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Surface leases are common in many rural areas in Alberta. Landowners often enter into surface lease agreements with oil and gas companies (“operators”), which entitles them to place wells on the property and extract natural resources below the surface. In exchange, the landowner receives annual compensation from the operator.  

Especially during economic downturns, it is not uncommon for operators to attempt to reduce their annual payment obligations. This often leaves farmers, ranchers, and other landowners asking themselves one question: is this legal? 

Under the Surface Rights Act, RSA 2000, c S-24, the rate of compensation for a surface lease may be subject to review every 5 years. On the fourth anniversary of the start of the surface lease, the operator must notify the landowner that it wishes to have the rate of compensation reviewed. Both parties are then expected to negotiate in good faith. If an agreement cannot be reached, either party has the right to request a review before the Land & Property Rights Tribunal (the “Tribunal”). No parties may apply to the Tribunal for a review before the 5-year anniversary date. 

In order to apply to the Tribunal, the requesting party must submit a completed Rate of Compensation Review form. The Tribunal will schedule a Dispute Resolution Conference and then a hearing, if necessary. 

At a hearing, the Tribunal will consider two factors in assessing the appropriate rate of compensation:

1. The loss of use by the owner or occupant of the area granted to the operator; and
2. The adverse effect on the remaining land of the owner or occupant, due to nuisance, inconvenience, and/or noise that may be caused by the operator. 

In considering the above factors, the Tribunal will often consider evidence with respect to the rate of compensation for similar properties in the area, particularly if there is a “pattern of dealing” (essentially a going market rate in that particular region). If no pattern of dealing is present, the Tribunal will assess evidence on a case-by-case basis relating to loss of use and adverse effect. This may include, but not be limited to, the following considerations:  

• Is the well located mid-field or a corner location? 
• Is the land used for crops or grazing? 
• Is the well active or in the process of reclamation?
• Is there an access road? 

The parties may also refer to past decisions of the Tribunal. Although previous decisions are not binding on the Tribunal, they will often provide a useful indication of how the Tribunal will assess present cases. 

The party requesting the review has the burden of demonstrating why a higher or lower rate of compensation is justified. The final decision of the Tribunal will be binding upon both parties, subject to either party’s right to appeal to the Alberta Court of King’s Bench. 

Key Take-Aways

• No party can unilaterally change the compensation payable under a surface lease or apply to the Tribunal to vary the compensation before 5 years has passed since the start of the surface lease term. 

• After the 5-year term has expired, either party has the right to request a review. If the parties cannot negotiate an agreement between themselves, the matter will go to the Tribunal. 

• The party requesting the review must demonstrate to the Tribunal why the compensation should be adjusted, having regard to the primary factors of loss of use and adverse effect. This is often done by tendering evidence related to similar surface leases in the area, case-specific evidence, and referring to past decisions of the Tribunal. 

This post provides an overview of the law on surface lease agreements in Alberta. It is intended to provide general information and does not constitute legal advice. If you have a legal issue with respect to negotiating a surface lease agreement, or a rate of compensation review before the Land & Property Rights Tribunal, we recommend you speak with a lawyer directly. Our team of lawyers would be pleased to serve you with advice that is specific to your situation.

There are various types of shareholder agreements, and a unanimous shareholder agreement is one of them. In this post, we’ll answer the top 3 questions about unanimous shareholder agreements, including:

1. What is a unanimous shareholder agreement?
2. Why should shareholders consider putting a unanimous shareholder agreement in place?
3. What does a unanimous shareholder agreement include?

If you’re a shareholder or a corporation owner, it’s important to know the following information about unanimous shareholder agreements.

What is a Unanimous Shareholder Agreement?

A unanimous shareholder agreement (USA) is a contract about the governance and management of a corporation. The agreement is between all the shareholders of the corporation, and it details their rights and obligations to each other and to the corporation.

The Canada Business Corporations Act defines a USA as a “lawful written agreement among all the shareholders of a corporation, or among all the shareholders and one or more persons who are not shareholders, that restricts, in whole or in part, the powers of the directors to manage, or supervise the management of, the business and affairs of the corporation.”

The Act explains the purpose of a USA as three-fold:

1. To give shareholders the power to govern and manage the business by placing restrictions on the power of directors
2. To specify means of dispute resolution
3. To dictate how shareholders can join or exit the corporation

A unanimous shareholder agreement works best for corporations with only a small number of shareholders.

Why Should Shareholders Consider Putting A Unanimous Shareholder Agreement In Place?

Having a unanimous shareholder agreement in place provides several benefits to the company and its shareholders. Perhaps the foremost benefit is that it minimizes conflict and empowers owners and shareholders to operate and grow the business without the distraction of defending decisions and trying to protect the company.

It’s common for corporate start-ups to assume conflict won’t be an issue. After all, a business is born of a vision, and people don’t invest in a business if they don’t believe in the vision. Add to this all the other legal matters involved in starting a business, and putting a USA in place is often overlooked.

But a USA is like insurance—you don’t think you need it until you do. Setting up a unanimous shareholder agreement from the start saves a lot of hassle and protects the corporation from costly and lengthy litigation. Its clear plan for decision-making and share transfers helps avoid deadlocks and is particularly useful when share ownership changes unexpectedly.

What’s Included in a Unanimous Shareholder Agreement?

A unanimous shareholder agreement includes provisions that:

• Empower shareholders to govern and run the company
• Resolve disputes and deadlocks
• Decide how shareholders can join or leave the company, and how shares can be transferred

A USA lays out the rights and obligations of shareholders, including fundraising and capital contributions. It provides mechanisms for settling disputes by specifying when a majority vote can be employed and how to resolve other disagreements. And it details how shares can be transferred in specific situations, such as when a shareholder leaves the company or dies.

There are several common provisions in a USA that apply to share transfers, including:

• Drag-along—Prohibits minority shareholders from blocking the sale of the company if a majority shareholder wants to exit
• Piggyback or tag-along—When a shareholder sells their shares to a third party, other shareholders can “piggy-back” or “tag along” on the sale by including their own shares in the deal and exiting the company
• Right of first refusal—Shareholders get the first chance to buy shares that are being sold, even if a third party offers to buy them first
• Shotgun—Typically used when relationships deteriorate and one shareholder wants to exit the company. The shareholder can set the terms and price at which they will sell their shares or buy the shares of another shareholder. The other shareholder(s) must decide if they will buy or sell shares based on the terms and price presented.

What You Should Know Before You Enter a Unanimous Shareholder Agreement

Shareholders should understand that a USA may impose liabilities on them that would otherwise be placed on the directors, such as paying salaries and wages. It’s important to be aware of the risks before signing such a contract.

While a USA provides valuable benefits, it’s not a one-size-fits-all contract. To ensure its effectiveness, your company’s USA should be customized and structured properly for your business.

The corporate lawyers at Getz Collins and Associates can draft a unanimous shareholder agreement for your company. We can review existing agreements and advise shareholders on their rights, and the risks and obligations of entering into a specific agreement. Contact us today.

Fierce debates are taking place regarding the mandatory vaccinations that are being implemented in response to the COVID-19 virus.  It was not very long ago that the balance between employee privacy versus safety was hotly contested regarding random alcohol and drug testing.  There is an argument that the implications of mandatory vaccinations are far-reaching and more intrusive.

British Columbia and Quebec recently became the first provinces to institute “vaccine passports,” requiring individuals to provide proof of vaccination to attend a wide range of social activities. The Calgary Flames and Calgary Stampeders have announced that all fans and employees will need to be fully vaccinated in order to attend games at Scotiabank Saddledome and McMahon Stadium. Vaccine requirements for students and professors have also been a contentious topic at many Canadian universities as they approach the return to campus this September.

In the workplace, the federal government has announced that vaccinations will be mandatory for all public employees, including those employed by Crown corporations and in some federally-regulated industries. Several employers in both the public and private sector have followed suit, including Porter Airlines, most major banks, and the Town of Banff.

This begs the question: can private companies in Alberta legally require their employees to be vaccinated? Obviously, employers cannot physically force their employees to get vaccinated. The legal question at play is whether employers are legally allowed to terminate an individual’s employment, or discipline them in any way if they refuse to provide proof they have been vaccinated.

This question does not have a simple answer. The legality of a vaccine mandate will depend highly on the nature of the company, the individual circumstances of the employee, and the precise terms of the policy being put in place.

Mandatory vaccination policies place in conflict two competing priorities: (1) the rights of each individual employee to privacy, autonomy, and freedom from discrimination; and (2) the employer’s obligation to provide a safe and healthy workplace for all employees, under occupational health and safety legislation.

Many people mistakenly believe that their Charter rights would prevent any vaccine requirements. In the case of private employers, this is not the case. The Canadian Charter of Rights and Freedoms applies only to government actors—it does not apply to the actions of private individuals or corporations.

Nevertheless, private companies are still subject to other applicable laws, including privacy and human rights legislation. Under section 7 of the Alberta Human Rights Act, employers are prohibited from discriminating against employees on the basis of several protected grounds, including but not limited to physical disability and religious beliefs. If an employee refuses to be vaccinated on the basis of a protected ground, the employer does have the duty to accommodate them to the point of undue hardship. If a company refuses to accommodate an employee, this may leave them vulnerable to a discrimination claim.

In most industries, it will be very difficult for employers to demonstrate that they should not be required to provide accommodation.

Even if the employee does not have a protected ground for refusing the vaccine, employers may face a claim for constructive dismissal if the employee was not terminated but “forced to resign” due to the circumstances. When employees are hired, they agree to work pursuant to certain policies and procedures.  Marked changes to these policies and procedures, such as mandatory vaccinations, could be seen as a unilateral change to the employment agreement and a “breach of contract” by the employer.  This could result in a claim by the employee for termination pay.

Companies should be implored to make their best efforts to accommodate the individual through alternative measures. Any accommodations put in place should not be met with decreases in pay or other disciplinary measures as this will heighten the risk of a successful discrimination claim.

In addition, companies that require proof of vaccination and collected medical records must adhere to privacy legislation. Specifically, such information must be collected in the least intrusive manner possible; it should only be used for the company’s stated purpose; and if copies are obtained, they should be stored securely and then destroyed as soon as they are no longer needed.

Mandatory vaccination requirements are a novel and complex legal issue that will be highly contingent on individual workplaces and evolving circumstances. If you require assistance navigating the legal implications of a mandatory vaccine policy in the workplace, as either an employer or an employee, please contact our team of professional employment lawyers who can provide you with sound advice that is specific to your situation.

The Strathmore housing market is moving, but prices are lower than some sellers would like.

“There is a lot of movement right now,” said Kevin Baldwin, realtor of Real Estate Professionals Inc.

Hayley Poirier, realtor of Homes by Hayley, agreed.

“We have definitely seen an upward trend in the number of houses, attached homes and condominiums in the last half of 2020,” she noted.

This trend in the market was also noticed by John Getz, a lawyer with Getz, Collins & Associates.

“Real estate has just been going nuts this fall,” said Getz. “We had more closings in October than we’ve had in any month since 2007.”

In the last month, there have been 32 properties sold, with 88 properties for sale, according to data provided by Baldwin. The four neighbourhoods with the highest number of sales were Hillview Estates (eight), Cambridge Glen (five), Downtown (five) and Strathaven (four).

The reason for the increase in sales is lower interest rates, said Baldwin.

“Some of the banks are offering 0.99 per cent, for a five-year term with a lower down payment,” he said. “You don’t have to go in with 20 per cent down, you can go in with five per cent.”

But the easing of COVID-19 restrictions also helped boost sales, explained Poirier.

“The market was tough in the first half of 2020 until it was clearly defined that real estate and realtors were considered an essential service,” she said. “That helped give confidence back to the market, which along with interest rates that are historically low, have really given a boost to sales.”

The low rates have many looking to buy, but most are seeking a house on the lower side of the price spectrum, said Baldwin.

“They’re looking to buy under the $400,000 mark,” he said. “People are looking for the best deal.”

But now there is less supply at that lower end of the price spectrum, he said. “I don’t think there is much right now in that range.”

Part of the reason is that sellers are trying to hold off for a better price and are unwilling to drop below that $400,000 mark, said Baldwin.

“People still think they can get more for their property, but until they come down to reality, it’s pretty hard to sell,” he said. “It’s the market that’s dictating what the buyer wants to pay.”

According to Strathmore multiple listing service (MLS) statistics, the average sold price between Nov. 12 and Dec. 10 was $259,000, representing an 11.8 per cent decrease from the previous month and an 18.2 per cent decrease from the same period last year. Average sale price was about $298,000 in November and $344,000 in September. Despite this trend, the proportion of sales of detached homes versus townhouses and condos has been increasing over the past three months.

There are other reasons for the higher sales in the market, with many homeowners realizing the house they were living in was not suitable for their needs, whether they were upsizing or downsizing, said Poirier.

“Many people discovered they did need an office for themselves and their Zoom calls or a great study are for their children to be able to Zoom with their teachers or work quietly with their schoolwork,” she said. “Gardens and outdoor living space also became a huge trend this year with people staying home more and discovering that they enjoyed planting their own vegetables and gardens.”

In a groundbreaking judgment released last week, Madam Justice Avril B. Inglis of the Alberta Court of Queen’s Bench recognized a new claim in law with respect to the public sharing of private information without consent. Justice Inglis’ decision in ES v Shillington has created a new tort in Alberta called “Public Disclosure of Private Facts”.

The parties in Shillington had previously been in a romantic relationship and the Plaintiff had on occasion shared intimate photos that were intended to be viewed only by the Defendant. Near the end of their relationship, the Plaintiff became aware the Defendant had posted the images of her online, without her knowledge or consent, where they became publicly accessible.

The images were shared online as early as 2006 and some were still viewable in 2021. The Plaintiff was identifiable in some of the images, and she was recognized in public on at least one occasion by someone who had viewed the photos online. Not surprisingly, this caused the Plaintiff significant stress, nervous shock, anxiety, humiliation, and long-term psychological and emotional suffering. As the Plaintiff also suffered physical and sexual abuse by the Defendant, she brought claims for battery, sexual assault, breach of confidence, intentional infliction of mental suffering, in addition to the newly proposed tort of Public Disclosure of Private Facts.

Justice Inglis held that each of the claims had been made out and ordered the Defendant to pay significant damages totaling over $300,000, taking into account the egregious breach of trust, number of images posted, the fact that the Plaintiff was identifiable in the images, and the significant and long-standing psychological impact the Defendant’s actions had on the Plaintiff. Justice Inglis also granted a permanent injunction requiring the Defendant to remove all images and prohibiting him from sharing any images of the Plaintiff in the future.

While the high damage award is noteworthy, Justice Inglis’ decision is novel for her recognition of the new tort of “Public Disclosure of Private Facts” and the award of damages on this basis.

For civil claims, plaintiffs are almost always required to prove liability on the basis of an existing type of claim (for example, negligence, battery, etc.). However, courts are permitted to recognize new torts in rare cases where “the facts cry out for a remedy”; in other words, if a new type of claim is required to address wrong-doing that is not sufficiently addressed by existing types of claims.

In the digital age, courts have recognized that the non-consensual sharing of private images over social media is one such area that is inadequately addressed by the traditional categories of tort law. The prior absence of any civil recourse for non-consensual sharing of private images was a pressing concern, especially given the serious nature of the wrongdoing which prompted Parliament to make this a criminal offence in 2015.

Accordingly, this type of claim had already been recognized in other provinces in Canada. In 2016, the Manitoba legislature passed the Intimate Image Protection Act, which created a new statutory tort. The Ontario Superior Court’s 2018 decision in Jane Doe recognized the novel claim of Public Disclosure of Private Facts in another case where the Defendant posted an intimate video of the Plaintiff on a pornography website without her consent. The Nova Scotia Supreme Court followed suit in 2021 with its decision in Racki v Racki, a case in which the Defendant had published a memoir detailing his wife’s addiction issues and suicide attempts.

Alberta has also enacted similar legislation: the Protecting Victims of Non-Consensual Distribution of Intimate Images Act. However, the Plaintiff in Shillington could not rely on this statute because the images were shared before the Act came into force in 2017 and it could not apply retroactively. Furthermore, the Act has a narrower scope; it protects only against the distribution of “intimate” images, as defined under the Act, as opposed to the wider ambit of “private facts” as considered in Racki, noted above.

With Justice Inglis’ decision in Shillington, the tort of Public Disclosure of Private Facts will now be available to plaintiffs in Alberta. To bring a successful claim, a plaintiff must prove each of the following:

• the defendant publicized an aspect of the plaintiff’s private life;
• the plaintiff did not consent to the publication;
• the matter publicized or its publication would be highly offensive to a reasonable person in the position of the plaintiff; and,
• the publication was not of legitimate concern to the public.

In determining whether something is “private”, a court will ask: “what would a reasonable person feel if they were placed in the same position as the claimant faced with the same publicity?” Intimate images will clearly fall into this category.

However, after Shillington, the newly-recognized tort of Public Disclosure of Private Facts can extend beyond the distribution of intimate images to cover a broader range of conduct. The test under the new tort refers to any private information that is disclosed without the person’s consent, would be highly offensive to a reasonable person in their shoes, and is not of legitimate concern to the public. This is a noteworthy decision as it potentially opens the door to civil liability being imposed for the non-consensual disclosure of a wide range of private or sensitive information.

Defamation is widely understood as public statements that damage a person’s reputation. While this may seem a simple concept, the legal test for defamation is quite onerous and, depending on the circumstances, bringing a legal action for defamation may be quite complex.

The general rule is that a plaintiff must file a claim within 2 years from the date they first knew of the defamatory statement. However, it is important to note when the alleged defamatory statement is broadcast or published in a newspaper, the Defamation Act requires the plaintiff to provide notice of their intention to bring an action within 3 months of the date the statement first came to their attention.

In the 2009 decision of Grant v Torstar, the Supreme Court of Canada held that a plaintiff must prove three elements for a successful defamation claim.

First, the statement must be defamatory. A defamatory statement is one that “would lower the plaintiff’s reputation in the eyes of a reasonable person or expose the plaintiff to hatred or ridicule.” The court will assess both the plain meaning of the words used and the circumstances surrounding the statement.

Second, the statement must refer to the plaintiff. In most cases, this will involve the defendant referring to the plaintiff by name, although this is not necessarily required. Where the defendant does not explicitly name the plaintiff, the court will ask whether an ordinary person who is reasonably informed would know the statement was made about the plaintiff.

Third, the statement must have been communicated to at least one person other than the plaintiff, as their reputation cannot have suffered if they were the only one to hear the defamatory statement.

Importantly, there is no requirement that the defendant intended to defame the plaintiff. If a plaintiff can prove each of the elements, intention does not matter.

However, arguments in a defamation case will rarely end there. In most cases, the available defences to defamation play a key role. A defendant will not be held liable if they can prove they had a valid defence, regardless of whether each element has been proven by the plaintiff.

One of the most common defences to a defamation claim is truth, or justification. If a statement is true, it cannot be defamatory. The truth of the statement is to be determined as of the time the statement was made. Importantly, the defendant’s subjective belief in the truth of a statement is not sufficient; the actual truth of the statement must be proven under this defence.

Another important defence is “fair comment”, which applies to statements of opinion that are “generally incapable of proof.”. As stated by the Supreme Court in Grant v Torstar, this defence will apply when the statement is: (1) about a matter of public interest; (2) based on fact; (3) is recognizable as comment, not a statement of fact; and (4) satisfies the test of whether a person could honestly express the stated opinion on the proven facts. The opinion stated does not need to be reasonable, so long as it was honestly expressed and based on the facts.

Qualified privilege is a defence which attaches to the occasion upon which a statement was made and not to the communication itself. This will apply where there is a special relationship characterized by a “duty” to communicate information and a reciprocal interest in receiving that information. A common example is a reference provided in the employment context.

For both the defences of fair comment and qualified privilege, the defence will not apply if the plaintiff can demonstrate that the defendant was motivated by “express malice”. In that case, defamation will be made out.

However, where a statement is subject to absolute privilege, it can never serve as the basis for a defamation claim. Recognized examples include statements made in Parliament or testimony given by a witness in court or other quasi-judicial proceedings.

Lastly, the Supreme Court’s decision in Grant v Torstar created a new defence deemed “responsible communication on matters of public interest.” This defences applies mainly for journalists and media organizations. The defendant will be required to demonstrate that the publication was about a matter of public interest and it was communicated responsibly, having regard to the seriousness of the allegation, public importance, urgency, reliability of the source, whether they sought comment from the plaintiff or presented their side of the story accurately, and other relevant circumstances.

If a defamation claim is successful, the plaintiff may be entitled to monetary damages or an injunction preventing the plaintiff from making further statements. The defendant may also be required to issue a retraction of the statement and apologize. An apology will often reduce the damages to which a plaintiff is entitled.

General damages are intended to compensate for harm to reputation and will be determined with references to amounts awarded in previous cases. In some instances, special damages will be awarded if there is evidence of quantifiable monetary loss—i.e. loss of business, contracts, etc.

Punitive damages are awarded in rare cases where it is necessary to punish the defendant for behaviour that is overly malicious, oppressive, or high-handed. This is more likely where malice has been found on the facts of the case.

As shown above, defamation claims have many components. If you need advice to bring or defend a defamation claim, please contact our civil litigation team. Our experienced and knowledgeable Calgary and Strathmore litigation lawyers can assist you in navigating through the process.

For parties who have never been involved in a lawsuit before, the court process can seem daunting. That is why we have provided below a comprehensive overview of the civil litigation process in Alberta, from start to finish.

A civil action can usually be broken down into four stages: (1) pleadings; (2) discovery; (3) settlement; (4) trial. The process will differ depending on whether the action is brought in Provincial Court or the Court of Queen’s Bench. Actions for $50,000 or less fall under the jurisdiction of Provincial Court and all other actions must be filed in the Court of Queen’s Bench. This article will focus only on actions brought in the Court of Queen’s Bench.

(1) Pleadings

A claim is commenced when the Plaintiff files a “Statement of Claim”. For most types of claims, the Statement of Claim must be filed within 2 years from the date the plaintiff first knew they had a claim against the Defendant. The Statement of Claim outlines the underlying facts and the remedy being sought by the Plaintiff. It does not provide any evidence to support the Plaintiff’s claim—that comes later at the discovery phase. The Statement of Claim must then be served upon the Defendant within 1 year of the date it is filed with the Court.

Once the Defendant has been served, they have 20 days to file a “Statement of Defence” (assuming they are served in Alberta; they will have 1 month if served elsewhere in Canada and 2 months if served outside Canada). If the Defendant wishes to make a “Counterclaim” against the Plaintiff, they must do so at the same time. The Plaintiff would then have to respond with a “Statement of Defence to Counterclaim” within the same time requirements. If there is no Counterclaim, the Plaintiff may also file and serve a “Reply to Defence” within 10 days of receiving the Statement of Defence.

If other parties are involved in the dispute, the process gets more complicated. The Rules of Court set out the applicable timeframes for the Defendant to add a Co-Defendant or a Third Party to the lawsuit.

In cases where the Defendant fails to respond, the Plaintiff may have the Defendant “noted in default” and then apply for what is known as “Default Judgment”. This means the Plaintiff will automatically obtain judgment in their favour and may take steps to enforce it.

(2) Discovery

After the pleadings phase, the next step is the discovery process, which can be further broken down into: (a) exchange of documents; and (b) oral questioning.

Both parties are required under the Rules of Court to disclose all documents that are relevant and material to the issues in dispute between the parties. First, the Plaintiff will provide all documents under their possession and control through what is called an “Affidavit of Records”. The Plaintiff must serve their Affidavit of Records on the other party within 3 months of the date they are served with the Statement of Defence.

The Defendant will then be required to provide their own Affidavit of Records within 2 months of receiving the Plaintiff’s Affidavit of Records.

Any documents that subsequently come to light must be served on the other party through a “Supplemental Affidavit of Records”. If either party is unwilling to disclose relevant documents, the other party may apply to the court for a production order.

After documents have been exchanged, the parties will then schedule dates for questioning. Both parties will be questioned under oath with respect to the documents provided. Transcripts of the questioning will be produced by a court reporter.

During questioning, the other side’s lawyer may ask the witness to search for additional documents or to confirm information which is not readily available at the time of questioning. These requests are called “Undertakings” and parties are required to provide responses to Undertakings within a reasonable period of time. If one party refuses to provide responses or objects to proper questions, this must be dealt with by an application to the court to compel answers.

It may also be necessary for parties to re-attend for further questioning after undertaking responses have been provided.

(3) Settlement

In practice, the settlement process will usually span the entire course of an action. In most cases, the Plaintiff will inform the Defendant of their potential claim and propose settlement before the claim is even filed, through what is colloquially referred to as a “Demand Letter”.

As the action proceeds and the evidence gains greater clarity, the parties will usually make frequent attempts to negotiate a settlement, in order to avoid the significant time and expense associated with taking a claim all the way to trial. In fact, the vast majority of actions do “settle” before making it to trial. A settlement will usually involve a payment to the Plaintiff in exchange for discontinuing the action and signing a Release preventing them from bringing another claim arising out of the same facts.

After the discovery process but before trial, the parties are required by the Rules of Court to undergo a settlement process called “Alternative Dispute Resolution” (“ADR”). ADR comes in different forms, such as mediation, arbitration, or “Judicial Dispute Resolution” (“JDR”). These processes are more informal than a trial and require the consent of the parties to come to a final determination. The parties will need to certify to the court that they have engaged in ADR, or obtain an order waiving the ADR requirement, before they will be allowed to proceed to trial.

It is important to note the parties can reach a settlement agreement at any point in the litigation process. It can occur before a claim has even been filed or after a trial has already begun—or at any time in between.

(4) Trial

If the parties are unable to resolve the matter, a trial is the last resort. After all other steps have been completed, the parties must file a “Certificate of Readiness” with the Court, advising how long the trial will be and the number of witnesses who will testify. The parties are required to provide further confirmation of readiness 3 months prior to the trial date, as well as advise of any changes to the number of witnesses or days required.

Most cases are heard by a judge alone, without a jury. The parties will put forward their evidence in an effort to prove their respective claims or defences. The judge will then issue a decision which is final and binding upon the parties, subject to any successful appeal to a higher level of court. The successful party will typically have a portion of their legal costs reimbursed by the other side. Parties can expect an action to last between 2 and 5 years from the date a claim is filed to the end of a trial. The length of the process depends on a variety of factors, such as the complexity of the issues, availability to schedule questioning and trial dates, requests for extensions, and any applications brought by either party throughout the course of the litigation.

Wrongful dismissal occurs when an employee is dismissed from their position in a manner that violates the terms of their employment contract or the Employment Standards Code (the “Code”).

Wrongful dismissal can occur in several different forms. Employees are typically terminated from their employment in one of two ways:

(1) without cause; or

(2) with just cause.

A wrongful dismissal can arise in either scenario. However, if the employment relationship ends after a fixed-term contract, or upon the employee’s resignation or abandonment of their position, this generally cannot give rise to a wrongful dismissal claim. The one exception is “constructive dismissal”, which refers to a situation where the employee objects to a fundamental change to the terms of their employment and are therefore considered dismissed under the law.

Without Cause

It may surprise many people to learn that employers can legally dismiss workers without cause at any time and for any reason.  The catch is that the employer must provide working notice or pay in lieu of notice upon termination (unless the employee is dismissed during the 3-month probationary period, in which case no notice is required).

Employers are prohibited from contracting out of the following minimum notice requirements under section 56 of the Code. These amounts are the bare minimum an employer is required to provide when dismissing employees without cause:

• If employed for more than 90 days but less than 2 years = one week notice
• If employed for more than 2 years but less than 4 years = two weeks’ notice
• If employed for more than 4 years but less than 6 years = four weeks’ notice
• If employed for more than 6 years but less than 8 years = five weeks’ notice
• If employed for more than 8 years but less than 10 years = six weeks’ notice
• If employed for more than 10 years = eight weeks’ notice

Many employees may also be entitled to reasonable notice at common law depending on the terms of their employment contract. Reasonable notice periods at common law are much greater than the minimum requirements under the Code and depend on a variety of factors, including the character of the employment, the length of service, the employee’s age, and the availability of similar employment, keeping in mind the experience, training, and qualifications of the employee. Courts will also examine previous decisions in similar cases to determine the applicable reasonable notice period in any given case.

Just Cause

Where an employee is dismissed for just cause, no notice is required. However, the legal test for just cause imposes a high standard. The employer bears the burden of proving they had just cause to dismiss the individual from their employment.

Whether an employer is justified in terminating an employee for just cause will be assessed in the context of the alleged misconduct. The legal test, coming from the Supreme Court of Canada’s decision in McKinley v BC Tel, asks whether the employee’s misconduct gave rise to a breakdown in the employment relationship.

While there are no hard and fast rules, the Supreme Court has set out examples of situations where the test for just cause will be met. If an employee breaches the faith that is inherent in the working relationship, violates an essential condition of the employment contract, or acts in a manner which is fundamentally inconsistent with their obligations to the employer, their dismissal will be justified.

Courts will take a contextual approach in determining whether the employee’s misconduct was serious enough to strike at the heart of the employment relationship. The nature and extent of the misconduct, as well as the surrounding circumstances, will be important factors. Courts will also be asked to determine whether dismissal is warranted as a proportionate response to the employee’s misconduct. A balance must be struck between the severity of the misconduct and the harshness of the sanction imposed.

Damages

Upon a successful claim for wrongful dismissal, a plaintiff may be awarded three kinds of damages. The first, and most common, is the notice period payment to which the employee is entitled. However, because the purpose of notice pay is bridge an employee to a new position, it is important to remember that employees have an obligation to mitigate their damages by searching for new employment. A failure to mitigate, or any income earned during the notice period, may result in deductions to the final notice award.

In rare cases, a plaintiff may also be entitled to aggravated or punitive damages. Aggravated damages are awarded in cases where the plaintiff was wrongfully terminated in a humiliating and emotionally distressing manner. Punitive damages are further reserved for rare instances where courts wish to punish employers for conduct that is overly egregious.

Litigating Wrongful Dismissal Claims

The potential strength of a wrongful dismissal claim is heavily dependent on the facts of each individual case as well as the specific terms of the employment agreement. If you need advice on how to bring or defend a claim for wrongful dismissal, including questions about common law reasonable notice, the standard for just cause, or potential damages, please contact our team of employment lawyers who can provide professional advice applicable to your situation.

A recent decision from the Ontario Superior Court provides a word of caution to employees who bring questionable wrongful dismissal claims.

In Goruk v Greater Barrie Chamber of Commerce, the plaintiff Ms. Goruk was terminated from her employment with cause and she brought a claim for wrongful dismissal, seeking a damage award equal to two years’ salary. In a separate written decision, Justice Boswell concluded that the Defendant employer did, in fact, have just cause to terminate Ms. Goruk’s employment based on several incidents of misfeasance and poor judgment. As her claim was therefore unsuccessful, the litigation then moved on the final stage—assessing the amount of costs to be paid.

The law of costs can generally be summarized as “loser pays”, although in practice the assessment of costs is much more nuanced and takes into account several different factors, including the complexity of the proceedings, the importance of the issues, any unnecessary delay caused by either party, and offers to settle made by either side.

Many litigants are often surprised to learn that the successful party does not have all their costs reimbursed. The general rule of thumb is an award equal to 40-50 percent of the successful party’s actual costs. However, costs awards are not required to follow any set formula and they are largely subject to the discretion of the presiding judge, within the confines of the applicable rules of court and having regard to what is fair, proportionate, and reasonable.

In employment cases specifically, courts are often hesitant to award high costs against employees for at least two reasons: (1) the imbalance of bargaining power and financial means between an employee and an employer; and (2) the risk of dissuading employees from bringing legitimate claims, thus posing an acute access to justice issue.

In Goruk, the action lasted a total of seven years and the trial itself took 13 days. The gross expenses of the Defendant alone amounted to approximately $257,000, with the Defendant seeking to recover $183,000 in costs. The costs award sought by the Defendant was particularly high because they had made an offer to settle for $25,000 before trial, which was declined by the Plaintiff. Because the Plaintiff’s result at trial was worse than the $25,000 offer, the Defendant was entitled to claim increased costs for every stage of the litigation taking place after the offer was refused.

Perhaps most notable in this case was how the Court received the Plaintiff’s arguments relating to impecuniosity and the reasonableness of her claim. Ms. Goruk argued that costs should not be awarded because of her dire financial circumstances (she had to sell her house to fund the litigation). She also argued that although she was ultimately unsuccessful, her claim was nevertheless a reasonable one.

Justice Boswell did sympathize with Ms. Goruk’s financial state, and he also agreed that her claim was reasonably compelling (he called it a “close call”). However, because she was unsuccessful, there was no basis in law to decline to order costs.

Justice Boswell’s assessment concluded with these words:

“[L]itigation is an expensive business. It is not for the risk-averse or the faint of heart. There are winners and there are losers. And it is a well-established convention in our civil justice system that losers pay the winners a significant portion of their costs.  Ms. Goruk knew that going into this case.”

Although Justice Boswell was clearly attuned to the implications of his decision for access to justice, he was nevertheless required under the law to order a substantial costs award. Factoring in a modest reduction based on the reasonableness of Ms. Goruk’s claim, Justice Boswell settled on an award of $143,978 (approximately 56% of the Defendant’s total costs).

This decision is somewhat unusual in the high quantum of costs awarded, but it does convey a word of warning to prospective plaintiffs who may have precarious legal claims. Even though workers typically elicit greater sympathy from courts when facing off against organizations with greater economic means, advancing shaky claims to the end of trial will result in significant cost consequences if the claim is ultimately unsuccessful.