IDEL Regulation and Constructive Dismissal at Common Law: Appeals Court Finds Errors in Analysis “Marked” Lower Court’s Decision and Fails to Decide on a Substantive Issue – Employee Rights/Labour Relations

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On May 12, 2022, the Ontario Court of Appeal released its highly anticipated decision in the appeal of Taylor vs. Hanley Hospitality Inc.. The lower court had considered the interplay between the Infectious Disease Emergency Leave Regulations (Ontario Regulation 228/20 or IDEL Regulation) made under the Employment Standards Act 2000(ESA) and a constructive dismissal action at common law (see our summary of that decision). The Court declined to consider this issue because it found that the lower court motion judge had made numerous errors under the Rules of civil procedure (Rules). She overturned the decision and sent the case back to the Superior Court of Justice to be decided by another judge.

For your information, following the close of pleadings, the employer filed a motion under paragraph 21.01(1)(a) of the
Ruleswhich permits a motion “for the determination … of a question of law raised by a pleading.”

Specifically, the employer sought to determine whether the plaintiff’s constructive dismissal action, arising from her temporary layoff at the end of March 2020, was excluded under s. 50.01 of ESA (Emergency Leave: Declared Emergencies and Infectious Disease Emergencies) and O. Reg. 228/20 made under the ESA. The Motions Judge concluded that the motion was appropriate for determination under Rule 21.01(1) on the basis that it related to statutory interpretation and not issues of credibility. The motion judge then took judicial notice of several important facts, including, due to the COVID-19 pandemic, that the Ontario government required the closure of certain storefronts (such as the employer) and limited them to takeout and delivery. , and that the emergency measures forced some employers to temporarily close their businesses or reduce their activities without having chosen on their own. The Motions Judge also accepted the allegations contained in the Statement of Defense as admitted facts because the Plaintiff had not filed a pleading response to the Statement of Defense. The motion judge then found that the IDEL Rules precluded a constructive dismissal action at common law. The plaintiff appealed.

The Court of Appeal allowed the appeal and set aside the motion judge’s order on the basis that this was not a proper case to decide a question of law under Rule 21.01. The Court found that the motion judge misapplied the well-established approach to be followed in motions under paragraph 21.01(1)(a). Specifically, he held that the motions judge failed to assume that the allegations in the statement were true and erroneously accepted the statements in the defense statement as true simply because there was no reply argument (i.e. in circumstances where the claim itself had alleged facts directly contrary to those of the defence).

Further, the Court found that the motion judge erred in taking judicial notice of material and disputed facts, including the legislative background and intent behind the government’s emergency measures. Ontario and their impact, in the absence of any evidence adduced by the parties or an agreement between the parties.

The Court of Appeal then concluded that the interpretation of s. 50.1 of ESA and Reg. 228/20 was marred by parsing errors. As the Court concluded that the matter was not suitable for a motion under Rule 21, it declined to give an interpretation of s. 50.1 of ESA and Reg. 228/20 and its potential impact on common law rights, as it would not resolve the factual dispute between the parties.

The Court allowed the appeal, set aside the motion judge’s order and returned the matter, including the issue of statutory interpretation, to the Superior Court of Justice for determination by another judge.

Following this decision, the issue of substantive statutory interpretation underlying the motion was not considered by the Court of Appeal. This is still a hot issue for trial courts in Ontario.

Originally published May 12, 2022

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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