In Verigen v. Ensemble Travel Ltd., (2021 BCSC 1934) Justice Milman had a situation of a 55 year old Business Development Director (really more of a sales person) with 13 months service who was given a temporary layoff notice at the beginning of COVID. The plaintiff consented to the first time limited layoff and consented to a second one but did not consent to at third extension beyond August, 2020.
- The Judge found that because she had consented to the first two layoff periods, the date of her constructive dismissal was not her original layoff date in March but only when she refused to consent to a third extension in August.
- At the time of hiring there was a clause in her contract agreeing that she was bound by the Employee Handbook which they said was enclosed, but in fact it was not enclosed. The Defendant did not actually give her a copy of the Employee Handbook until a few months after she started and, lo and behold, the Handbook contained an ESA termination clause. The Court found that because there was no termination clause in the original hire letter, that extra consideration would have had to be paid to the Plaintiff at the time she was asked to agree to the termination clause, and as no such extra consideration was paid, the termination clause was not enforceable.
- The Defendant then tried to argue that COVID had devastated the travel industry so that the doctrine of frustration applies and therefore the Plaintiff was not entitled to any common law notice This is how the Court dealt with that issue:
[59] The issue in Wilkie was whether the imposition of additional purchase tax on a prospective purchaser of real property frustrated the contract of purchase and sale. In answering that question in the negative, Warren J. canvassed various authorities holding that a purchaser’s inability to perform due to a lack of adequate funds will not generally justify a finding of frustration. She summarised the relevant principles as follows:
[38] That a lack of money to perform does not, generally, give rise to frustration is not surprising because, as noted, frustration arises from a supervening event that results in performance becoming a thing radically different from that which was undertaken. While a lack of money affects a party’s ability to perform an obligation, it does not normally alter the nature or purpose of the obligation itself.
[60] So too here, the collapse in the travel market goes to ETL’s “ability to perform”, rather than “the nature of the obligation itself.” This case is unlike the CRT decisions relied upon by ETL, where the very subject matter of the contract had been lost due to discrete, pandemic-related events. Although much of the consumer demand driving the business on which ETL and its members depend has abated, at least for the time being, not all of it has, and then not permanently. Moreover, although ETL chose to terminate a large part of its work force in the summer of 2020, at least some positions have been preserved and a recently-opened vacancy has been filled. ETL chose to relinquish Ms. Verigen’s branch of the business with a view to cutting operating costs so that it could better weather an ongoing storm. The fact that the pandemic had admittedly not brought about a frustration of the contract as of July 2020 makes it implausible for ETL to maintain that the contract had become frustrated only a few weeks later.
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