Wednesday, 17 October 2018

FRUSTRATION OF CONTRACT Superior Court Makes It Easier for Employer’s to Frustrate Contract


The Ontario Superior Court of Justice ruled that an employee’s contract may be frustrated when they are on LTD, if there is enough evidence for the employer to reasonably conclude that there is ‘no reasonable likelihood’ that the Plaintiff would be able to return to work within a ‘reasonable period of time’.

The recent decision in Roskaft v. RONA Inc., 2018 CarswellOnt 10638 may have an immense impact on the employer’s ability to frustrate contracts earlier than ever before.

The Plaintiff commenced employment with a predecessor company of RONA Inc. ("RONA") on September 16, 2002 and started a leave of absence for a medical condition on September 28, 2012. The Plaintiffs STD and LTD were approved through SunLife.

In late October 2014, the Plaintiff completed a return to work form stating that he was unable to work and his return to work date was ‘not applicable’. On December 5th 2014, SunLife advised RONA that the Plaintiff could not return to work.

In September 2015, RONA concluded that the Plaintiff was ‘permanently’ totally disabled from any occupation and that it was unlikely that he would be able to return to work within a reasonable time. RONA terminated the Plaintiff, a 13-year employee, on September 15th, 2015, after only being on LTD for less than 3 years.

The Plaintiff sued RONA for wrongful dismissal. The Employer brought action for summary judgment dismissing the action, which was granted by the Superior Court. Justice Pollak held that to determine frustration of contract, a consideration of the totality of the available evidence must be conducted.

Despite having no direct evidence determining that the Plaintiff was permanently disabled, Justice Pollak went on to find that based on Sunlife’s decision to continue to supply LTD benefits combined with the Plaintiffs own representations that he could not work, was enough evidence to conclude that there was ‘no reasonable likelihood’ that the Plaintiff would be able to return to work within a ‘reasonable period of time’.

What does this mean for employees?

In the past, before concluding that a contract was frustrated, courts would assess if there was any reasonable likelihood that an employee, who is absent from work for a long period of time, would be able to return to work in the foreseeable future. This meant that employees could be absent from work for many years without having their contract frustrated.

The Employer may now only need ‘enough evidence’ to prove that there’s no ‘reasonable likelihood’ that an employee will return to work within a ‘reasonable time’.