Manitoba facility, part of her duties linked her to operations at Chalk River Laboratories in Ontario and CNL’s head office in Ontario and that this connected the action to Ontario.
Justice Holowka concluded that the forum selection clause in the plaintiff’s 2014 contract was valid and enforceable.
The court dismissed the motion for a stay.
Counsel for the parties were not immediately available for comment.
Counsel for the plaintiff were Stephen Moreau and Emma Bolf of Cavalluzzo LLP.
Counsel for CNL were Kevin MacNeill and John Wilkinson of Ogletree Deakins.
Counsel for CNEA was Sarah Whitmore of Torys LLP.
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