First Reference company logo

First Reference Talks

News and Discussions on Payroll, HR & Employment Law

decorative image

Frustration of contract can be resolved by summary judgment – Does not require a trial

frustration of contract

Is a stated “desire” to return to work, at some point, and without more information, sufficient to rebut the medical evidence that a contract of employment has become legally frustrated?

In Katz et al. v. Clarke, 2019 ONSC 2188, the Ontario Divisional Court held that was not.

Facts

The decision of the Divisional Court is, as of the time of writing this post, not available on CanLII. The decision giving rise to the appeal, Clarke v. Katz Group Canada Ltd., 2017 ONSC 6927 (CanLII) is.

Because the underlying motion judge’s decision is a little short on facts, the facts have to be taken from the decision of the Divisional Court. In that decision, the court noted the following:

Eugene Clarke is a former employee of Katz Group Canada Ltd. c.o.b. as Pharma Plus and/or Rexall. He was hired in March 2000 and most recently was a front store manager. He had been off work since July 2008 due to a disability.

Short-term and, subsequently, long-term disability benefits were approved by the Katz Group’s disability carrier, Great-West Life (“GWL”).

On June 11, 2013, Clarke’s family physician completed a GWL Supplementary Attending Physician’s Statement, in which she wrote, among other things: “Pt is totally disabled…There is no job he would be able to perform.”

On June 26, 2013, Clarke completed GWL’s Employee Supplementary Statement Disability Information Questionnaire, stating that: (a) his mobility was limited due to pain; (b) any tasks completed are at a snails pace and typically require rest in doing things and long rests after; (c) he was house confined; (d) he was not capable of performing any work due to the limited length of time that he is able to stand, walk or sit; and (e) no treatment was available for his medical condition as per his doctor.

Some time in early 2013, GWL advised the Katz Group that, on the basis of the medical information available to it, Clarke was unable to perform the essential duties of his position and there was no reasonable expectation that he would be capable of performing them in the foreseeable future.

On July 1, 2013, the Katz Group wrote to Clarke informing him that: (a) based on the information received to date and his prolonged absence from work, the Katz Group believed he was incapable of performing the essential duties of his position due to his illness, and there was no reasonable expectation that he would become able to return to his position in the foreseeable future; (b) Clarke’s employment had therefore been frustrated; (c) Clarke’s employment would cease on December 31, 2013 and he would be provided with 22 weeks of pay as required under the Employment Standards Act (the “ESA”) (i.e. 8 weeks’ pay in lieu of notice plus 14 weeks’ severance pay); and (d) Clarke’s benefits would cease effective December 31, 2013 and his statutory entitlements under the ESA would be paid to him on January 9, 2014.

On September 24, 2013, Clarke’s lawyer wrote to the Katz Group that Clarke “has been working very hard to get well so that he can return to his former employment and perform the essential duties of his position.”

In response, the Katz Group’s legal counsel wrote to request updated medical information outlining Clarke’s estimated date for return to work and his prognoses for recovery.

Clarke did not respond to that letter, nor did he provide updated medical information.

On December 10, 2013, the Katz Group’s counsel again wrote to Clarke’s counsel and reiterated that, unless updated medical information was received, the Katz Group would deem Clarke’s employment to be frustrated effective December 31, 2013, on the basis that there was no reasonable prospect that he would be able to perform the essential duties of his position in the foreseeable future.

The Katz Group did not receive a response to that letter.

Consequently, the Katz Group terminated Clarke’s employment effective December 31, 2013 on the basis of the frustration of his contract of employment and, on January 9, 2014, paid Clarke his statutory entitlements in accordance with the ESA.

Clarke sued the Katz Group, seeking a declaration that he was terminated as a result of his disability in breach of s. 5(1) of the Ontario Human Rights Code (“the Code”). Clarke sought damages under s. 46.1 of the Code for lost wages from January 1, 2014 until the date of judgment and the amount of $25,000 for injury to dignity, feelings, and self-respect. In addition, Clarke sought a declaration that he was wrongfully dismissed and, in the alternative to the damages set out above, damages in the amount of $75,000 as compensation in lieu of reasonable notice. Clarke also sought moral damages in the amount of $25,000 on the basis of alleged bad faith conduct by the Katz Group in the manner of his dismissal.

The Katz Group defended the action on the basis that Clarke’s contract of employment was frustrated due to his absence from work for five years and the absence of any reasonable prospect of his returning to work.

Decision of the motion judge

The Katz Group moved for summary judgment. In a short, six-paragraph endorsement dated November 20, 2017, the motion judge, the Honourable Justice Thomas J. Carey, determined that there was a genuine issue for trial and dismissed the request for summary judgment.

Justice Carey’s reasons for dismissing the summary judgment motion were as follows:

[2] It is clear from the Statement of Defence that the defendant was aware of the plaintiff’s wish to return to full employment. Their response was to request further medical reports and his plans for return. He did not provide further reports or make proposals for how he might be accommodated. I disagree with the defendant that the state of law would require more from the plaintiff. His stated desire to return to work is certainly capable of being interpreted as a request to be integrated back into the workforce. The medical reports were indicating some degree of mobility and no present psychological impairments to work. It is relevant, here, that his original absence from work was stress-related and it was two falls, while on leave, that turned his absence into a long term one.

[3] The law is clear that employers have substantive duties and need to have procedures in place to accommodate employees with disabilities up to the point of undue hardship to the employer. A failure to even consider the issue of accommodation and what steps could be taken has been held to constitute a failure to satisfy the procedural obligation. It is arguable here that the defendant’s failure to spend the time and effort to explore with the plaintiff how his desire to return to work could be accommodated resulted in a “rush to judgment” that breached s. 5(1) of the Human Rights Code, R.S.O. 1990, c. H.19, Ontario.

[4] The record before me indicated an almost complete lack of personal contact between the defendant employer and their long term managerial employee. There appears to be no offer of rehabilitation help or any discussion with the employee plaintiff as to what his goals were. The employer is the one in the best position to know how an employee can best be accommodated in their operation. Use of crutches, walker or even a wheelchair all would seem reasonable areas of discussion that could have been initiated by this employer who in their statement of defence states that their business mandate is to deliver pharmacy care through its integrated network of more than 420 corporately-owned pharmacies.

[5] There is, on the record before me, a genuine issue for trial as to whether: a) the plaintiff was terminated as he states because of his disability or b) his contract of employment was frustrated by his inability to work as the defendant argues. The plaintiff argues that the defendant breached its obligations to accommodate him in violation of the Ontario Human Rights Code. There is a genuine triable issue as to whether the defendant fulfilled its duty to accommodate the plaintiff, given his express desire to return to work.

Decision of the Divisional Court

The Katz Group appealed that decision. In overturning Justice Carey’s decision, Justice Herman J. Wilton-Siegel, on behalf of the three-judge panel, (J. Wilton-Siegel J., J. Fregeau J., R. Ryan Bell J.), wrote the following reasons for decision:

[22] As mentioned, the motion judge held that there is a genuine issue for trial as to whether the plaintiff was terminated because of his disability or was validly terminated on the basis of frustration of his contract of employment. The motion judge also held that there was a “genuine triable issue” as to whether the defendant fulfilled its duty to accommodate the plaintiff, given his express desire to return to work. Both of these issues are based on the motion judge’s conclusion that the law did not require more of the Respondent [Clarke] than an expression to his employer of his wish to return to full employment to trigger the employer’s duty to accommodate.

[23] The motion judge provided no case law or other authority for this conclusion. Nor did the Respondent on the hearing of this appeal. In our view, the motion judge erred in his expression of the law regarding an employer’s duty to accommodate an employee’s disability and therefore in his denial of the Appellant’s motion for dismissal of the action on the basis that the Respondent’s contract of employment had been frustrated.

[24] The doctrine of frustration of contract applies where there is evidence that the employee’s disabling condition is permanent. The principle applies in these circumstances because the employee’s permanent disability renders performance of the employment contract impossible “such that the obligations of the parties are discharged without “penalty”: see Fraser v. UBS, 2011 ONSC 5448 at paras. 14-15.

[25] Summary judgment is clearly appropriate to determine an issue of frustration of contract where, as here, there is no dispute as to the underlying facts: see Fraser at para. 3. Courts have granted summary judgment on the basis of frustration of contract on a number of occasions: see Fraser; Duong v. Linamar, 2010 ONSC 3159, upheld 2011 ONCA 38; Lemasani v. Lowerys Inc., 2017 ONSC, 1801 upheld 2018 ONCA 270.

[26] In this case, the evidence was undisputed that the Respondent’s medical documentation available to the Appellant and GWL indicated that he was totally disabled and unable to work in any occupation at the time or for the foreseeable future. As such the test for frustration of contract was clearly met.

[27] Insofar as the motion judge considered that the evidence indicated some degree of mobility and no present psychological impairments to work, he misapprehended the evidence, in particular the most recent documentation provided in June 2013 described above. We also fail to see the relevance of the fact that the Respondent’s original absence from work was stress-related and that it was two falls, while on leave, that turned his absence into a long term one. These circumstances have no bearing on the medical evidence regarding his medical condition and the prospects for his return to employment as of the date of his termination.

[28] The motion judge held, however, that there was a “genuine issue for trial” on the basis that the Respondent’s stated desire to return to work without more was sufficient to create the possibility of an issue of the employer’s duty to accommodate notwithstanding the state of the documentation before the Respondent. However, the law is clear that an employer’s duty to accommodate is only triggered when an employee informs an employer not only of his wish to return to work but also provides evidence of his or her ability to return to work including any disability-related needs that would allow him or her to do so: see Lemasani at para. 187.. As was succinctly put by Fregeau J. in Nason v. Thunder Bay Orthopaedic Inc., 2015 ONSC 8097at para. 144, “the employee must communicate the ability, not just the desire, to return to work”. In this case, the Respondent never provided any such information to the Appellant.

[29] Further, an employer’s duty to accommodate ends where the employee is no longer able to fulfil the basic obligations associated with the employment relationship for the foreseeable future: see Hydro-Quebec v. Syndicat des employées de technique professionelles et de bureau d’Hydro-Quebec, section locale 2000, 2008 S.C.C. 43 at para. 19; Nason at para. 143. It is “inherently impossible” to accommodate an employee who is unable to work: see Mathews v. Chrysler Canada, HRTO 2053 at para. 54.

[30] In this case, the evidence was undisputed that the Respondent was unable to fulfil the basic obligations associated with the employment relationship for the foreseeable future. In these circumstances, the Appellant’s duty to accommodate the Respondent in the workplace had ended. Essentially, the Respondent’s position is that the employer failed to satisfy a duty to accommodate him by failing to contact him while he was off work. However, the Appellant had no such duty so long as the medical documentation provided to it indicated that the Respondent was unable to return to work. Any such communications regarding possible accommodation would have been entirely futile on the evidence before the Court and, arguably, inappropriate. In any event, the Appellant did contact the Respondent through his counsel on two occasions in 2013 prior to terminating the Respondent’s employment and requested documentation or information that, if delivered, could have triggered a duty to accommodate. The Respondent did not reply to either of these letters and never did provide any such documentation or information.

[31] In these circumstances, the Appellant was entitled to treat the employment relationship as ended.

In the result, Katz Group’s summary judgment motion was granted, dismissing Clarke’s claim.

Commentary

The very first post published to this blog, on April 1, 2012, concerned the subject of frustration. Since that, this blog has looked at this subject perhaps more than it really deserves.

In my post Employee on Disability Leave Deemed to Have Abandoned Employment After Failing to Respond to Employer, I wrote, “being on disability leave does not transport one to Superman’s fortress of solitude.” The right to remain silent, as Mr. Clarke did here, does not apply in the employment context.

The evidence in this case was clear: Mr. Clarke was unable to return to work. He said so in June of 2013 when he wrote that he was “not capable of performing any work.” While his stated desire to return to work was laudable, without the ability to actually do so, one has to question the value that statement added.

Sean Bawden

LL.B., Director,Legal (Employment and Litigation) at Labour Pain
Sean Bawden, is now a director of legal for a private company and blogging about work by an in-house lawyer which he calls “Labour Pain.”To read more click here.

, , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *