Employee Wins Pre-Trial Procedural Point on Pleadings

By Daniel Standing LL.B., Editor, First Reference Inc.

 

The Ontario Superior Court of Justice put forward several motions in a wrongful dismissal case, Kaminsky v. Janston Financial Group, 2020 ONSC Number 5320 (CanLII) via Zoom in August. The parties ended up in court following Carolyn Kaminsky’s dismissal from her position within her family’s business. The decision turned on a point of civil procedure and provides employers with insight into what they may argue at trial based on their knowledge of facts amounting to just cause at the time of dismissal.

Background

Carolyn Kaminsky, the plaintiff, worked in office administration for the defendant company, Janston Financial Group, for 18 years until she was dismissed on November 6, 2018. At that time, she was given the equivalent of 20 weeks’ salary. In her action, she claimed damages equal to 20 months’ salary, and lost bonus money.

Several paragraphs of Janston’s statement of defence outlined various allegations under the heading “Performance Concerns” which purported to provide the company with just cause for termination. However, this contradicted the company’s admission during examination for discovery that the termination was done on a “without-cause” basis. Ms. Kaminsky brought a motion that these paragraphs be struck. The court referred to this motion as “the Pleadings Motion.”

Janston also brought a motion seeking an order requiring Ms. Kaminsky to answer 50 questions that she was asked during examination for discovery. Ms. Kaminsky refused to answer them because she felt they dealt with the matter of cause for termination, which was irrelevant given the company’s admission that the termination was without cause. The court referred to this motion as “the Refusals Motion,” and noted that while the motions are interconnected, the Refusals Motion should be adjourned pending an outcome on the Pleadings Motion.

Before looking at the merits of the Pleadings Motion, the court dealt with the preliminary issue of whether Ms. Kaminsky had leave to bring the motion. The legal test for receiving leave to bring such a motion in the circumstances is whether the company’s Refusals Motion amounted to an “unexpected change in circumstances” such that a refusal to grant leave would be manifestly unjust. Janston opposed on the matter of leave on the basis of Ms. Kaminsky’s signing a Notice of Readiness to proceed to trial.

The court noted that despite the employer’s admission during examination for discovery that the termination was without cause, Janston did not amend its defence or bring the Refusals Motion until January 2020. In the full context, the Refusals Motion was an unexpected and substantial change that fairness required giving Ms. Kaminsky leave to bring her motion.

On the merits of Ms. Kaminsky’s Pleadings Motion, Janston argued that it could plead facts that it learned after termination that would have entitled it to dismiss Ms. Kaminsky for cause. It also categorized the 20-week salary payment as a “goodwill” payment that did not preclude the employer from pleading cause.

Justice Liza Sheard agreed with the legal underpinnings of Janston’s arguments on gratuitous payments at termination and after-acquired cause but held that the facts did not support its claim. Nowhere did Janston claim to possess after-acquired grounds for termination. Instead, its defence materials said that it had grounds to terminate for cause but chose not to do so because Ms. Kaminsky was a family member.

Neither of these principles could help Janston since it unequivocally stated in its defence and at examination for discovery that the termination was without cause. Janston chose not to amend its pleading. As a result, the court held that the paragraphs in question were in fact irrelevant and should be struck out. Having issued a ruling on the Pleadings Motion, the parties were invited to schedule a hearing of the Refusals Motion.

Takeaways for employers

Part of the peculiar nature of this case stems from the familial nature of the business. A dismissal is a difficult way to end the employment relationship, and this difficulty is magnified in a family business setting. From that perspective, a company’s decision to make a “goodwill” payment to the employee on termination makes some sense. While such a payment does not prevent the employer from later asserting cause for termination, or from relying on after-acquired cause for termination, these defences have to be read in the context of the pleadings and facts that the defendant has admitted. The employer cannot claim that a termination is without cause and, without amending the pleadings, argue the opposite. This case will also be of interest to employer-side lawyers who draft pleadings on behalf of their clients in wrongful dismissal actions.